Why Are Commodity Prices Rising? Let Me Count the Ways

By 2 Cents on January 18th, 2011 | Category: Economics | 4 comments
food-inflation

If inflation continues to soar, you’re going to have to work like a dog just to live like one.

~George Gobel

This is an excerpt of an article that was originally published yesterday as exclusive content on another site. You can read the whole thing on Seeking Alpha.

The Food Crisis of 2011 (Excerpt)

Our overview of 2011 What Ifs concentrated on the concepts of bifurcation and biflation. Those themes are already playing out just a couple of weeks into the New Year. Inflation in all types of commodities has ramped up even further, leaving countries like China, India, Brazil, Thailand and South Korea to deal with more than their fair share of these inflationary forces. Meanwhile, easy monetary policy in the U.S. and Europe just adds fuel to the inflation fire.

The [...]

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Category: Economics | Tags: , , , |

Investment Strategies for Biflation

By 2 Cents on September 22nd, 2010 | Category: Investing | 22 comments

Life is the sum of all your choices.

~Albert Camus

Update: This article was included in the Carnival of Wealth #6 posted at Personal Dividends. Thanks!

Many have described the current economic and investing environment as uncertain and confusing. Indeed, individual investor sentiment as tracked by the AAII survey has flip-flopped from decidedly negative at the end of August to extremely positive during the latest survey. The Investor’s Intelligence survey, which tracks the sentiment of investment advisors, is not quite so bullish. Pragmatic Capitalism compared the two.

Many investors may be shifting their sentiment based on whether they believe inflation or deflation is the primary economic influence. As we discussed Monday, however, there is a distinct possibility that we may experience biflation for some time. That means commodities and services may experience inflation even as prices in real estate and [...]

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Commodities and Real Estate: Pros and Cons

By 2 Cents on July 28th, 2010 | Category: Investing | 13 comments

No man acquires property without acquiring a little arithmetic also.

~ Ralph Waldo Emerson

Update: This article appeared in the Carnival of Financial Planning #153 at The Skilled Investor.

We continue our look at the prospects for various asset classes in the current market environment today with a survey of the commodities and real estate landscape. Both of these are usually considered hard assets. As Dennis Gartman always says, “if you drop them on your foot, they hurt”.

Generally speaking, hard assets like commodities and real estate tend to appreciate during inflationary times and depreciate during deflationary climates. So your view on whether to allocate money to these two may hinge on your position in the inflation vs. deflation debate. I tend to be in the camp that says we are currently in a deflationary environment, and likely will be for some [...]

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Category: Investing | Tags: , , |