I think it already has started, the large gold producers have doubled in value since their low in October. I don't think you need a large increase in the actual bullion price to drive the gold producers. If everything else is going down, gold takes the price.

On the other hand there is lots of cash on the sideline and yes that money could switch into other companies like Microsoft etc. With low interest rate etc and the possibility for a great rebound, lots of money could flow into these kinds of stocks.

However, the trillions of derivaties and banks not trusting each others make a lot of investors nervous. We all know that the western societies have lived beyond their means for a long time, and that it will take time and lots of hurting to resolve these issues. The house as an ATM is gone? Can Obama continue the good times that we have gotten used to or a long time.

My feeling is that personal hurting has only started, sure many already have felt it pretty bad, but when 70% of people say we should not bail out the 3-Big ones, I think the majority still do not know what is happening.

I think deflation is not an option, it would just be impossible to deal with, the governments will do everything including changing rules and laws to avoid deflation. If need be, they will give everyone thousands in cash just to get us to spend, this money will be in form of giftcards making sure you spend it in a certain time.

Inflation is something they are more familiar with and something that is good if you have a huge debt. They will push inflation by any means, try to devalue their currencies against each other, and yes things will get more expensive.

I personally invest with the thinking that since I make enough money for a good living I do not need to invest for good times. My investments are more targeted at some safety in difficult and bad times. In such a case gold and gold stocks will do relatively well.