We are in a deflation. If you cannot fathom or agree to hold this as a possibility, please skip to the next post. Nothing I say will make sense to you.

In periods of deflation, the only appreciating asset is cash. Cash is sought for margin calls, closing short positions, fund redemptions, mattresses, etc. etc. The spectre of deflation is buoying the dollar. When the limit is reached, when the Fed finally achieves critical mass, the dollar's fall will dwarf it's previous strength. So one can not afford to be out of gold in case you miss the day it goes from USDX 90 to 75, all in one shot, because you will miss the biggest day for gold ever, with a lot more to come.

We don't want to admit it, but the smartest portfolio was/is cash and gold only throughout this historic mess - nothing else. Those of us with gold shares, oil/energy positions, agriculture, etc., really can't afford to sell now in this illiquid market, so we hold and wait. However, the "I'm getting out at even" guys will later regret they sold, IMHO. Because when the deflation breaks the shares we regret will pay off big time.

Heed at your own risk, DYODD, yada yada.