The next 5 years, Zulauf and Hendry Options

[stocks]

Zulauf:

So, at the moment, you have two countervailing forces. On the one hand, you have a high level of debt, which is a highly deflationary force, which results in lower economic growth and a decline in prosperity for the masses. If you let this run unchecked, it leads to depression and the collapse of the system.

In order to counter these deflationary forces, governments and central banks adopt policies aimed at fiscal and monetary reflation. At the moment, we’re weaving between these two forces, and at any moment, it’s a question of which force is stronger, and whether it’s risk on, and risk assets go up, or risk off and risk assets going down.

Eventually there will be a conclusion, either a systemic collapse or a rise in inflation which will lead in some countries to hyper-inflation. And hyper-inflation itself always leads to systemic collapse. It’s an ugly situation, no question.


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Hendry:

The world is very fearful of hyperinflation. Pension schemes have a preponderance of real assets, from forestry to gold to TIPS [Treasury inflation-protected securities], because they are very fearful. The road to hyperinflation is via hyperdeflation. That is why it's proving so difficult for hedge funds to make money. How does the rational mind that anticipates hyperinflation own 10-year government Treasuries yielding less than 2%? It can't. That's why people are struggling. To lay the seeds of hyperinflation, you need really, really bad things to happen. I thought the U.S. housing market having a massive crash would be hyperdeflationary. But then my Chinese friends pumped $1 trillion of credit into their $5 trillion economy, and created a global recovery, which has just come to an end. I'm speculating that hyperdeflation happens before hyperinflation.

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[Islander]

Good post, I certainly feel that things can go as suggested, I try to be heavy silver and some gold. But real estate takes guts I have not got.

Islander

This post has been edited by Islander: Feb 28 2012, 01:25 PM

[Om_Namah_Shivay]

Good post, I certainly feel that things can go as suggested, I try to be heavy silver and some gold. But real estate takes guts I have not got.

Islander

I tried heavy short on both gold and silver, yield is not bad
http://www.traders-talk.com/mb2/index.php?showtopic=138247