Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Antidote to The Most Investment Destructive Force

Commodities / Gold and Silver 2012 May 04, 2012 - 01:57 PM GMT

By: DeepCaster_LLC

Commodities

Best Financial Markets Analysis Article[Fed Chairman Ben] Bernanke and the Fed have zero credibility… Bernanke has never been right about anything.

“We have inflation in the U.S., and it’s going to get worse.

“They’ve printed staggering amounts of money. They’ve taken staggering amounts of debt on their balance sheet. Much of it is garbage.


“Throughout history, when governments debase their currencies, you protect yourself by owning real assets.

“I’m not selling my gold by any stretch. The surprise with oil is going to be how high it goes.”

“Bernanke Has Never Been Right, Inflation Will Get Worse”

Jim Rogers, Moneynews.com, 4/27/12

Legendary Billionaire Investor Jim Rogers is right. The inevitable result of The Feds (and ECB and other Central Banks’), Printing Money in excess of any Real increase in the value of Goods and services, is Highly Inflationary.

But it is important to realize that it usually takes a few months for that Monetary Inflation to manifest itself as Price Inflation. But in the U.S., for example, (and elsewhere) it is already showing up as Inflation in Food and Energy Prices.

Indeed, the Real Numbers (as opposed to the Bogus Official Ones) show that the U.S. is already at a Hyperinflationary Threshold of 10.28%/yr per shadowstats.com.

Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

Bogus Official Numbers         vs.      Real Numbers (per Shadowstats.com)

Annual U.S. Consumer Price Inflation reported April 13, 2012
2.65%     /     10.28%

U.S. Unemployment reported April 6, 2012
8.2%     /     22.2%

U.S. GDP Annual Growth/Decline reported April 27, 2012
1.62%        /     -2.17%

U.S. M3 reported  April 21, 2012 (Month of March, Y.O.Y.)
No Official Report     /     3.72%

Thus it is no surprise that inflation is already reflected in Key Commodities Prices.

Consider:

Copper

 

Like a Sugar High, Massive Central Bank Liquidity injections are boosting Economically Sensitive Commodities like Copper Short-term.

 

No surprise then that Copper is now bullishly Trending above its 120 day M.A.

 

And even though we expect periodic pullbacks, short-term, we expect Copper to Bullishly Rally for a while (see deepcaster.com for Forecast Timing and Targets), as the Central Banks-supplied Massive Liquidity works its way into the Economy via Higher Prices.

Crude Oil

Contrary to claims that high Crude prices result from “Speculators,” the fact is that Crude Production Globally has been flat at approximately 73 to 74 million barrels per day for some 8 years now.

But for all these years, China and other Emerging Markets’ demand for Petroleum Products has continued to surge.

Indeed, Crude Price Momentum (per the MACD) continues to be UP. Not surprisingly, U.S. consumption has not dropped significantly over this 8 year period. Indeed, Distillate (gasoline, jet fuel etc.) Inventories have recently dropped, going into the Summer driving season – a sure fire formula for even Higher Prices.

 

In sum, Crude is an International Market, and the Emerging Markets Economies continue to demand increasing amounts.

And notwithstanding increasing amounts of “Shale” Oil being produced (with a very much lower EROI (Energy Return on Investment) than the big “easy” Elephant Fields of decades past) Crude Production is forecast to increase by only less than 1% (i.e., 0.9%) per year over the next decade, as the Big Easy (i.e., High EROI) Elephant Fields continue to be depleted.

Therefore, mid-to-longer term, Fundamentals and Technicals dictate inexorably rising Crude and therefore Gasoline and other distillate Prices.

Soybeans

Soybeans have been (and still are) in a Massive Price Uptrend for months, in part because they are a favored food in Asian nations. Expect more Bullishness.

So being long Copper and Crude and Essential Foods like Soybeans, have been and are likely excellent Antidotes to Increasing Price Inflation (See Note 3).

One other Antidote is Selected High-Yield Equities whose prospective Total Return (Gain plus Yield) exceeds Real Inflation (See Note 1).

But what about Gold and Silver. Some readers will already know that a Cartel (See Note 2) of Central Bankers and Factota periodically engage in Precious Metals Price Suppression to try to maintain legitimacy for their Treasury Securities and Fiat Currencies.

Not surprisingly, at this time Gold seems to be stuck in Bear Trend territory, trading below its 120 day M.A. of $1679ish.

However, notwithstanding continuing Cartel Price Takedown Attacks (e.g., the April 24 to May 2, 2012 increase in Short Interest by 20,455 lots was a Precursor/Set-up for the May 3 Price Takedown by the Cartel), Mega-Buyers (including Central Banks!) are buying the Metal in the low to mid $1600s.

Most Important: However, both from a Long-Term Fundamental and a long-term Technical Perspective, Gold (and Silver) is now in a (still) Solid Uptrend.

And as the Massive & Increasing Central-Bank-Provided Monetary Liquidity increasingly becomes reflected in Prices, Gold and Silver Prices are likely to launch up to New Highs notwithstanding Cartel Price Manipulative Operations which are so eloquently described by Jim Grant:

“This is a world of Immense Wall-to-Wall Manipulation. The Fed is The Giant Squid.

“They have manipulated Virtually every price in the Capital Markets.”

Jim Grant, Interest Rate Observer

             Bloomberg (05/03/2012)

However, Short-Term, it is more likely than not that Gold and Silver and the Miners Shares have more downside in them. (For specific Timing and Targets Forecasts see Deepcaster Alerts.)

Even so, if Investors fail to Buy near Interim Lows for fear these Precious Metals and their Miners will be taken lower, they risk not getting in when these Metals and their Miners are Dirt Cheap, and are ready to launch up.

Therefore, with another round of QE likely later this year, we stand behind our earlier Bullish Forecast for Gold and Silver, for the Mid and Long term.

Significantly, it is becoming increasingly hard for the Cartel to sustain Takedowns, as the Mini-Takedown and launch back up of April 10, 2012 showed.

In sum, the Best Antidotes to The Most Investment-Destructive Force – Inflation – are The Monetary Metals, Gold and Silver, and the Essential Tangible Assets like Food and Energy.

 

Best regards,

www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation         Wealth Enhancement

© 2012 Copyright DeepCaster LLC - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

DEEPCASTER LLC Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in