Regular Daily readers know Tom’s Great Unwinding thesis entails a worldwide deflation… and it’s playing out just as he’s said.

For more insight on how to stay safe and profitable in a deflationary “chill,” we turn to longtime PBRG friend Chris Mayer…

From Chris Mayer, chief analyst, Bonner & Partners: I always liked the colorful “Fire and Ice” metaphor former Morgan Stanley strategist Barton Biggs used to talk about inflation and deflation.

Deflation was Ice. He defined it by its effects:

Ice is a loss of pricing power and a world where prices are as likely to go down as up. Ice is an erosion of profits. Ice is excess capacity. Ice is developing countries with low-cost factories and huge new labor forces. Ice is creative price destruction from technology. Bursting stock market bubbles cause Ice… Ice is also about competitive devaluations, as countries try to export their unemployment and lack of growth.

We’ve got all of the above today.

The world is going through a classic old-fashioned Ice age, as Biggs described it.

The powers that be will try to prop their economies up as long as possible, but it’s hard to get out from under debt deflations. Look at Japan.

Despite the best efforts of the Bank of Japan to stimulate inflation and grow the economy, it contracted again in the fourth quarter of 2015.

How do you invest in a deflationary chill?

Successfully navigating the bizarre world of zero interest rates and deflationary winds will call for a mix of assets: gold, cash, and select value stocks.

Bill’s keeping one-third in cash, one-third in gold, and one-third in long-term stock holdings.

Gold is a worrier’s asset. It’s the insurance policy that pays off when things go a little haywire.

It’s no surprise then that gold has quietly set a hot pace in 2016. It’s up 16% while the stock market is down.

Cash is U.S. dollars held in a brokerage account. But Bill also owns foreign currencies.

And stocks have a role to play. There are stocks you’ll want to own in a Biggs-like Ice age: stocks in companies with lots of cash and little or zero debt. Companies with guaranteed contracts and leases and rents. Sellers of necessities with the ability to raise prices.

Reeves’ Note: Chris delivered an average return of 28.8% on his recommendations over the course of a decade… and beat the S&P 500 3-to-1. Now he’s revealing his outperforming methodology in a can’t-miss free video training series.