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Neal: And maybe getting into currency funds? |
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Nina: That makes sense, particularly as the Euro develops. |
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Neal: So, you think we may see people trading gold or silver? |
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Nina: I expect precious metals' prices to begin to stir again. Gold in particular is completing a very long term correction, and the next rally should be strong, reflecting a breakout from a protracted basing period. Think of all the central banks that have divested their gold reserves in favor of paper currency reserves. If the U.S. dollar experiences high volatility, as I expect, gold may start to look attractive again. And what the central banks drove to 18-year lows, they potentially can drive to highs as well. |
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Neal: We're going through a time of deflation. How long do you think that's going to last? |
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Nina: I would argue that we're not going through a period of deflation. Some costs are declining, but prices in general continue to rise. Only the rate of change has slowed. There are few places in the world where price levels are falling generally. However, the very long-term cycles are probably shifting to the deflationary side, but we haven't faced those conditions yet. |
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Neal: In Tricks of the Floor Trader, I said we have inflation. When I repeat that notion in my fundamental analysis class, the students find it ridiculous, until they look at what they owe on their student loans. |
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Nina: I have the same problem. All you have to do is look at prices on day-to-day items to see that inflation is alive and well. There are some exceptions. Computers, telecommunications, and other technology-driven goods are cheaper. But housing, food, and ser- |
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