Comments on: Deflation Investing Strategy: 5 Things You Should Know

By: Trend Investing - Van Beek

Trend Investing - Van Beek — Wed, 08 Dec 2010 05:06:48 +0000

Good article stays relevant and actual. Here is my take on it:

1) Yes, cash is King. But safe fixed income is better. You are right: return OF is more important than return ON investment.

2) Maybe the Dollar will rally. It depends versus which currencies. The Yen may get stronger due to its financial position. If other markets maintain a high growth, their currency may strengthen.

3 & 4) Stocks, metals and commodities will show booms and busts during a deflationary recession. Buy and sell with the trend. Be careful with just going short.

5) Yes, debt and high leverage are killing for business and individuals during deflation. Those that are leveraged too highly will disappear.

By: Classic Sign of a Gold Bubble? Mr. T Interviewed by Bloomberg — The Contrary Investing Report

Thu, 14 Oct 2010 21:03:57 +0000

[...] not gold, is the object that deflationists believe folks will be scrambling for, if/when the next wave of credit crashing commences. And Mr. [...]

By: FDIC Problem Bank List for Second Quarter Q2 2010 — The Contrary Investing Report

Tue, 31 Aug 2010 20:48:02 +0000

[...] As the next wave of deflation sinks its teeth into the remains of our teetering economy, it seems inevitable that the FDIC itself will need a bailout at some juncture. [...]

By: Ted

Ted — Sun, 15 Aug 2010 12:27:21 +0000

(this is a little tongue in cheek but) Why don’t you just invest in US nickels? If there is deflation you come out ahead as the nickel will be worth more and if there is inflation: The nickle is 75% copper and 25% nickel. $18 dollars of nickels are about $9 worth of nickel and $9 worth of copper at current scrap prices. If you get $10,000 worth of nickels you will have 200,000 nickels to play with. Inflation will make a nickel worth much more (in scrap metal prices) than five cents but there could be a problem with scraping US currency. I guess you could do the same thing with pre ‘82 pennies but they would weigh 3 times as much as the nickels (about one metric ton vs. three) and you will have to sort through a lot of pennies to find the pre 82 ones. Or you could just do what I’m doing, but if I told you then my strategies wouldn’t work. If you read a solution on the internet, it most likely won’t work. If I knew the winning lottery #’s I would be in great shape, if I told them to everyone (internet) we would all lose. Best of luck to all, we need it.

By: Brett

Brett — Thu, 05 Aug 2010 21:33:05 +0000

Re: your 401K, if you are fearing deflation, you may want to at least make sure you don’t have your allocations heavy in stock indexes. You can keep it in cash or cash equivalents in your 401K.

The argument against leaving cash in your 401K at all, rather than pulling out and taking the penalty, would be the fear that the government is going to lock up retirement accounts at some point and force you to place the cash in treasuries as they inflate it away. I don’t think we’re there yet, but I think that is the question you need to figure out as to whether or not you cash in your 401K.

FWIW I have not done this yet myself, I still have retirement holdings in 401K and IRA accounts.

By: Sherry

Sherry — Thu, 05 Aug 2010 13:22:07 +0000

I don’t know much…okay, I don’t know anything about investing. I have a 401K where I work and wouldn’t begin to know how to shift and change in preparation for deflation. Anyway, as I understand it, cash is the best way to keep what you have. So, should I cash in my 401 K? Even after paying the penalty, maybe I would be better off?

By: Renting vs Buying Pros and Cons – 7 Reasons You Should Never Buy a Home — The Contrary Investing Report

Sat, 31 Jul 2010 23:06:58 +0000

[...] it’s day once again, but not until the scale tips in favor of inflation. Please review our deflation investing guide for full [...]

By: John

John — Mon, 05 Jul 2010 23:28:09 +0000

Yes, that’s the one. It is a small shop; sells all sorts of old coins, silver and banknotes. He usually displays a few sovereigns and half-sovereigns in the cluttered window; I work nearby, and will check his prices, and let you know.

I don’t think you will have any trouble selling sovereigns in or after a depression; the think you will not be able to control is the price, which will vary according to the prevailing circumstances. Ebay is an easy place to sell, except Ebay takes a whopping 10% cut, plus Paypal fees on top. Gold coin shops are probably an okay place to sell back to. Avoid “cash for gold” dealers; one local to me are offering £80 for sovereigns, less than half their price elsewhere.

By: Sam

Sam — Mon, 05 Jul 2010 06:06:40 +0000

Thanks John

For gold soverigns I understand there is shop called Gold Coin Exchange on Charing Cross road – is that the shop you are referring to?

Also, how easy would it be to encash soverigns in an emergency after depression?

Sorry for the questions but I am a total novice in this field and any education is welcome.

By: John Gardner

John Gardner — Sat, 03 Jul 2010 20:03:31 +0000

Sam:
Quote “John, where can I get gold sovereigns. Why not keep gold bars?”

Coins are easier to identify/authenticate (and therefore easier to trade). Also, more pleasing to have, or to offer as gifts. I suggest sovereigns because (a) they are historically interesting and known in most countries, (but not so much the USA) and (b) are they are exempt from UK capital gains tax (just in case you buy a lot and the price goes to the moon!) . Best place to get sovereigns is a gold coin shop E.g. there’s one on Charing Cross Rd, near Leicester Tube. Don’t buy from Ebay, bidding makes it pricy, but look them up on Ebay to get a feel for the price. Gold can be tricky with price going up and down, so buy one or two to begin with, and more when you are confident. Don’t go overboard; gold may yet decline in value along with everything else in a depression, but it good to have some as a “core position”. Best time to buy lots MAY be at the bottom of the depression