“Since the start of this global economic crisis, the U.S. government has been injecting massive amounts new currency into the financial system to prevent deflation and stimulate economic growth. This is referred to as reflation. This large injection of currency into our economy will certainly lead to higher inflation, which will be further amplified due to our fractional reserve banking system. In a fractional-reserve banking system a new sum of money is created whenever a bank gives out a loan,” Ted Peroulakis Reports From Contrarian Profits.
“What is the reflation trade? We will see a large spike in prices for goods and services when we finally emerge from this global economic crisis, which could be within a year. Hard assets like oil, gold and agricultural products will see substantial price increases in the coming high inflationary environment. Commodities will be one of the strongest sectors over the next decade or more. This huge underpinning force in the equities markets opens up an once-in-a-lifetime trading opportunity,” Peroulakis Reports.
The list of ETF’s below are some of the great plays listed for the reflation trade:
HAP – This ETF closely tracks the Hard Assets Producers index which consists of over 250 companies engaged in the production and distribution of hard assets and related products and services.
GLD – This gold tracking Exchange Traded Fund (ETF) mirrors the price of gold.
SLV – This silver tracking ETF mirrors the price of silver.
DBA – This ETF tracks widely traded agricultural commodities like corn, wheat, soy beans and sugar. As agricultural prices rise the price of this ETF goes up.
MOO – This ETF comprises a basket of companies engaged in various sectors of agribusiness, like agricultural chemicals, livestock operations, agricultural equipment and ethanol/biodiesel.
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