Hi MZ, as i see it:

Deflation is a contraction in money supply and credit, inflation is an expansion of money supply and credit.

On one hand you can have deflation because of falling home prices (less money, credit to spend), difficulty of getting loans.

On the other hand you have a government who tries to inflate the balloon again with money injections to banks. Question is if they succeed though... If banks don't lend you the money they get from the gov., then it doesn't help.

In the end we will end up with a much larger national debt, that means the gov. is keen to see inflation happen. We need to become cheaper again compared to the emerging economies in Asia. Asian currencies will have to go up, so there will be a more balanced situation. We will be able to compete better but we will lose a lot of wealth in the process. Something that should've happened along time ago already.

I also think this is a suckers rally, we will go up 10-20 percent and then down again. But i expect a reversal for gold/silver stocks in the next few months. Latest in January but more likely earlier for the simple reason you mentioned that gold will go up eventually and the stocks are not in line with the gold price.

Cruisie