These Realities are Investor Profit and Protection Enablers
Stock-Markets / Financial Markets 2010 Sep 18, 2010 - 06:33 AM GMTBy: DeepCaster_LLC
“THE FED - Yesterday I read Saturday's front page headline in the LA Times and my blood boiled. The headline read, "Fed Stands Ready to 'Do all that it can.' With Growth slowing, Bernanke Says the Central Bank is Willing to Act to Keep the US Out of Recession." The nerve of these bastards; Fed Chairman Greenspan kept interest rates too low for too long, setting off the greatest housing bubble in US history. The bubble burst, as all bubbles do, sending the US into recession and near-deflation. And now our new Fed Chairman, Ben Bernanke, has the nerve to tell us that the Fed is going to save us. What kind of pure BS is that? First the Fed kills us and then it steps forward and says it's going to be our savior. Yuck.
I say get rid of the Fed, let the US create its own money, and spare us the curse of the Federal Reserve with its bubble-booms and recessions and its fiat, man-made, phony money…
One of the greatest bull markets in history continues to be ignored or actually scorned. This is a bull market that has hit new highs year after year for longer than most of today's economists and investment advisors have been in the business - and still they seem unable or unwilling to focus on the fabulous gold bull market.
And I ask myself, "Why?" The answer is that the great American public, including most of Wall Street's "experts," have been brain-washed by the US government and the Federal Reserve. Where gold and silver were once treated with respect, treated as the only real money, the Fed and the Government have sought to substitute intrinsic money with their own brand of junk fiat paper (actually, it's not paper, it's linen and cotton). In their greed and desire for power, a sinister and secretive small group of men sold the American congress in 1913 on the idea that they would take over management and issue of America's money. And in so doing, eliminate booms and busts.
…Thus, the fraud of the Federal Reserve took over the creation and management of America's money.
Now, in this great bear market, the dirty water is seeping out from under the locked closet. And the dirtiest secret of all, fiat money, is being exposed. It's being exposed as gold rises inexorably toward new record highs. Gold's rise equates with the downfall of the Fed and its fiat money…
…The unspoken word is that Federal Reserve notes (dollars) are in trouble.
The era of the great brain-washing is coming to an end. Know the truth, and the truth will make you free.
Maybe that's why I'm writing these reports at the tender age of 86. America has been held hostage by a bunch of monetary bandits. I love this country. At one time I put my life on the line for this country. I go for fundamentals. One of any nation's fundamentals is its money. I want to see honest money come back to the US. I believe slowly, very slowly, its happening. Excelsior!”
“Time to End the Fed”
Richard Russell, DowTheoryLetters.com, 9/9/10
“…Shrewdly, the Chinese gov’t is hedging its liabilities via precious metals and commodity accumulation, and encouraging its population to do likewise. What are our govts doing? Using propaganda to deceive us that recovery is just around the corner, and in depriving us from the truth they are also depriving the people from the chance to prepare for a crisis…
…WashingtonsBlog reveals the US Postal Service is now quoting IMF Special Drawing Rights (SDRs) to US$ conversion rates, and that the IMF endorses replacing US$s with SDRs. A creeping acceptance of SDRs as the world’s new reserve currency appears to be underway, at least amongst the powers that be!...”
Harry Schultz, Gold (& mkts) Charts R Us, 9/6/10
Denial of Fundamental Realities is Fatal to Investment and Trading Success.
One thinks of the Internet/Tech Bubble a decade ago which those who were caught riding it thought was not bursting. (If they had not thought this, they would not have been eviscerated by ‘staying in’.)
Or the Housing Bubble which House “Flippers” repeatedly rode to profits until they got caught holding illiquid overpriced Houses.
Or the Equities Market Perma-Bulls, who in 2008 dissed the Bears and disregarded the Fundamentals and Key Technicals such as Hindenburg Omens, until the Bears ripped them apart.
Today there are similarly widely denied Realities. And, similarly, The Deniers are setting themselves up for a Big Fall as well as losing Serious Opportunities for Profit and Protection.
Thus we lay out here certain Key, but widely Denied Realities, and some Guidelines which can be used to protect and profit.
Consider all the widely-Broadcast (by, predictably, the Mainstream Media) claims that we are in a “Recovering Economy”.
-- The Reality is that there is No Economic Recovery. A quick look at the Real Numbers shows that, instead, we are moving into a Depression.
Shadowstats.com calculates the Real Numbers for the U.S. the way they were calculated in the 1980’s and 1990’s, before systematic Official Data Distortion and Interventions began in earnest.
Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported August 13, 2010
1.24% 8.57% (annualized July 2010 Rate)
U.S. Unemployment reported September 3, 2010
9.6% 22%
U.S. GDP Annual Growth/Decline reported August 27, 2010
2.98% -1.25%
U.S. M3 reported September 12, 2010 (Month of August, Y.O.Y.)
No Official Report - 4.28 %
A quick look at the chart above also dispels the Myth that we are in a predominantly Deflationary Environment.
-- The Reality is that we are in a Mixed Deflationary/Inflationary Environment with the Inflationary Factors set to Strongly Dominate beginning any month in the next Few Months.
Notice that GDP, M3 and Unemployment are Now Deflationary Forces and are somewhat counteracted by CPI which is already raging at 8.57% annualized.
Notice also that, although the recent trend of a diminishing M3 is a Key Signal of Economic Decline, the Fed’s and other Central Banks Recent Binge of Fiat Currency Creation and increased Debt Facilitation, (much of which has been temporarily sequestered on the Fed’s and other Central Banks Balance sheets), stands ready for release at any time with inflation-generating Force.
-- The Reality is that Hyperinflation is in our future; the only question is when it will become Manifest. The Answer: it will not be too long. In that connection consider John William’s view regarding timing.
“Systemic Turmoil is Unthinkable, Unacceptable but Unavoidable. Pardon the use of the Aerosmith lyrics in the opening headers, but the image of tap-dancing on a land mine pretty much describes what the Federal Reserve and the U.S. Government have been doing in order to prevent a systemic collapse in the last couple of years. Now, as business activity sinks anew, much expanded supportive measures will be needed to maintain short-term systemic stability. Such official actions, however, in combination with global perceptions of limited U.S. fiscal flexibility, likely will trigger massive flight from the U.S. dollar and force the Federal Reserve into heavy monetization of otherwise unwanted U.S. Treasury debt. When that land mine explodes — probably within the next six-to-nine months, the onset of a U.S. hyperinflation will be in place, with severe economic, social and political consequences that will follow.”
“SPECIAL COMMENTARY NUMBER 323: Updated Outlook on Economy, Systemic Stability and Financial Markets”
John Williams, shadowstats.com, 9/13/10
In its simplest terms, Monetization means The private for-profit Fed’s creating more Fiat Dollars out of thin air (for free) to buy debt, upon which U.S. Taxpayers must pay interest.
But printing more money inevitably (but not necessarily immediately – See Deepcaster’s recent article “Velocity–Armageddon Antidotes, & Just Say “No” to 401(k) & IRA Confiscation” (09/01/10) in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com) reduces the purchasing power of U.S. Dollars. This means Inflation and, likely, eventually hyperinflation, are inevitable.
The Eurozone and Great Britain are similarly at risk, also having to create much more money (i.e. Quantitative Easing – Q.E.) to pay down debt.
Thus, The Intermediate and Long-term Negative Consequences of this Present and Prospective Q.E. are profound – the Dramatic Degradation of the Purchasing Power of the U.S. Dollar, Euro, and Pound.
But there are actions one can take to profit and protect.
We therefore lay out the following Considerations and Constructive Guidelines:
- Fed (and other Central Bank) Monetization is very injurious to Savers and Retirees and Prospective Savers and Retirees.
As the Monetization proceeds, the Purchasing Power of their Dollars (and other Fiat Currencies) drops. What would have been sufficient for retirement and for a decent standard of living, no longer suffices. The value (measured in terms of Purchasing Power) of savings and earnings declines.
- Placing those “saved” funds in Equities-in-general is no Solution either.
Equities-in-general have had ZERO appreciation over the last decade and indeed, a 30% (cf. Shadowstats.com) decline if Real CPI is considered, Equities are not now in a Bull Market, but, rather, in a Bear Market. It is highly likely that the Equities Bear Market will continue and worsen for many reasons including the ones the quotations above reflect.
- And many Sovereign Nation and Corporate Bonds are no Solution either, with record low yields and/or Sovereign Debt default Threats.
- The six month U.S. Trade Deficit Widened 35% versus a year ago for what is, still, the World’s largest Economy. Indeed, neither the U.S. nor the Eurozone are genuinely recovering. And though some emerging Markets are Marginally Recovering, their fortunes are nonetheless linked to their largest customers, the U.S. and the Eurozone.
- Corporations do have $1.8 Trillion in Cash, but that is offset by $7.2 Trillion in Corporate (nonfinancial) Bank debt.
- Notwithstanding the fact that The private-for-profit (i.e. owned by its Mega-Bank Shareholders) Fed has reduced rates to Banks to nearly Zero, the Mega-Banks are doing very little lending to small and medium size businesses – the engines of hiring.
Yet U.S. State, Regional and Local Banks are being allowed to fail at alarming rates – over 200 have failed already in 2010. “Main Street”, including the U.S. Middle Class has been helped little by the Bailouts and Stimuli.
Given that the Mega-Banks were saved in 2008, 2009, and 2010 with U.S. and Eurozone Taxpayer funds and that they are being given a continuing boost to their balance sheets, and profits, by receiving virtually (in the U.S. e.g.) no-cost capital from The Fed, they should be lending.
Solutions: In the U.S. ongoing, and any further, help from The Fed/U.S. Treasury should be conditioned on a “Cram-through” Requirement such as: “To the extent that you take our virtually “free” capital you must lend 95% of it out.” If Voters dump most incumbents in the November elections, Main Street and including the American Middle Class may have a chance of Economic Salvation.
- The Reality is that the Private Sector in the U.S. and Eurozone is deleveraging.
This debt liquidation reduces aggregate demand, which triggers business cost-cutting and present (for some) and prospective (for many) Business Earnings Reductions.
These Realities/Prospects discourage business from hiring, and encourage layoffs, thus increasing unemployment.
Increasing Unemployment results in reduced demand, resulting in further business Contractions. Thus the Negative Business Cycle worsens as it feeds back upon itself.
In sum, the foregoing and following Two Major Negative Realities create Consequent Opportunities.
Negative Reality #1: For all the foregoing Reasons (and others) the International Economy will at best remain stagnant for many months. More likely, it will contract further into a widely recognized Depression.
Negative Reality #2: Major Nations and Central Banks will continue to, and increasingly are, flooding their economies with Fiat Money. This Q.E. will continue to drive down the value (Purchasing Power) of the U.S. Dollar, Euro, Pound and other Major Fiat Currencies.
Thus, Real Inflation (Already! At 8.57% in the U.S. per Shadowstats.com) will Surge to much higher Levels.
Result: Hyperinflation
Opportunities:
Deepcaster has long been, and still is, an advocate of Gold and Silver, The Ultimate Monetary Metals, are our #1 and #2 Selections as the best Fortress Assets for Profit and Protection. Indeed, Gold in particular is not only a hedge against Deflation or Inflation, but also provides Profit Potential as well.
Indeed, several months ago, Deepcaster issued two ‘Buy’ Recommendations on a particular form of these Metals and these Recommendations are now showing a nice profit. And, as Regular Readers know, Deepcaster has for weeks maintained an open ‘Buy’ Recommendations on these metals notwithstanding ongoing and prospective Gold and Silver Price Suppression Attempts by the Fed-led Cartel* of Central Bankers.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
The #3 Category is High-Yield Securities which meet certain criteria. If one Selects those with High Yields (i.e. above the inflation rate) and appreciation Potential (or, at least, those resistant to depreciation) one has a chance of making a Real Profit Notwithstanding ongoing Substantial Real Consumer Price Inflation, the ongoing Equities Bear Market, and the Declining Economy. Deepcaster has recently Recommended five High-Yielders which meet his Criteria, Four of which were recommended when their Recent Yields were 15.6%, 26%, 18.5% and 10.6%. To see these four including Deepcaster’s latest High-Yield Recommendations, go to www.deepcaster.com and click on the ‘High Yield Portfolio’ Cache.
But note one important Caveat: one must be prepared to sell these securities immediately upon the onset of Hyperinflation, because, then, the Real Inflation rate will exceed the Yield.
Regarding Gold and Silver, as we indicated several Months ago, The Cartel’s* Precious Metals Price Suppression Capacity has been weakened considerably by Recent Revelations catalyzed by GATA, Deepcaster, and others, that e.g. Major Gold Repositories have very little of the actual Physical Metal that they claim.
This has, thankfully, led to an increased demand for delivery of and possession of Physical Gold and Silver.
Deepcaster sees the next few weeks as critical for The Cartel. To see Deepcaster’s forecast regarding whether The Cartel will be able to reverse the, thus far relentless, advance of Gold and Silver, see our latest Forecast in the ‘Alerts Cache’ at www.deepcaster.com.
Middle and Long Term, Gold and Silver are the World’s Best Bet to rise dramatically in terms of all Fiat Currencies.
Indeed, GATA Board member Adrian Douglas makes a convincing case that The (Second) London Gold (Price Suppression) Pool is likely to fail imminently, thus propelling Gold and Silver to New Highs, in the Near Term.
In any event, Gold and Silver are the Single Best Assets for Wealth Protection and Profit to surmount the Coming Mega-Crises.
Best Regards,
By DEEPCASTER LLC
www.deepcaster.com
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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.
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