Question Of The Week - 2/11/2009

Unless Gold exceeds its 2008 high, evidence is it will remain in a bear market for the next 4+ years (this QofW was written Feb. 11, 2009). The S&P has already gone through the majority of its bear market, but one, final, massive decline is due in the next few months! The same can be said for T-Notes. The only logical explanation for all markets to be heading south at once is if deflation is a current and ongoing reality for 2009 and 2010. In a deflationary environment, the best place to be is cash. Instead of looking for "returns" in typical investments, the value of cash itself will be increasing substantially. So, merely having cash could mean you will see a 25-50% increase in the purchasing value of your capital. We've all been taught to invest in "things" the last few decades, but this time around holding cash is likely to produce the best, albeit "invisible," returns.