Inflation vs. Deflation

For the past 12 weeks, the amount of gasoline bought nationwide was 1.5 percent lower than it was for the same 12-week period a year earlier, according to data collected by the Energy Information Administration, the statistical division of the U.S. Department of Energy. (Poten & Partners)

Is this inflationary, of deflationary? Right now, we have a combination of prices increases and decreases in various things. Equities and real estate are falling, while commodities are increasing in price. Why? Because as the credit crunch works its way through the global economy, those things that depend on credit to maintain their price will fall, while those that depend on cash will continue to rise. At this point, the only commodities I feel comfortable with are sugar and natural gas. The companies I hold (IPSU and PWE) both pay large dividends. Gold I consider in a class of its own, as I think both inflation and deflation will help gold. OZN is up almost 40% since I started buying it. I've added 1% of portfolio positions twice, using the following valuation: I've roughly estimated future share value at $0.50 for every $50 gold rises over $600. For example, I estimate future value of OZN to be $3.00/share with gold at $900/0z. I then halve the future value to get a current value and buy a 1% position if shares are below that price.

Since the Fed has juiced the markets again today, I want to look for some more shorts. Maybe DSL. The market is going to break hard one way or the other, and I'm betting on down. All that's needed is something unexpected to spook the herd.