So many interesting thoughts in Gary Dvorchak’s piece over on thestreet.com Real Money:  First look at the S&P chart:  Yep, it is a slaughter…….

.

Then look at his ideas about Gold and the dollar.

Most importantly look at his recommendations for what to own:  As for what you should own, focus on gold and defensive companies that sell staples and can price as inflation accelerates.

I agree totally with this conclusion (buy some gold and good, high dividend yielding defensive companies) but not his reasoning about inflation.  Inflation makes no sense in a European economic disaster that has a USA contagion component.

GARY DVORCHAK

……..My thesis from late August was that there would be an upward “drift” with a lot of violent swings both ways, netting out to a small positive return. The thought was that the U.S. economy would be better than expected, while Europe would be worse. So far, the thesis has been kind of wrong……….. When (not if) Europe implodes, the European banking system will be gutted, and many U.S. banks will see written credit default swap (CDS) positions create very large losses.

………. It will be painful, however. I foresee a global recession in the first half of 2012.

My position is simple: Expect inflation from the huge monetization being done by the Fed and, soon, by the ECB. As for what you should own, focus on gold and defensive companies that sell staples and can price as inflation accelerates. Gold has the added benefit of being in its strongest seasonal period, so it should do well through the holidays.