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Monday, August 03, 2009

Doug Casey: Go short on bonds, long on precious metals

And don't for get to fear your own government!
It seems to me that the sure bet is to be short bonds,” says Doug Casey. “Interest rates are going way up. Why? There will be tremendous demand for capital, of which there’s a limited supply. Interest rates are the price of capital. So they’re going up for that reason -- and because of the trillions of paper dollars the government is creating, inflation is going to skyrocket. High inflation will itself guarantee high interest rates.

“So the trade of the decade is going to be to short long-term bonds and to go long precious metals (which are the only financial assets that are not also simultaneously someone else’s liability). These are two excellent investment plays, but there are many others…

“However, just as important is political diversification. The main risk you have is your own government. You have to diversify your assets out of the control of your government. This is even more important than picking the right investment today.”
-- from "Grantham Says Sell, Trade of the Next Decade, The Plight of Old White Men and More!" by Addison Wiggin and Ian Mathias

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