Macro Reflation/Deflation update Feb 11,2009

Precious metals and mining stocks were strong today.Gold is up $26 to $928 and Silver up 42 cents to $13.4.
Money flowed back into treasuries with a successful 10 year auction yielding 2.75%. As a result TSY short(TBT) is down again 2% at $45.25.Watch corporate bonds for stability, doing well since mid-Dec.
Reviewing again meltdown models from Barron’s articles:

Dec.15, 2008 Stephanie Pomboy: weaker dollar likely scenario as higher rates unlikely near term;Japanesque-subpar growth of 1% GDP;deleveraging for many years;long gold to protect capital.

Feb.9, 2009 Ray Dalio: D-process -end of a longterm debt cycle where cash flows are not high enough to service debt so needs to be written down; banks may be nationalized;FED needs to print money resulting in currency devaluation;TSY ‘s okay for now but own Gold to hedge currency;huge opportunity in equities in 2010 time frame as toxic debt is restructured with dollar devaluation.

see also: http://seekingalpha.com/article/113655-the-reflation-top-ten-portfolio

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