Deflation Investments Strategy For The Greater Depression

By Delwyn Lounsbury  -  THE DEFLATION GURU

The deflation investments strategy you make is of utmost importance to your financial and possibly physical survival in the next decade?

Per Robert Prechter - Bullish - Only the U.S. Dollar - Short the rest!  Get cash or short term government t-bills to be ultra safe. Robert Prechter's monthly ELLIOT WAVE FINACIAL FORECAST said:  "BOTTOM LINE - The world-wide credit crisis is returning to the front burner.  In Europe, it is full throttle ahead and spreading.  In the U.S., a top in a key index of leveraged loans indicates that all but the highest-grade instruments should start to retreat.  Short-term U.S. treasury notes remain the safest place for investments.  The uptrend in gold and silver appears exhausted.  The next major move in each precious metal will be down.  The U.S. Dollar Index is at the forefront of a significant rise, which, based on sentiment measures, should come as a surprise to just about everyone."

There are few deflation investments in a secular bear market cycle when waves of selling of securities, other assets and collectable items will take place.  Remember:  "Cash is King" in a deflationary depression.

Your best deflation investments are the ones returning your principle not necessarily having a return on that principle. Deflation investments for safety are short term (90 day) credit instruments like Tbills or money market funds that only buy Tbills.  Some 2 year or less CD's at solid banks - EWI has list.

Shorting stocks is: borrowing shares in a broker account then immediately selling them with the hope of buying them back at a lower price in the future and replacing the borrowed shares. Stock shorting of shares that had run up in price in the "Roaring 20's" was the way Jesse Livermore got rich back in the 1930's crash.  Some new ETF's (Exchange Traded Funds) are actually short different sections of the market and trade like stocks with low commissions.  Beware of value decay in these because they have to be always short even in up markets.  Best for short periods when the market is dropping fast.  See article "Stocks and Deflation".

Robert Prechter is on record recommending shorting REITs (real estate investment trusts) that trade like stocks.  He thinks they will be down to penny stocks in the future as real estate prices tank by 90% from peak of 2006.  There are even a few new short ETF's, but they tend to lose value over time because the always have to be short stocks.

Deflation investments in options on some of these shares and instruments could be big winners if your timing is right.  LEAPs are (long term equity appreciation) options giving more time.  Contact your stockbroker and financial advisor.  Keep in mind they will only preach the usual - diversify and stocks are good investment in the long run.  Those are not necessarily good deflation investments when we are looking at a depression larger than the 1930’s. 

The deflation economics cycle started with the 2000 dot com stock mania bubble climax peak may not end until 2016 to 2018. At that time most of your assets may have lost 90% in price and unemployment could be 30%.  Even the price of gold may drop in half.  CASH IS KING in deflation.  Japan has seen deflation for 20 years and now the rest of the world is catching the epidemic.  You cannot stop the pendulum from swinging.

Deflation economics will continue until the inflation is wrung out of the system in this Greater Depression. Your deflation investments should first be geared to survival because of a massive upheaval in all economies of the world.  Deflation Dead Ahead!  Your safest deflation investments strategy may be to stay in cash or cash equivalents. 

Robert Prechter says the U.S. dollar may turn out to be a strong and valualble holding if the rest of the world is in shambles.  Besides the Anglo financial power elite have most of their money over here where it is safer and they will not want to see the dollar lose any more value.  Forget about inflation.  Its not in the picture no matter how much money the FED and the US government try to throw at the deflation problem.  Cash is King!

Note - a new ETF (Exchange Traded Fund) that goes short gold mine stocks is DUST  - For your information only - not a recommendation.  See list of other short the market ETF's below.

Copyright 2011 by Delwyn Lounsbury – THE DEFLATION GURU
Use of this article allowed with attribution back to:
http://www.deflationeconomy.com