inflation play

Discussion in 'Trading' started by ropey b, Jul 17, 2009.

  1. ropey b

    ropey b

    what's the best way to bet on an increase in the inflation rate in u.s.? short eurodollars? long gold? any ideas?
  2. us inflation > world inflation- short dollar index

    global currency crisis- long commodities

    or like me:

    us inflation < world inflation- long DX :)
  3. ropey b

    ropey b

    ok, thanks. Any ideas for benefiting from a worldwide inflation increase?
  4. long commodities.

    particularly agriculture

    but as always timing is hard, I am waiting to see if we have another deflation downleg.

    if wheat, corn etc tank to severe new lows over the next year or 2 i think buy and hold for 20yrs will be the moneymaking strategy of our lifetime...

    if however commodities just go up from here i guess i might miss the boat. id rather that than get squeezed hard. if you have really deep pockets i guess u could buy half here then buy the other half in 2 years time
  5. I find it amusing that people think there's going to be inflation given how fugly this economy is and how much fuglier it's getting.
  6. piezoe


    Since the advent of fiat money there is only inflation. Most if not all the major economies are constantly (except for brief insignificant periods) expanding money supply. Look at the ratio of the dollar, the Yen, or the Euro to gold over recent years if you need convincing. While Japan suffered a period of deflation from about 1990 to 2003, the Yen was slipping relative to gold by 2000. The Yen remained extraordinarily weak relative to gold and other currencies throughout. It is not a matter of which country will have the strongest currency, but rather which will have the weakest, as we are all in a race to see who can get by with the greatest currency dilution. Because the US is part of the world economy, the degree of inflation we will see in the US is dependent on other currencies as well as Fed policy. The US has had a weak currency policy for a long time. To bet against inflation is to deny reality. It is not a question of whether there will be inflation, but rather how much inflation.
  7. ropey b

    ropey b

    ok. thanks for the insight. but how can we make a profit from it?
  8. Take out as much fixed-rate debt as you possibly can and buy stuff with it.

    You will be happy, while the people who you will be paying the coupons to won't be.
  9. piezoe


  10. Perceval


    Hi ropey !
    I think you've hit a nice spot here !
    Specially regarding the eurodollars futures...
    It seems to me as an oppotunity almost to good to be true !
    Had I the money, I would just short like crazy and rollover the pos. (I'm kind of broke right now and recently cashed out all my trading accounts to pay my debts and bills F$#%K !!! :( )
    Shorting treasuries would be nice too. But I'd go easy on that one and would be really carefull because of the risk of a stockmarket crash / fly to quality...
    Otherwise, I would definetly slowly load my truck and build a position in gold, silver, oil, and agricultural commodities.
    But needless to say, those would only be a portion of my capital allocated to super long term trade.
    Hope you'll be able to take the ride of this most probable move.
    #10     Jul 17, 2009