If this is what deflation looks like...

http://www.zerohedge.com/article/guest-post-if-what-deflation-looks-like%E2%80%A6

Stocks, bonds and real estate will perform horribly in the environment that we have. Even if they go up for periods, over time they will not make up for the cost of living increases in the things that we need. This is the major disconnect happening right now between “Wall Street” and “Main Street.” Wall Street has been coddled and pampered for two and a half decades by the natural forces of a secular bull market in financial assets as well as the Federal Reserve Chairman and a D.C. establishment that refuses to allow the free market to function. So when a money manager of financial assets looks into his future and sees deflation he is correct. When the majority of “Main Street” looks into their future they also correctly see inflation. That is because when you have 40 million Americans on food stamps I am sorry but they have much bigger issues to deal with than the S&P500. So the world we are looking at is where a BLT sandwich could cost $12 and home prices drop another 20%. Investment professionals have a very hard time getting the heads around this concept for some reason but that is the reality we are looking at. Goods that are wanted around the world will rise in price in debased dollars while non-essential items deflate. The Chinese want pork but they could care less about some McMansion in Ohio. There is nothing anyone can do to change this. It is a natural cycle as simple, powerful and inevitable as any cycle in nature. If it must happen, it will happen.

My problem with the “deflationists” that recommend a high allocation of assets to long-term treasuries is that there are a lot of better assets to buy in the type of environment we are entering. As I have repeated over and over again these assets are primarily precious metals but also include other commodities. Especially commodities that people need and are strategic to governments such as food and oil. There are plenty of equities that are associated with these themes and in my opinion they will do far better over time than long-term treasuries. Gold for example IS the end game. Treasuries certainly are not. Gold is the best way to short the market. Gold is the ultimate form of payment. Gold is your vote as an investment manager and a citizen against the maniacs running governments all over the world.