Topic: Is Deflationary Investment the Most Profitable Strategy for Our Era of Crisis (Read 358 times)

Deflationary assets are generally good ventures to explore upon even without a recession imminent. It has everything to do with timing. You time your investments when the value is still low, and you're sure to profit provided that nothing undesirable happens.

If I may just add one to your lists of great physical assets to invest upon during recession, I would suggest Real Estate. It has been proven and tested, Reap Estate recovers after recessions and depressions because people need a place to stay, one way or another, and recessions render real estate cheaper due to the urgency of greenbacks necessity during these trying times. So for me, real estate is a good investment which could become great when the right opportunity arrives.

The problem with your list of deflationary assets is that they aren't necessarily deflationary because the short term supply can be manipulated which makes investment volatile. They're usually profitable long term but it isn't feasible to invest in fossil fuels agriculture, guns, etc. long term so you're left trying to time the market and capitalize with short term gains.

The opinion that you express looks very extraordinary and amazing because you are able to explain each of the existing comments one by one. Well, in this case I will not respond to what you have said because it is very correct and there is nothing to add. But I just want to give a little advice, if possible, don't bring your local language into international discussions because you can still use English as you have written in several other comments.

BTW, I see you recently upgraded your rank to Senior Member. Congratulations on this extraordinary achievement, because I see you deserve it and also have the ability to earn it. And you can consider my suggestions above so that in the future you can be better and more observant in discussions. Especially now that you are in senior rank.

Let's discuss guns. Do you mean investing in companies that produce them, like S&W, Glock, or buying them and having warehouse full of guns saved up for bad times?
In many countries you can't get a lot of guns without a special collectors license. Such license costs a lot and has to be renewed. It's basically a tax on people who have enough money to collect guns.



Is it a bad thing to be a prepper?
It's common thing to laugh at these people until something bad really happens and suddenly you wish you'd listened to them. I bet some people in Ukraine wish they had the time to do some prepping in 2021.
You obviously can take it too far, like those people who build nuclear shelters in their back yards and buy industrial diesel generators to power up their homes. In reality chances of you getting into such bunker during a nuclear attack are slim and a diesel generator consumes so much fuel that you're going to run out in a week, maybe two, and then what? Wars can take months or years.

there is only a X supply untapped.
one tapped its burned and gone. (decrease supply)

fossil is not a fixed supply that stays in circulation
its a supply with a decay/burn rate

there is a reason of fear in the 1980's of promoted carbon deadline date of  2050 for fossil fuel and its not "climate" its "reserves"

they have to reduce how much they tap into resserves and burn resevers to try to stretch out remaining untapped supply

so far they estimate they have stretched out reserves to last until 2065
but more need to be done to last longer than 43 remaining years

I do not expect to see a further decline in fossil fuels, given that many countries have the capacity to produce and are now able to expand it outside the control of OPEC, and with low prices and high inflation, it will be easy for many countries to buy fuel at any price.
Supply chains are a temporary problem that will end with the end of political crises.
Water and guns will increase in severity.

for deflationary assets where supply decreases should have its own definition to explain eventually nothing is left

decay-tionary

im sure there is a word. but cant think of it right now

a few years ago there were a few altcoins described as "demurrage" coins
(greyscale GBTC is demurrage) where users holdings reduce per year in way of a 2% fee per year

I gotta mention one important thing about fossils and fuels. Though as per your definition they are deflationary assets but we got to agree that they are going to “end” after sometime. They are going to vanish and ther wouldn’t be anything left to dig out of the earth. In short its an asset which will become zero for sure.

Now some of you might just say that there is still plenty of resources for our generations to come. However, those plenty of resources are so abundant now that you will use more energy to dig it out rather than making it viable asset for investment.

I think we should understand it’s not investment option, it’s just last resort burning fuel and nothing more.

With more purer energies getting researched I think fossils got least shot at it.

I do think that guns and ammunition will always be a busy industry, because humans can't live without war. There is always a conflict around the world that will require new armaments and other military supply. And even if we could end all the conflicts in the world, countries would never give up their military. Also any major war like we have seen this year is going to increases the budget countries will allocate to the military.
Water seems like the one trend that should keep going upward in my opinion. Every human needs at least 1-2l of fresh water every day and there a few factors that will reduce supply and increase demand. First of all, the world population is constantly increasing which means that we will also need more fresh water every year. Then we have the effect of global warming which increases the occurrence of natural disasters. Whenever a big disaster happens there is a huge demand for water as most local wells will be polluted and not useable. That is why I would consider investing in companies that sell water directly, or in companies that offer filter systems to purify contaminated water.

from reading hydrogens endless copy/paste articles. i believe he is one of them "doomsday" preppers.

even though water and food are not deflationary. he is of the mindset of post armageddon scenario in his evaluations of what an asset/deflation item is to him

How do you define the term "asset"? Some of the stuff in your list cannot be classified as assets.
1.Fossil fuels might become very scarce or completely obsolete after 30-40 years.
2.Food is NOT an asset. I guess that you mean agricultural land as an asset.
3.Parts and components aren't assets. They are products...
4.Guns and ammunition aren't assets. They are products...
5.Water is still too abundant to become an asset. Maybe after 50 years, water will become scarce enough to be viewed as an asset.
The only real deflationary investments are precious metals and real estate(and Bitcoin, if the cyclic theory about BTC is true and we hit another ATH after 2 years).

be cautious about words like "market price" vs underlying value

some land may have been at premium price in year X and cheaper rate in Y year

but in comparison to the 'comps' of land value per acre where the lowest amount over time is shown. (not the premium rates) the cheaper land at year Y may still be above year X cheap rate

actually for land property, it is a long term investment instrument and its value will not increase forever as many say .. for example, in my city, there are many developers who end up selling their land at half price because the price claimed is increasing and this reduces people's interest in buying the land,, while they need fresh money to invest again .. therefore it is not always profitable to invest in land properties

food is not deflationary

food is inflationary

one tomato contains several seeds. meaning its exponential inflation growth

PRICES going up does not mean VALUE goes up with it
VALUE declines when food prices go up

EG imagine 5 tomatos cost at retail $1. or a loaf of bread
but a farmer was producing tomatos for $0.50 for 5
(at the time bread loaf was $1)

imagine real costs increased the tomatos by 10%
farmer now has a $0.55 cost

you would think this equates to retailer selling tomatos at a 10% meaning $1.10
but no
retailers instead of selling at a 2x of farmer. now sell at a 3x of farmer
meaning that tomatos retail for $1.65

bread also goes up to $1.65
..
so previously a farmer could sell 2x tomato bunches to get retailer bread
but now has to sell 3x tomato bunches to buy bread from retailer

that is not deflation. thats inflation..

..

bitcoin is deflationary
buying bitcoin at 2020 low of $3.15k+ and selling at this years low of $15.75k+ means you get5x more fiat
which even if bread has increased by 65%

2020: 3150 loaves
2022: 9545 loaves
so even now bitcoins value as a deflation hedge means you get 5x more fiat and in value terms 3x more bread

About the water, food and fossil fuels.
It is necessary also to consider the technology advances which could contribute to the supply of those commodities.

A recent example would be the development of the hydraulic fracture for the extraction of oil and gas, I recall that in the beginning of the deployment of the technology the oil prices decreased because of the increase of supply in the USA, some oil wells became economically exploitable.

Water and food are also under the influence of technology, the agriculture yield tends to increase by the use of fertilizers and other more advanced technologies like genetically modified crops. Water can the filter, purified and recovered.

Keep in mind that fossil fuels are expected to compete against green energy, if somehow major industrialized countries managed to replace a good percentage of their oil importation, the price would drop regardless of the limited reserves.

Real estate assets is best thing to have so if there's opportunity like this where there are people selling their asset also located on strategic places on more cheaper price then this is good to acquire because either you can flip it up or you can use it for business purposes. All of this will soar high once economy became stable so this should be added on investment list of young investors.

It depends on which sector is controlled by a particular country, because it is possible that the impact of recession and inflation will affect any sector without exception.

Personally, I pay more attention to the agricultural sector, because this sector is the most decisive for the sustainability of human life.

1. The occurrence of war "Eating is a need that must be met".
2. Natural Disasters " Food is also urgently needed".
3. Recession and Inflation cannot be separated from the power to fulfill increasingly scarce food, causing uncontrolled increase in food prices.

Agricultural holding is one of my favourites recession hedge assets. Let's take a look at Wheat farming, it has been impacted by the recent floods Middle of these year with its produce been low compare to previous years and its the reason why the cost is still high even at this period, with recession looming around and the wheat been low in circulation. Holders will tend to benefit from it.


Landed properties are actually cheap to buy during recession. With people losing there jobs and the urge to carter for there needs drives many to sell off there lands at cheaper rates. But the fascinating thing about lands are it prices increases as economy grows stable. So landed properties are best purchased at downturn periods

deflationary assets value trend upwards to hedge against an inflationary assets loss of value that goes downwards

value: how many loaves of bread can you buy with X value.
deflationary increases more loaf bread amounts. inflation decreases loaf bread amounts

however. timing is crucial
if you buy a deflationary asset when its own market is at a premium (bubble/ATH) then the 'lock in' of value is less

EG say bitcoins true deflation value is $10k in 2021(it was by the way)
and the market price was $70k when you bought bitcoin

you are only locking in 1/7th of your wealth.~14%
and having ~86% 6/7ths at risk of loss

..
however 2022 store of value is about $15k this year. (thanks to deflation)
so buying in at $16.5k means your wealth has a deflationary hedge lock in of value of 90%

..
this is important because waiting for the store of value to rise to $16.5 is sooner than waiting for store of value to reach $70k

yes forget the market price. and understand the market price is the PREMIUM above value.

it will take a while for the VALUE (below market) to raise up to sustain and protect $70k full

so remember. its important to BUY LOW, to lock in more of your wealth so your not risking losses whilst waiting for the value to increase to cover whatever premium you bought in at

---

in a real estate market where the market prices are bubbling.. smart investors buy plots of land in area where comps are Xrate. where they can buy square metre land cheaper and then build to net a finished home thats below the X rate comps
they also buy run-down/fixer-uppers below X rate of local comps to "buy low"

never buy a house at its premium, else your waiting alot longer for the value (below market) to increase to match your initial perchase and ongoing costs..

..
for me. buying bitcoin is just that. buying and hoarding. no ongoing costs. i just write my paperwalet key on paper. and move on with life. no need to have ongoing electric/computational costs for me personally to maintain my value

however real estate does come with ongoing costs of maintenance after purchase. which means you endlessly adding to the initial costs. waiting for the markets to outpace that costbase to then profit.

in short. bitcoin if you are smart to buy low. can see gains faster. and have a better hedge protection

Don't forget about land properties, they're also limited and that's why it's bound to go up despite that crises are there.

Just a business matter, whoever gives the solution to these problems will be the ones to benefit it. And the typical that we have for each and personal investment, BTC is.

Question: Which current day assets are most likely to trend upwards with high inflation, recession or depression looming on the horizon?

Answer:  Deflationary assets, in cases where reductions in supply are expected.

In practice, this might apply to the following.

• Fossil fuels
• Food and Agriculture
• Parts and Components Restricted By Supply Chains
• Guns and Ammunition
• Water

Supply of fossil fuels is declining off of a number of factors, which could contribute to appreciation in value.

Supply of food and agriculture are generally declining, contributing to higher prices.

Parts and components are declining in supply, due to restrictions imposed by the recent USA vs china trade war.

Guns and ammunition supplies could decline due to newly introduced gun regulation, lawsuits and restrictions.

Water shortages are becoming a bigger issue globally, due to drought and a number of other factors.


While it is unfortunate that many of these negative trends are contributing towards overall reductions in standard of living for people across the globe.

These negative trends could also be profitable for some in terms of investment or businesses which cater to shifts in supply and demand.