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Could I get somone with an education to decipher this response?
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<p>[QUOTE="thedabbler, post: 1324079, member: 32800"]This is, in my opinion, the key.</p><p><br /></p><p>Lets arbitrarily say that inflation is going to shoot up to 20% per year three years from now.</p><p><br /></p><p>If you had a working crystal ball that told you inflation would be 20% per year but didn't tell you when, you could buy all the calls, puts, futures, etc. you wanted and still lose all your money simply because they had expired before the affects of inflation were reflected in the value of the calls, puts, and futures.</p><p><br /></p><p>By buying "physical" objects (be it gold, silver, stocks, or non-perishable goods), you are reducing the effect of the time element. In exchange, you are foregoing the leverage that options and futures provide.</p><p><br /></p><p>You might find "Aftershock: protect yourself and profit in the next global meltdown" by David Wiedemer interesting.</p><p><br /></p><p>Basically, it states we had a number of bubbles that just popped (consumer debt, housing, and a couple others) and that there are two more bubbles that are still inflating: government debt and the dollar. David notes that those two bubbles will pop sometime (causing massive inflation), and makes some rough guesses as to when, but he also points out that there are a number of parties who will mask the bubbles as long as possible, making it difficult to predict when they will actually pop.[/QUOTE]</p><p><br /></p>
[QUOTE="thedabbler, post: 1324079, member: 32800"]This is, in my opinion, the key. Lets arbitrarily say that inflation is going to shoot up to 20% per year three years from now. If you had a working crystal ball that told you inflation would be 20% per year but didn't tell you when, you could buy all the calls, puts, futures, etc. you wanted and still lose all your money simply because they had expired before the affects of inflation were reflected in the value of the calls, puts, and futures. By buying "physical" objects (be it gold, silver, stocks, or non-perishable goods), you are reducing the effect of the time element. In exchange, you are foregoing the leverage that options and futures provide. You might find "Aftershock: protect yourself and profit in the next global meltdown" by David Wiedemer interesting. Basically, it states we had a number of bubbles that just popped (consumer debt, housing, and a couple others) and that there are two more bubbles that are still inflating: government debt and the dollar. David notes that those two bubbles will pop sometime (causing massive inflation), and makes some rough guesses as to when, but he also points out that there are a number of parties who will mask the bubbles as long as possible, making it difficult to predict when they will actually pop.[/QUOTE]
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