Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Investors Golden Sunrise Coming

Commodities / Gold and Silver 2013 Aug 03, 2013 - 12:26 PM GMT

By: DeepCaster_LLC

Commodities

“To combat depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end.” Friedrich Hayek, 1933

Gold Investors have suffered through nearly two years of Price Takedowns, as have the Gold Miners.


But a number of Developments in the Economy, Financial Markets and Mining Sector are coalescing and should impel Gold Prices to begin their launch up to new highs soon, despite ongoing Cartel (Note 1) Price Suppression attempts.

Here we focus on the Key Triggers which will determine the Timing of the launch.

One Key Trigger is Credit Expansion, as Hayek points out, which goes hand in hand with Monetary Expansion.

Credit Expansion, to Sovereigns and others around the world, will inevitably bring a Collapse upon itself. Bill Bonner explains

“…The US now operates on a type of money better suited to the Paleolithic Age. A credit-backed money system has never worked in the modern world… and none has ever survived a full credit cycle. The credits expand until the debt is far too heavy. Then, when interest rates rise, the cost of carrying the debt goes up until the system falls apart.

…We consider the plight of the average person. In 1950 the typical working man was able to support a family. Today he can barely support himself because the costs of his main expenses have gone way up. He has to work about twice as long to pay for a new car and a new house.

…How did the feds’ funny money system affect the average family’s wealth?

The Money Makers

We can begin by wondering what would have happened if the US had kept its pre-1971 money system. Then the amount of credit was limited. National accounts were settled in gold. Whatever the feds may tell you, when push comes to shove, it is gold we trust.

In 1971 France had accumulated more dollars than it wanted. Its clever chief economist, Jacques Rueff, urged the French to take their dollars forthwith to the US Treasury and demand gold. But after August 15, it was too late. The gold window had slammed shut. France had to keep its dollars and hope for the best.

Since US dollars were now the cornerstone of the international monetary system, they were in demand. The US dollar itself became America’s No. 1 export, with the highest margins of any export item ever produced.

Say’s Law, however, tells us that “products are paid for with products” – you have to produce things in order to be able to buy things. That is normally true. But not when you’re printing up the world’s reserve currency. Then you have the exorbitant privilege of needing only to produce “money.”

The factories that would normally have fabricated the products needed to buy other products from other people in other places decamped to other places themselves. Between 1978 and 2010, the Bureau of Labor Statistics tells us the that the US lost 78% of its workers in the garment industry, 69% of those in “primary metals,” 67% of those in the textile industry and 26% of those in “transportation equipment.”

To look at it another way, the accumulated trade deficit since 1971 is roughly $8 trillion. That’s how out of balance the products-for-products exchange has been.

The foreigners produce the products; Americans produce only money. Imagine that the labor component of the products is 50%. That means US workers have lost out on $4 trillion worth of income. Share that out among the entire male workforce and each one would be $80,000 richer. More importantly, had it not been for the wholesale loss of American manufacturing, Americans would now have more jobs and higher wages.

Credit-based money is easy money. And easy money easily becomes more debt. Debt impoverishes. It doesn’t make people richer.”

“What’s America’s No. 1 Export?,” Bill Bonner,
Diary of a Rogue Economist, 08/01/2013

Bonner then goes on to explain, albeit indirectly, why the private for profit Fed (owned by Globalist Mega-Bankers) has fought so hard to avoid being audited and/or abolished. 

Where Did the Money Go?

Then why do we have this credit-based money?

Because governments are essentially a way for the insiders (who control the police power of the state) to take power and money from the outsiders.

Bullion-based money is a natural limitation on the ability of the elite to rob the rest of the population. It’s relatively harder to fiddle with gold and silver coins than it is to mess with paper money....”

           Ibid.

Deepcaster and Bonner agree that the Credit-Backed Money System until inevitably “Fall Apart.” The question is “When?” Deepcaster’s answer is “Soon.”

But consider that the anticipation of the Credit Money Systems’ Collapse will Ignite a Gold launch, because Gold, as Real Money, is the Antithesis of Fiat-Currency based Credit! That is why the “Smart Money” is already increasing, demanding delivery of Physical Gold. Consider:

  • Comex inventories of Physical are declining rapidly (reportedly about 2 months left at current drawdown rates), as are LBMAs
  • Germany demanded its Physical be returned but is now getting only one-seventh per year.
  • The bullion banks are no longer net short Gold.
  • The Indian Central Bank/Government has taken ten steps to contain Gold demand, but (ironically) smuggling has now reportedly increased tenfold).
  • China, the world’s largest producer is dramatically increasing imports of Physical.
  • Gold has risen from the low $1200s to the low $1300s in the last month.
  • Gold futures are in backwardation (especially when increasing premiums for delivery of physical are considered, a signal of current supply shortages).

Of the foregoing, The Critical point is the increasing demand for Physical and Delivery of Physical, and the Prospective Inability of Comex, LBMA, and other Depositories, to actually deliver Physical Metal.

Another positive Trigger for a Gold launch is the (highly likely) continuation of QE (The Fed’s Buying Treasuries and Mortgage-Backed Securities) into 2014 with no tapering (though they will likely talk tapering on occasion) and that should support Treasuries in its current Trading range for a few more months. But the long-term Trend for Treasuries is down, and, indeed, has already begun.

However, Continuing Fed-generated QE will likely become relatively ineffective in 2014 (or perhaps sooner) to support U.S. Treasuries. Non-U.S. Central Banks and Big Investors are already dumping U.S. Treasuries by the carload. Thus, at some point even The Fed will be unable to save U.S. Treasuries, which will than tank (Rates Spike).

And when Rates Spike (as they have already begun to do) that will be a visible sign Hyperinflation is upon us, and there will be an even greater rush to Gold. Indeed, Real U.S. Inflation is already Threshold Hyperinflationary at 9.38% (Note 2).

Then, interest rates for all credit transactions will rise dramatically. And that will likely be one Catalyst for our Forecast Equities Crash (see our recent Alerts for Timing and Forecasts). This is but one reason The Fed has no choice but to continue QE and to continue it until Hyperinflation collapses the $US; consequently Gold will skyrocket. Legendary Jim Rogers’ assessment is correct, “Run for the Hills.”

And The Crash will bring Defaults on Paper Assets. We already saw counterparty defaults on Paper Assets in the 2006-09 Crash, and we will see them again, as The Bond Market Crashes. Yet another Trigger for a Gold Launch.

And The Crash will lead to an even greater distrust of Wall Street and the Financial System. The public is already fed up with the Financial Services World’s shenanigans and immunity, thus far, from serious punishment.

“The nice thing about being in the financial services world is that you never really have to say you’re sorry. Screw over customers, botch foreclosures, run afoul of important regulations, and violate some important rules---and the worst you’ll have to do is pay some fines or settlements. It’s a cost of doing business…

Joshua Rosner, a financial analyst and co-author of Reckless Endangerment, in March, estimated that the company’s litigation expenses since 2009 have totaled $16 billion.”

“JPMorgan Chase’s Crazy Fine Tally”

Nina Strochlic, The Daily Beast, 05/08/2013

So consider how the Markets reflect the current state of the financial system including The Triggers for a Gold Price launch.

S&A Short report provides an overview

  • Interest rates are spiking higher.
  • NYSE margin debt is at an all-time high.
  • Investor Sentiment (a contrary indicator) – as measured by the AAII Sentiment Survey – is overwhelmingly bullish.
  • The Volatility Index is trading near its lowest level in six years.
  • The Nasdaq Summation Index is in “nosebleed overbought” territory and is trading at its highest level in 10 years.
  • The bullish percent index for the S&P 500 is overbought.
  • The percentage of S&P 500 stocks trading above their 50-day moving averages (DMAs) just turned down.
  • The daily and 60–minute charts of the S&P 500 have extensive negative divergences on both the MACD momentum indicators and the relative strength index.

And, we should add that a Bank of America Merrill Lynch study shows the Professionals have begun bailing from Equities while ‘Mom and Pop’ are buying, an indication of a Major Top.

In sum, the Markets and the “Triggers” signal the Gold launch is approaching ever closer (see Deepcaster’s August Letter and recent Alerts for Timing).

Finally, one last Trigger is already signaling a Gold launch is impending – the price of The Quintessential Inflation Asset, Crude Oil.

The recent elevated (over $100/bbl) Oil Price can be explained by considering the following: that Equities and Bonds are artificially elevated, Fiat Currencies are losing Purchasing Power due to ongoing QE, and many Commodities Prices are depressed until just now due primarily to China’s slowdown, and Gold & Silver Prices have been depressed by The Cartel (Note 1).

Therefore, only Crude Oil has been recently seen as a most reliable store of value to sophisticated Investors. Thus it is not surprising to us that WTI Crude has approached the $110 level recently notwithstanding the Economic slowdown. Part of this strength is due also to QE-generated Real Price Inflation, and to recently reported above-ground supply drawdowns.

Because Crude is essential, with relatively high inelasticity of demand, and because it gets used up, it is not easily subject to price manipulation though, for sure, its Price is manipulated. Thus a spiking Crude Price provides yet another Signal that Hyperinflation is impending, and thus a Gold Price Moonshot is impending.

Some week soon, The Cartel will no longer be able to sustain its Paper Gold Price Takedowns.

Best regards,

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

DEEPCASTER HIGH POTENTIAL SPECULATOR

Wealth Preservation         Wealth Enhancement

© 2013 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

© 2005-2019 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

6 Critical Money Making Rules