Long Gold, Short Treasuries

To short something now will easily get killed. You need to be extremely brave too. The only asset class that I dare to short now will be long dated treasury ( 20 or 30 yr). Central bankers from the US, UK or even China have been struggling to auction their debts because investors demand higher yield to compensate for potential inflation and over-supply to fund deficits. With the US government signaled to issue Treasury Inflation Protected Securities, you know they are going to engineer higher inflation.

Aug. 5 (Bloomberg) -- Treasuries declined for a third day after the U.S. announced it will sell a record $75 billion of notes and bonds at next week’s auctions and Goldman Sachs Group Inc. boosted its forecast for U.S. economic growth.

Thirty-year bond yields touched their highest levels in a week as the government signaled it’s considering the introduction of 30-year Treasury Inflation Protected Securities and ending 20-year TIPS as it finances unprecedented budget deficits. Goldman Sachs, one of the 18 primary dealers that trade with the Federal Reserve, said GDP will grow at an annual rate of 3 percent in the second half of 2009, an increase over its previous forecast of 1 percent growth.

http://www.bloomberg.com/apps/news?pid=20601009&sid=aoUGtnZP.XK4

It is also about time go long on gold and also other hard-asset.