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4 Essential Assets for Profit and Protection

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“The Renmembi will become the World’s Reserve Currency.”

Pan Gongsheng, V.P. China Central Bank,
Caijing Financial Magazine, 05/20/2014

There are Four Fortress Assets Investors should hold in Today’s environment of increasing Geopolitical Economic, Financial and Market Risk.

Indeed, one of the 4 “Must Own” Fortress Assets is an interest in Food Production.

“Given the trends in world food production, energy prices, droughts, El Niños, depleting aquifers, and the like -- we actually have to work very hard to come up with any scenarios wherein food prices might fall instead of rise.”

“Rising Resource Costs Escalate Odds of Global Unrest: The critical 40% income-to-food threshold,” C. Martenson, 05/13/2014

But owning some of all four is very important. Indeed, all Four Taken Together are the “Fortress Assets Quartet.”

And all have Unparalleled Profit and Wealth Protection Potential in today’s increasingly risky environment.

Fortress Assets are those which offer considerable Profit Potential and some considerable degree of protection from Inflation, Hyperinflation or Deflation.

To identify this Quartet consider that the world’s population is about 7 billion and increasing by about 80 million per year.

A purblind economist may salivate over the fact that more people usually means more consumption and thus more GDP growth from increased economic activity.

But what really counts is GDP per capita. If population increases faster than wealth production, the population as a whole is poorer. That is, GDP per capita is less. And this is happening in much of the world today, (e.g., why India and China still have hundreds of Millions living in poverty) and is in large part why the middle class in the USA is diminishing. The population of the USA is increasing faster than any increase in Wealth.

In other words, one must consider the issue of carrying capacity (resources) limits. Available Topsoil for food production is one limiting factor, which is why China (with nearly 1.4 billion people) is having difficulty feeding itself. Topsoil is created only by natural processes and, once lost, takes decades to replace.

Twenty percent of China’s arable land has been irretrievably lost to toxic pollution or topsoil loss. China must, therefore, increasingly import food.

As well, “free” or low cost potable water for human consumption and agriculture is increasingly scarce when considered on a per capita basis.

“•The Ogallala aquifer that waters the Great Plains will be gone “in our lifetime,” according to the U.S. Agriculture Department

“•Half the rivers in China have disappeared since 1990

“•Worldwide demand for water will outstrip supply by 40% come 2030, according to a 2009 study prepared for a handful of giant companies including water guzzlers like Coca-Cola, Nestle and brewer SABMiller.”

“One Index Finally Makes Water a Great Investment,” Addison Wiggin, Dailyreckoning.com, 05/13/2015

But still-rapidly-growing countries like China and India (with nearly 1.2 billion people) nonetheless have an increasingly (for a while) large economic middle class, i.e., with increasing purchasing power.

These burgeoning new middle classes demand more of the good things in life, but they also need food and potable water, and increasing amounts of each. Thus these facts have given rise to several of Deepcaster’s Buy Recommendations.

Accordingly, costs for Food have been and are rising rapidly with concomitant social upheaval (and were, e.g., the primary cause of The Arab Spring Riots) as is inflation generally, though most Bogus Official figures disguise it (See Shadowstats Note 1 below re True Inflation (9.69%) and Unemployment (23.2%) in the USA. Relying on such accurate figures has facilitated Deepcaster’s recent profitable recommendations – (see Note 2).

Consider

“There's quite a bit of research to support the idea that people who spend above a certain percent of their income on food are more likely to protest, riot, or otherwise become restive. That number seems to have a minimum threshold of 40% of income to food costs, give or take:

“Since the beginning of 2014, riots have occurred in countries including Thailand and Venezuela. Although they’re different cultures on different continents, these mass protests movements may all have one commonality; increasing food prices may have contributed to their occurrence. The cost of food has been steadily increasing in both Thailand and Venezuela; last month demonstrators in Caracas took to the streets marching with empty pots to protest food shortages. According to Dr. Yaneer Bar-Yam and fellow researchers at the New England Complex Systems Institute (NECSI), events such as these may be anticipated by a mathematical model that examines rising food costs.

“The events of 2014 aren’t without precedent; the price of food has provoked (and placated) throughout history, beginning in Imperial Rome when Augustus introduced grain subsidies. In recent years, the Middle East has been particularly affected by the cost of grain. Centuries after Egypt developed bread as we recognize it, the nation experienced a bread intifada – the country rioted for two days in January 1977 following Anwar Sadat’s decision to drastically decrease food subsidies. More recently, under the rule of Hosni Mubarak, the price of grain rose 30 percent between 2010 and 2011. Then, on January 25, 2011 a new revolution began in Egypt….

”Saudi Arabia’s main aquifer is slated to run out as early as 2016. Because it has abundant energy resources Saudi Arabia will be able to turn to desalination plants, but for how long and at what costs to their ability to export oil as that same oil is being used to power those plants?

“It takes up to 1,000 tons of water to grow one ton of wheat. Therefore, when China imports grains, like corn, soybeans and wheat, it is actually importing water, something it increasingly needs to do because of aquifer depletion and surface water pollution.

“Given the trends in world food production, energy prices, droughts, El Niños, depleting aquifers, and the like -- we actually have to work very hard to come up with any scenarios wherein food prices might fall instead of rise.”

“Rising Resource Costs Escalate Odds of Global Unrest: The critical 40% income-to-food threshold,” C. Martenson, 05/13/2014

Thus rising essential resource costs are pushing all of us toward an inflationary future.

Indeed, because most Major Central Banks continue to debase their currencies via intensifying printing of their Fiat Currencies (cf. our essays on the Currency Wars) it is highly likely Hyperinflation is in our future. In other words, the Cost of Essentials with limited (“easy”) availability like Food, and Potable Water and Energy will increasingly Rise. Indeed, if one considers the Real Numbers, the U.S. is already on the Hyperinflationary (i.e., intensifying U.S.$ debasing) Threshold (Note 1).

This concern that there not be a run on the $US, is why the private, for-profit U.S. Federal Reserve takes pains to conceal the fact that it is not tapering but rather intensifying its Bond Buying Program.

“Is the Fed ‘tapering’? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.

“From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.  

“Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?

“No, Belgium’s trade and current accounts are in deficit.

“Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?

“No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.

“So where did the $141.2 billion come from?

“There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month….

“Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?

“Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week….

“The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of ‘banks too big to fail’ and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets. The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering….

Washington’s power ultimately rests on the dollar as world reserve currency. …

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills….”

“Fed Disguising QE by laundering it through Belgium,” Paul Craig Roberts, paulcraigroberts.org, 05/12/2014

What incentive would a country like Belgium have for cooperating with The Fed?

Money

Consider the following from the Establishment The Wall Street Journal of all places.

“Foreign banks are collecting billions of dollars in interest from the Federal Reserve, analysts said, a sum that stands to rise when the central bank ultimately begins raising interest rates.

“In 2014, the Fed will pay … an estimated $3.37 billion headed to foreign banks specifically, according to an analysis from J.P. Morgan, which used Fed data.”

“Foreign Banks Collecting Billions from the Fed,” Mike Cherney Blogs.wsj.com, 05/08/2014

Ah yes, $3.37 billion in printed $US “paid” to Non-US Banks for “Interest.” Such a deal!

Of course, this intensifying printing increasingly diminishes the Value (Purchasing Power) of the $US denominated Assets, and the Purchasing Power of the Dollars in which they are denominated. And while the value of paper Assets can be “gamed,” the cost of Tangible Assets in de facto Limited Supply (e.g., Food, Water, Energy) will continue to increase in Fiat $ terms so long as Money Printing intensifies.

That is one reason all that money printing will come to a very bad end according to noted Investor, Jim Rogers, with whom we agree.

Consider that Russia reduced its holdings of (sold) U.S. Treasuries by 20% in March 2014 – no surprise there. And China just agreed to a non-$US Settlement deal with Russia’s largest bank, VTB. And China and Russia just agreed to a $400 Billion 30 year Natural Gas Purchase Agreement.

The move away from the $US and the Currency Wars, in general, are intensifying and it is increasingly likely the Chinese Yuan will displace the $US as the World’s Reserve Currency.

For Profit and Protection as this Displacement and Currency Wars intensify, Investors will want to own or hold ownership interests in the Fortress Assets Quartet: Food, Water, and Gold and Silver.

Best regards,

Deepcaster
May 23, 2014

Note 1: *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 May 15, 2014

1.95% / 9.69%

U.S. Unemployment reported May 2, 2014

6.3% / 23.2%

U.S. GDP Annual Growth/Decline reported April 30, 2014

2.33% / -1.85%

U.S. M3 reported May 12, 2014 (Month of February, Y.O.Y.)

No Official Report / 4.15% (i.e., total M3 Now at $15.782 Trillion!)

Note 2: Our attention to Key Timing Signals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in the last eight months*:

  • 30% Profit on Equity Index Puts on May 13, 2014 after 34 days (i.e., about 320% Annualized)
  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)
  • 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)
  • 40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)
  • 135% Profit on Equity Index Call on October 28, 2013 after just 13 days (i.e., about 3800% Annualized)
  • 110% Profit on Equity Index Call on October 22, 2013 after just 7 days (i.e., about 5800% Annualized)
  • 120% Profit on Equity Index Put on October 9, 2013 after just 16 days (i.e., about 2700% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.


Bogus Numbers, Real Threats, Real Opportunities

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“The U.S. Jobs report came out announcing that 288,000 new non-farm payroll jobs were created in April. It turns out, 234,000 those are fiction. The Labor Department fudged over 80 percent of the reported number using their CESBD estimate, the estimate they believe of new jobs that were created by new companies in April. That is an impossible number to estimate…

“To include an estimate of these jobs, which is way off the mark anyway, is ludicrous. It is a bogus attempt to pretend the economy is stronger than it actually is. There are very few sold signs on homes anywhere; a recent ABC survey showed 71 percent of folks dissatisfied with the economy; good people have to work two jobs, and or long hours at one job just to keep their positions. Most successful people I meet are working 12 hour days, 6 days a week. To pretend the economy and jobs market is strong is nonsense.”

McHugh’s Mid-day Market Update, Robert McHugh May 2, 2014

And Jeremy Grantham, who manages $120 Billion in Assets says the S&P 500 is overvalued by 65%.

Unfortunately, both Grantham and McHugh are correct.

Put another way, Bogus Official Numbers and Fed QE (et al) policies have artificially inflated Equities Prices – they are a “Mirage” as Carl Icahn says. And they have greatly distorted other Markets’ Prices as well. Indeed, if one looks at the Real Numbers (cf. Shadowstats.com below) one realizes the Economy is not recovering and is in fact weakening. And on that basis one can reasonably conclude the S&P is 65% overvalued.

But the foregoing Realities mean that Nasty Market Surprises (and thus Opportunities) Await Investors, and sooner rather than later.

For Investors it is Crucial to know the Real Numbers so one can Avoid (or Profit from) the Threats and Profit from the Opportunities.

So here we first describe key Real Numbers and then identify Threats and certain Excellent Opportunities.

Employment is Key to recovery as the citizens of the USA and Eurozone know all too well. Employed persons consume, thus making improved Corporate Earnings possible.

And the Employment Reality in the USA (and elsewhere) is actually worsening but is hidden by Bogus official statistics. Consider Shadowstats:

“April Labor Data Were Nonsense, at Best. To the extent that the headline April unemployment data are to be believed, the labor situation is spinning negatively out of control, and the happy cheerleading from the Bureau of Labor Statistics (BLS) is without merit. Most likely, there are unstable seasonal adjustments at work here, as with the payroll series, but the BLS keeps those household-survey numbers secret….

“Unemployment Disaster. The April unemployment rate dropped, but that was in a manner that reflected horrendous deterioration in labor-market conditions. The “good” news was that the headline unemployment rate U.3 dropped to 6.28% in April from 6.71% in March. The bad news is that of the 733,000 people no longer counted as unemployed in the aggregate numbers, an even greater number effectively stopped looking for work or lost their employment, with total employment in decline. There was a loss of 73,000 employed, plus 733,000 unemployed, with a resulting, combined 806,000 drop in the headline labor force.

“How does the unemployment rate plunge when there is a net drop in employment? The key is the breakout of the 806,000 leaving the labor force. Here is how the math works, where the unemployment rate is calculated as a percent of the labor force. For March, 10.486 million unemployed / 156.227 million labor force = 6.71%. For April, [(10.486 – .733 = 9.753 million unemployed] / [156.227 -.733 (decline in unemployed) -.073 (decline in employed) = 155.421 million labor force] = 6.28%....

“As the headline unemployed become discouraged, they rollover from U.3 to U.6. As the headline short-term discouraged workers rollover into long-term discouraged status, they move into the ShadowStats measure, where they remain. …

“…headline April 2014 U.3 unemployment at 6.3%, down from 6.7% in March; headline U.6 unemployment at 12.3% in April, down from 12.7% in March; and the headline ShadowStats unemployment measure holding at 23.2% for the fourth month….” (emphasis added)

Commentary No. 624, John Williams, Shadowstats.com, May 2, 2014

And it is not merely that Employment is weak.

Another Burden the Middle Class and Working Poor have to bear is that the Purchasing Power of their $US (and several other) Fiat Currency continues to decline. Indeed, the Fed’s (and other Central Banks) various Money Printing and Credit Expansion Policies have caused a 98% decline in the Purchasing Power of the $US since The Fed was founded in 1913. And Savers and Retirees are getting the Currency Devaluation Shaft as well.

And though the Private, for-Profit Fed’s QE Policies have been touted as helping the Economy and Employment they Actually do no such thing. They merely support The Fed’s owners – the Mega-Banks – and bolster Asset Prices.

In sum, the Fed’s policies do not help the Economy or Middle Class via the Wealth effect. Instead, they hurt both. Consider the following cogent analysis of The Fed’s “Correlation Error” so far as the alleged Wealth Effect is concerned.

“[M]edian earnings for men in 2009 were lower than they were in the early 1970s. And it gets worse. [...] Between 1960 and 2009, the share of men working full-time fell from 83% to 66%, and the share not making formal wages tripled from 6% to 18%. When you take all men, not just those working full-time, [you see] a plummet of 28% in median real wages from 1969 to 2009….

“Start with that correlation error: What actually occurs during periods where stock prices are rising? As Benjamin Graham observed, over the long term, markets act like a weighing machine – valuing equities based on their cash flow and earnings.

“During periods of economic expansion, it is the rising fundamental economic activity that reflects the positive things wrongly attributed to the wealth effect. Companies can hire more and increase their capital spending. Competition for labor leads to rising wages. Employed, well-paid workers spend those wages on capital goods such as cars and houses, and discretionary items like entertainment and travel.

“Oh, and along with all of these economic positives, the stock market is buoyed as well, by increasing profits and more buoyant psychology.

“In other words, all of the same forces that drive a healthy economy, leading to happy consumers spending their plump paychecks, also drive equity markets higher. The Fed, though, seems to think that the stock-market tail is wagging the fundamental economic dog.”

Michael Greenstone & Adam Looney Hamilton Project, Brookings Institution

And it is not just the Currency Devaluation (i.e., loss of Purchasing Power) and Bubbles (e.g., the artificial inflation of Asset Prices) which Fed and other Central Bank Policies create. One could argue that Fed Policies are in fact creating the sort of Centrally Planned, Centrally Controlled Economy that the Marxist Pathology envisioned. To the extent that this is True, we are in a World of Trouble.

In any event, the Transformation over recent decades of Major Economies from being based on Savings for Investment (“Earned Liquidity” to use Dr. Richebacher’s RIP term) to being based on Borrowing (“Borrowed Liquidity”) has not only facilitated Bubbles and Crashes (cf 2001-2002 Internet Bubble Crash, 2007-2009 Real Estate Bubble Crash) but it has also opened the Door to other Chicanery which is profitable for the Mega Banks but harmful to nearly everyone else.

Consider

“Taxpayers are paying billions of dollars for a swindle pulled off by the world’s biggest banks, using a form of derivative called interest-rate swaps; and the Federal Deposit Insurance Corporation has now joined a chorus of litigants suing over it….

“Derivatives . . . have turned into a windfall for banks and a nightmare for taxpayers…. While banks are still collecting fixed rates of 3 to 6 percent, they are now regularly paying public entities as little as a tenth of one percent on the outstanding bonds, with rates expected to remain low in the future. Over the life of the deals, banks are now projected to collect billions more than they pay state and local governments – an outcome which amounts to a second bailout for banks, this one paid directly out of state and local budgets.

“It is not just that local governments, universities and pension funds made a bad bet on these swaps. The game itself was rigged,…

“On March 14, 2014, the FDIC filed suit for LIBOR-rigging against sixteen of the world’s largest banks – including the three largest US banks (JPMorgan Chase, Bank of America, and Citigroup), the three largest UK banks, the largest German bank, the largest Japanese bank, and several of the largest Swiss banks. Bill Black, professor of law and economics and a former bank fraud investigator, calls them “the largest cartel in world history, by at least three and probably four orders of magnitude.”

“LIBOR (the London Interbank Offering Rate) is the benchmark rate by which banks themselves can borrow. It is a crucial rate involved in hundreds of trillions of dollars in derivative trades, and it is set by these sixteen megabanks privately and in secret….

“The rate-rigging banks have been caught red-handed, but the greater manipulation of interest rates was done by the Federal Reserve itself. The Fed aggressively drove down interest rates to save the big banks and spur economic recovery after the financial collapse. In the fall of 2008, it dropped the prime rate (the rate at which banks borrow from each other) nearly to zero.

“This gross manipulation of interest rates was a giant windfall for the major derivative banks. Indeed, the Fed has been called a tool of the global banking cartel….

“Bill Black concurs, stating, ‘Our system is completely rotten. All of the largest banks are involved—eagerly engaged in this fraud for years, covering it up.’”…

“The Global Banking Game Is Rigged, and the FDIC Is Suing,” Ellen Brown, via lemetropolecafe.com, April 13, 2014

Quite apart from the illicit Wealth Transfers exposed in the foregoing, one important Takeaway is that there is now yet another Great Bubble, a Credit/Debt Bubble, a Bubble destined to loudly Pop with Seriously Negative Consequences for Citizens around the world.

Among the most prominent are the USA’s $17 Trillion plus Debt which can never reasonably be repaid, nor can Japan’s Debt which is 220% of GDP.

And much of China’s Huge Shadow Banking Debt will have to be written off.

Yes indeed. This bubble will pop. Indeed, the signs are that the “Pop” is near, but not before the Central Banks’ attempts to prevent its popping (via more QE et al) generate Hyperinflation.

I felt something changing last Friday. Was the truth breaking out? Lies, untruths and lies, propaganda, lies and damn lies. What are the lies? Lies that the Fed and the government are telling us -- Federal Reserve Notes ("dollars") are money and silver and gold are outdated relics of another age. What I sensed on Friday (with gold up 17 dollars and silver up 50 cents) was that the basket of lies was beginning to fall apart.

The US public will swallow lies for just so long, and then the truth breaks through the barriers. The public knows that 'their' inflation is more like 12% than the 1.2% that the Labor Department says it is. The public is beginning to wake up to the fact that silver and gold are real money -- pure wealth that has been respected for thousands of years.

Meanwhile the Fed is pumping trillions of dollars into the banking system in an attempt to push core inflation up to 2 percent. The system absorbs all this liquidity, and actual 'poor man's inflation' gradually increases. But somewhere ahead (I think it will be this year) inflation will break out of its current bounds, and today's 'mild inflation' will turn into hyperinflation. That's when interest rates will break out and head violently higher. At that point the Fed will administer the only medicine it knows -- more QE, more liquidity.

Judging by past history, there are only two certain events -- wars and currency depreciation….

Towards the end of the year, all the liquidity that the Fed has created will be released, and instead of deflation, the US will be dealing with hyperinflation. Russell advice -- Take a position in physical silver and gold, and be patient, very patient.

Richard Russell, 05/05/2014

Consider some of the Signals

– US Debt of $17 Trillion plus is unpayable and increasing.

– The BRICS Nations are establishing a Trade Settlement System as an alternative to the Western SWIFT System and as well establishing an Alternative Bank to the Western IMF.

– Much US and Eurozone Gold has been dumped for years to hold Gold Prices down and the $US up, but the Physical supply in the West is nearly exhausted. China and India have been and are purchasing Western Gold and taking Delivery.

– The Russian Parliament has ordered $US Abandonment (albeit not with sudden implementation) and other countries (e.g., China) are beginning to trade for oil in Currencies other than $US. Thus the Reign of the PetroDollar (and therefore the $US) is nearing its end.

– The $US is increasingly testing its 50 DMA

– We reiterate the U.S. Economy is not recovering.

As a final dose of Reality Therapy, consider that the Equities Market will not be helped by Ostensible Job “Growth,” Noah Sugarman via Greg Guenthner explains why: “It turns out that private sector job gains have lagged the growth in adult working age population since 2008,” explains Rude researcher Noah Sugarman. “In 2008, there were about 2 working-age adults for every private sector job. Today, that ratio has widened from 2 to 2.13. That means we’d actually need to total more than 123 million jobs to really get back to where we were before the recession.” [And this raises the question how in the world could the U.S. Benefit from the Senate Amnesty Bill (S744) Tripling of Legal Immigration, Amnestying Illegals and increasing H1B Visas, when 12% of the USA’s own STEM graduates and Millions of others are unemployed?]

And now there are two relatively new Negatives – Momentum Stocks have Cratered, and Margin Debt (recently at record highs) has reversed and fallen. The last two times margin debt reversed (2000-2001 and 2007-2008) the Markets Crashed.

And there is The Threat which becomes ever more threatening as the days pass.

And that Greatest Threat is that the $US is on its way to being finished as the World’s Reserve Currency. It does not please us to say this, but the private for-profit Federal Reserve’s decades-long devaluing of the $US for the benefit of its Mega-Bank Owners is The Main Culprit.

But the Key Point Now and going forward is that the current long-term downtrend in the $US could turn into a rout at any time, which it will when Big Money players realize that the $US Days as Reserve Currency are over.

Long-term therefore, since The Fed (and other CB’s) will have to continue, and eventually increase, QE again to keep interest rates down and Equities propped up a while longer, the already ongoing debasement of the $US Purchasing Power as a result of the Ongoing Currency War will become increasingly evident.

Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency. That is where we are headed, like it or not. In other words, the Winners in the Currency Wars will be the Holders of Tangible Assets — Gold & Silver above all, as well as Agricultural and certain (but not all) Energy Assets. Acquiring these now is The Opportunity of the decade.

But the foregoing Developments are also Signals which have facilitated our Profitable Recommendations described in Note 1 below. And we are close to recommending leveraged short positions as we profitably did in 2008.

Regarding Gold and Silver Prices, they have been subject to ongoing Price Suppression, (Note 2 below) however this suppression cannot continue much longer, due to increasing Chinese and Indian purchases and deliveries.

“Writing in the small hours of Wednesday (05/08/14) morning, chart and momentum factors induced *The Gartman Letter* to make optimistic noises about gold. To JBGJ’s memory, during the long bottoming process for gold around the years 1990-2001 when the confluence of these factors caused *TGL* to do this violent selloffs frequently promptly materialized. The *BullionVault*reminded this morning *UK Gold Sales, 15 Years to the Day.* That was a classic case of rising expectations being suddenly crushed. It looks as if the gold vigilantes are back….

“If indeed gold has reverted to the pattern of a decade and more ago, eventually Asian demand will oblige the overhead surveillance to retreat. And that is after all what was seen in late March.”

JBGJ, LLC, John Brimelow, 05/08/2014

Finally, we note one entirely avoidable Threat – holding an Excess of a Fiat Currency.

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

Warren Buffet, 05/07/2014

Best regards,

Deepcaster
May 8, 2014

Note 1: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent profits taken*:

• 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)

• 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)

• 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

• 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

• 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

• 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

Note 2: 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.

 


Unspinning the Spin

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

 

 

“Former Assistant U.S. Treasury Secretary, Paul Craig Roberts, speculates that the U.S. Government has recruited its satellite countries, like Belgium, to compensate for the ‘tapering’ being done with purchases of U.S. Treasuries by the Federal Reserve.”

“U.S. recruits satellites to compensate for Fed’s ‘tapering’ Roberts tells KWN,” gata.org, 04/16/2014

Indeed, “Tiny” Belgium is now the holder of the third largest Hoard of U.S. Treasuries. Fancy that!

It appears the Fed’s “Tapering” is being at least offset by Belgian Buying.

This and other shenanigans like Bogus Official “statistics” (see Note 1 re Shadowstats.com) make the 2013 Equities Bull Run and the recent Equities Market Sell-Off unsurprising to us.

Indeed, much of our writing is devoted to separating Truth from Spin in order to facilitate more Profitable and Wealth Protective Investing. Thus we offer the following mini-buffet.

Regarding one Major Untruth –that the U.S. Economy is recovering – the Reality is quite the opposite. Indeed, one consequence of the Non-Recovering U.S. Economy is the ongoing Impoverishment of the American Middle Class.

Clearly, (and especially in Inflation-adjusted terms) the Real Median Income of U.S. Households has dropped dramatically since 1989, and since 2007, because U. S. Unemployment is High (23% per Shadowstats.com – Note 1) because American workers are competing against low wage Foreign and Immigrant Labor and because the Economy is not recovering.

“Median U.S. Household Income in 1989 - $51.682

“Median U.S. Household Income in 2007 - $55,000

“Median U.S. Household Income in 2012 - $51,017”

Figures are NOT Inflation Adjusted.

Richie King, Quartz, 2014 Data from U.S. Census

Even worse, because the Purchasing Power of the U.S. Dollar has dropped dramatically in recent years (and The Cause is primarily Fed Money Printing and Fed Credit Bubble facilitation), Americans’ Standard of Living has diminished far more than the nominal Income Numbers would suggest. Thus Americans’ Constrained incomes and the Non-Recovering Economy are suppressing corporate Earnings and Prospects.

But the recent Equities Sell-Off and Mixed (at best) Economic Numbers raise the question “What’s Next?” Is it the beginning of a Great Crash, or a New Rally? We answer these questions in the context of our Forecasts, including Timing Forecasts; and most important, we make recommendations for Profit and Protection in light of these forecasts in our recent Letter and Alerts.

One Key Consideration for the U.S. and International Economy, and therefore Equities Market performance, is that Consumption continues to be Constrained because of continuing Impairment of Structural Consumer Liquidity. Diminishing Real Wages and High Debt loads are The Culprits. Therefore, any Recovery is thus prevented. The same is true of other Major Developed Economies.

Bottom line: The Economy is not recovering (cf. Shadowstats.com, see Note 1) and not likely to recover so long as consumer liquidity is impaired.

A related important Point is that Consumers have not been helped by successive doses of Central Bank QE, notwithstanding Fed and other Central Bank Spin to the contrary.

This is not surprising since QE is aimed at propping up Financial Institutions, (several of which own the Private for-Profit Fed) not (contrary to Bank Public Pronouncements) at helping “Main Street.”

Important to note is one (of several) Quite Significant Deleterious Effect of ongoing Fed QE.

The most Important Deleterious Effect of Ongoing QE is the ongoing Destruction of the World Reserve Currency Status of the $US.

From a Multi-Year Perspective, we have recently had an Harbinger of what is to come as the $US value (basis USDX) dropped below 80. Even the Chinese, who hold Trillions in Dollar Denominated Assets are hurt by the diminished purchasing power of the $US.

This recent $US drop was occasioned in part by decreasing U.S. Purchasing Power Parity. Again, Real Wages have been falling. And unpayable Debt has been rising.

And, Ongoing QE (i.e., Money Printing) is the Primary Culprit.

Fed Policy is destroying the $US as the World’s Reserve Currency, and inflicting a Credit Monster of Excess Debt on the World. The Fed-led Transformation from the Savings-funded Economy of a few decades ago to a Debt-funded one is not sustainable since debt loads of Key Sovereigns have become unpayable.

And if intensifying U.S. Sanctions against Russia impel Russia to begin to accept payment for Russia’s oil and Gas in currencies other than the $US and/or if China pays for Iranian oil and Gas in Yuan, the Demise of the $US will be hastened.

In any event, long-term, since The Fed (and other cooperating CB’s) will have to continue, and increase, QE again to keep interest rates down and Equities propped up a while longer (cf. Deepcaster.com), the already ongoing debasement of the $US Purchasing Power as a result of the Ongoing Currency Wars will become increasingly evident. Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency. That is where we are headed, like it or not. In other words, the Winners in the Currency Wars will be the Holders of Tangible Assets ¾ Gold & Silver above all, as well as Agricultural and certain (but not all) Energy Assets.

Of course, The Big Winner will likely be China which is importing Huge Quantities of Gold and acquiring Tangible Assets around the World.

And, unspinning the Spin on the Equities Front, consider that Equities are generally overvalued, overhyped (especially the Tech/Social Media Sector which is why we correctly, earlier, warned about Facebook) and supported by Central Bank QE, and “Communications Policy” et al. This recent little Tech Takedown is just the beginning of the Popping of the Tech Bubble. Before it is over it will be worse than 2001-2002.

Billionaire Carl Icahn is correct when he says current Equities levels are “a Mirage.”

Thus we have recently answered the question whether Equities will still have one “Last Gasp Rally” before a Great Crash begins. Consider that the Fed is still engaged in Market Intervention via QE, albeit in Reducing levels, and the Recovery Fiction has been “sold” to most of the Retail Public. [Indeed, our recently recommended profitable Trades have been facilitated by attention to such Interventionals as well as Fundamentals and Technicals (Note 2).]

In any event, we expect the spikes up to be punctuated by Spikes down as Investors realize stocks are quite overvalued. The recent Mini Crash of the NASDAQ is but one example.

As a final dose of Unspun Reality Therapy, consider that the Equities Market will not be helped by Ostensible Job “Growth,” Noah Sugarman via Greg Guenthner explains why: “It turns out that private sector job gains have lagged the growth in adult working age population since 2008,” explains Rude researcher Noah Sugarman. “In 2008, there were about 2 working-age adults for every private sector job. Today, that ratio has widened from 2 to 2.13. That means we’d actually to total more than 123 million jobs to really get back to where we were before the recession.”

In closing it is important to reiterate our earlier observation that the Shortage of Physical Gold is intensifying. Asian, and especially Chinese and Indian Buying, and taking Delivery of Physical continues at Record levels.

Couple that with China’s record January, 2014 lending (i.e., credit creation) year over year (also a 4 year high) and China’s Credit Bubble and Fed Chair Yellen’s promise to Open the Monetary Spigots in the event of a slowdown, and one can see why Gold and Silver have been rising this year until very recently. Inflation is not only already here, with Real U.S. CPI at 9.20% (cf. Shadowstats.com) but it is now becoming visible on the Horizon. The Great Launch up is coming notwithstanding ongoing Cartel Price Suppression (Note 3) and other Mega-Bank attempts to diminish Investor interest in Gold and Silver.

Looking above, beneath and beyond Main Stream Media Spin is essential for Profit and Wealth Protection.

Best regards,

Deepcaster
April ­­18, 2014

Note 1: *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 15 , 2014
1. 51 %     /     9.20 %

U.S. Unemployment reported April 4 , 2014
6.7%     /     23.2%

U.S. GDP Annual Growth/Decline reported March 27, 2014
2.59%        /     -1.40%

U.S. M3 reported April 15 , 2014 (Month of February, Y.O.Y.)
No Official Report     /   3. 77 % (i.e, total M3 Now at $15. 725 Trillion! )

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent * :

  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)
  • 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

Note 3: 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.


 

“– Washington has apparently fomented or supported a coup in the Ukraine that increases the likelihood of war in Europe dramatically therefore sending the gigantic pools of liquid financial assets in the world scurrying into the greenback and US Treasuries, which the Chinese have stopped gobbling up;…

“Guest Post: How Monetary Policy Drives Foreign Policy,” Tyler Durden Zerohedge.com, 03/11/2014

The Chinese sold a record Amount of U.S. Treasuries in December, 2013.

The WAR in The Key Financial Sector is moving into Stage 2.

The Stage 2 War will have Substantial Effects on virtually all Sectors of the Economy and Markets. Those aware of its Prospective Effects will be able to Profit and Protect Wealth. Those Unaware will likely suffer Great losses.

Consider the Prospective Effects.

Until Fed Chair Yellen’s comments recently that Interest Rates could go up about “six months after” tapering is scheduled to complete (i.e., about April, 2015) the US$ was in a serious Downtrend, closing several times below 80, basis USDX. A Key Factor in this War so far as the value of the $US is concerned is and will continue to be, weak U.S. fundamentals as well as Fed Money Printing. Consider Housing for example.

“Based on this mornings (March 20 th) Reporting, existing house sales were declining at an annualized quarterly pace of 24.4%.”

 Shadowstats.com 3/20/14

Contrary to Mainstream Media Reports, the U.S. Economy is not recovering (Note 1). But the Prospective Rise in interest Rates signaled by the Yellen comment, coupled with ongoing Geopolitical Concerns would, and did, drive up the $US temporarily as an Ostensible Safe Haven.

Unstated was the fact that Interest Rates will have to rise anyway to stave off the inflation that Fed Money Printing has already created in the Economy. Real US CPI is already 8.81% per Shadowstats.com. And the other Real Numbers also show the U.S. Economy is not recovering (Note 1).

But with the Chinese and other Sovereigns and Major Players already selling the $US, the $US as World Reserve Currency is already threatened. Foreign Holders of U.S. Treasuries are at a 10-year low!

So other Measures have to be taken (in the eyes of the Private-for-Profit Fed), and other Powers that be, to shore up the $US. But such Measures will provide only a temporary boost to the $US in the ongoing Currency War.

Regarding Geopolitics and the value of the $US, consider the following fuller Explanation of the Coup overthrowing the Yanokovich government of the Ukraine.

“– Washington has apparently fomented or supported a coup in the Ukraine that increases the likelihood of war in Europe dramatically therefore sending the gigantic pools of liquid financial assets in the world scurrying into the greenback and US Treasuries, which the Chinese have stopped gobbling up;…

“Russia has repeatedly stated over the past decades that an EU move on the Ukraine crosses a red line. The EU ignored the warning, and with the US's help and the ire of Ukrainians sick of a corrupt government crossed Putin's red line. What the Ukrainians want is democracy and relief from their corrupt plutocrats (see previous post's article by Paul Craig Roberts).

“The US has no compelling strategic interest in the Ukraine, or in the Crimea remaining part of the Ukraine. Yes, the Ukraine has been looted by its oligarchs, just as Russia was, and just as the US is being looted by its oligarchs right now; incomes of a majority of American households are falling so the banks can collect on bad debts. It would be nice for people everywhere if they could break the grip of the plutocrats over their livelihoods. In the Ukraine, to substitute debt servitude to Western banks for the domination of the oligarchs would only accelerate the collapse of the EU. And it's not clear the EU, if it offers help, won't be ripped off by the oligarchs as well. The new government in the Ukraine has already increased the power of the oligarchs by giving them provinces to rule, so it's not clear the Western "rescuers" are even able to help solve the fundamental problem at all, and might end up losing their shirts again, as they have in Greece, Portugal, et al.”

“Guest Post: How Monetary Policy Drives Foreign Policy,” Tyler Durden Zerohedge.com, 03/11/2014

In sum, the prospect of rising Rates, the Ukraine Crisis, and relative Chinese and Emerging Market weakness, drove investors to the Ostensible Safe Haven $US and US Treasuries very recently. Result: A $US Bounce, albeit a temporary one.

Longer term, rising rates will be lethal to U.S. Treasuries and the U.S. Economy ¾ already ¼ (one-fourth!) of available U.S. tax Dollars are used to pay interest on the $17.4 Trillion U.S. National debt.

But it is critically important not to let the aforementioned Developments Mask The Fundamental Reality: An International Fiat Currency War is in progress and is being played out in Economic, Financial and Geopolitical Arenas.

“Markets have been sanguine about geopolitical risk for several years now, a phenomenon illustrated by the relaxed approach they have taken to Ukraine’s crisis. There are understandable reasons for this, but contrary to a popular saying, this could well be a case where the trend is not necessarily the markets’ friend.”

Mohamed El-Erian, chief economic adviser to Allianz Financial Times, 03/24/2014

El Erian’s comment arguably applies to the Ongoing Currency War.

That is, Major Powers are engaged in a Competitive Devaluation of their Currencies. A Key Policy of Abenomics in Japan is the ongoing Devaluation of the Yen. And recently, the Chinese made a Major Move to devalue the Yuan.

But the Chinese have less reason to worry long-term about the relative “Paper Price” of the Yuan, because the Yuan is de facto backed by over Three Trillion Dollars in Foreign Exchange Reserves, and an increasing Hoard of Physical Gold and interests in Real Tangible Assets around the World. And Russia’s Ruble in de facto backed by Precious Metals & Energy Assets.

And the $US and Euro are backed by … Nothing Comparable which is Tangible. Thus China and Russia can not be successfully isolated economically.

And in the entire History of the World, Fiat Money backed by “Nothing Tangible” has failed 100% of the time. The Incremental playing out of these Failing Fiat Currencies sends Signals to those who are tuned in to them and thus present Opportunities and Threats. These Signals have already facilitated Opportunities for Profit (Note 2).

In sum, as Major Governments and Central Banks have now begun actively and competitively to devalue their Currencies (and now with that Currency War moving into the Geopolitical Realm), we have Moved into Stage 2 of that War.

Further consider the Reality that The Fed cannot stop printing (i.e., devaluing the $US), although it is likely to continue tapering a while more; eventually (next few months) it will have to start printing again.

The Equities and other Markets have come to depend on it, as is obvious.

Long-term, since The Fed (and other CB’s) will have to continue, and eventually increase, QE again to keep interest rates down and Equities propped up a while longer, the already ongoing debasement of the $US’s Purchasing Power as a result of the Ongoing Currency War will become increasingly evident.

Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency. That is where we are headed, like it or not.

In other words, the Winners in the Currency Wars will be the Holders of Tangible Assets ¾ Gold & Silver above all, as well as Agricultural and Energy Assets. Stay tuned for Forecast Timing of the Trend Shifts and Climacterics which provide both Opportunities and Threats.

Consider another effect of our “progress” per the foregoing Currency War Scenario — the prospects for the Equities Markets.

Absent a Major Market Destabilizing Event — e.g., Ukraine threatening to turn into a Hot War, or several overleveraged Chinese Trust entities defaulting on loans, either of which is possible — Equities have already launched into their Last Gasp (i.e. before The Crash Begins) Rally. But it is not without Trauma, as recently the NASDAQ fell under its 50 day moving average, led by the vastly over-hyped, overvalued social media stocks such as (as we earlier indicated) Facebook.

Indeed, ongoing QE and QE to come (and notwithstanding de minimus temporary tapering) and the Main Stream Media-Promoted (False) Notion that the Economy is Recovering, and Deep Pockets Intervention in the Markets, all Contribute to this last Gasp Equities Push up.

If one considers the Fundamentals providing the basis for our forecast of a Crash, which could start at any time, one sees that they are nearly all directly or indirectly related to the ongoing intensifying Currency War.

In sum, underlying Key Fundamentals are quite weak. Indeed, Fundamentals and Jaws of Death Rising Bearish wedge and other Key Technicals “forecast” a Major Market Crash beginning soon – we communicate probable timing as we receive signals. It is important to consider the Indicators of Fundamental Economic Reality.

Indicator #1 – Q4 U.S. GDP was revised down to 2.4% from 3.2% -- Not Bullish.

Indicator #2 – The Case – Shiller PE Ratio (Google it) reached 28 recently. But the Mean and Median since the 1880s is about 16. Historically, a reading as high as 28 indicates an Equities market which is grossly overvalued, and has typically resulted in a Crash.

Indicator #3 – Retail Sales, and Job Growth, and housing and Industrial Production have slowed.

Indicator #4 – Technically, as we have demonstrated in our recent Alerts, the Equities Markets are making Multi-year Tops, with all exhibiting Jaws of Death Patterns.

Indicator #5 – The Russia-China “Squeeze Play,” i.e., the Ukraine, is just aborning (see recent Alerts ).

Indicator #6 – Insider Selling is Heavy.

Indicator #7 – Margin Debt is near Record Highs.

The Currency War, Stage 2, is already Manifest in another Way. Consider that the Economic/Financial Crises of the early 1930s were characterized by Bank Runs.

And we are already seeing such runs this year in Crimea, Ukraine and Rural China.

Defaults in China have left Depositors understandably nervous. Deepcaster’s Forecast: there will be more Bank Runs and they will spread, eventually to the Eurozone and U.S.A. Physical Gold and Silver and Tangible Assets such as Energy and Agricultural Products will be the Investors’ Salvation.

Regarding Energy, unsurprisingly to us, OPEC recently estimated that World Demand has now risen to 90 Million/bbl/day – an all-time record. China’s demand continues to increase (albeit more slowly) and the U.S. still produces only about 45% to 50% of what it consumes.

Fracking is not all it is cracked up to be (pun intended) so far as production increase is concerned. Depletion rates are too high (60% to 70% in the Bakken reportedly) and the EROI is too low.

Indeed, the Crude Price is probably the best (i.e., least easily manipulated) Indication of Real Price Inflation – i.e., Fiat Currency Purchasing Power Devaluation – and the WTI Crude Price has recently moved back up over $100/bbl.

Only the next Episode of The Currency War-facilitated Great Equities Crash will likely serve to substantially deflate Crude Demand and thus Prices significantly once again, but only for a while.

Intensifying Currency Wars provide Opportunities and Threats for those who Track their Dynamic Effects on Key Markets.

Best regards,

Deepcaster
March 28, 2014

Note 1: *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 March 18, 2014
1.13%     /    8.81%

U.S. Unemployment reported March 7, 2014
6.7%     /     23.2%

U.S. GDP Annual Growth/Decline reported March 27, 2014 2. 59 %        /     -1.40%

U.S. M3 reported March 16, 2014 (Month of Febr uary, Y.O.Y.)
No Official Report     /   3.48% (i.e, total M3 Now at $15.641 Trillion!)

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

• 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)

• 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

• 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

• 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

• 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

• 40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)


Intensifying Currency War Consequences

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“When the dollar collapse comes, it will happen in two ways: gradually then suddenly. That formula, famously used by Hemingway to describe how one goes bankrupt, is an apt description of critical state dynamics in complex systems. The gradual part is a snowflake disturbing a small patch of snow, while the sudden part is the avalanche. The snowflake is random yet the avalanche is inevitable. Both ideas are easy to grasp. What is difficult to grasp is the critical state of the system in which the random event occurs.”  

Jim Rickards, Currency Wars

Major Fiat Currency Printers around the World are devaluing their currencies by “printing” ostensibly in order to bolster their economies.

But the consequences of The U.S. Fed’s QE for example, have been increasingly to artificially inflate financial Assets and enrich The Fed’s Mega-Bank Owners. It has not resulted in an improving U.S. Economy or Employment Picture.

But Fed QE and related forms of Money Printing have unleashed Serious and Impending Financial and Economic Threats.

These Threats are Signaling Impending Mega-Moves. Such Signals have already facilitated recent Profitable Recommendations (see Note 2).

But the impending Threats are also opportunities for Profit and Protection for the Well-informed!

Consider the U.S. Economy:

Indicator #1 – Q4 U.S. GDP was revised down to 2.4% from 3.2% -- Not Bullish.

Indicator #2 – The Case – Shiller PE Ratio (Google it) is nearly 28 today. But the Mean and Median since the 1880s is about 16. Historically, a reading as high as 28 indicates an Equities market which is grossly overvalued, and has typically resulted in a Crash.

Indicator #3 – Retail Sales, and Job Growth, and housing and Industrial Production have slowed. Real U.S. Unemployment is 23.2% per Shadowstats.com.

Indicator #4, technically, as we have demonstrated in our recent Alerts, the Equities Markets are making Multi-year Tops, with all exhibiting Jaws of Death Patterns.

Indicator #5 – The Russia-China “Squeeze Play” is just aborning (see below).

But, above all, The Currency War is being played out in the Ukraine.

Indeed, there is much more, and different than the Mainstream Media Version, about the Ukrainian Situation than meets the eye. And it is most Threatening to $US Hegemony as World’s Reserve Currency. Of the Many Factors causing that Conflict, Currency Hegemony, and Consequent Economic Hegemony is the main one.

The $US has been under increasing pressure in recent months as Sovereign Nations, and others have been increasingly selling $US and $US-denominated Assets.

There is much credible evidence that:

Russia, and China, and Russia in concert with China, are fed up with what they feel to be U.S., U.K. Eurozone (except to a degree Germany and the Nordics) Bullying-in-general. In their view, U.S. involvement in the Ukraine is only the latest example. Indeed, East Ukraine and Crimea which are historically and ethnically a Part of Russia, with millions of Russian-Ukrainian conjugal families as Testimony to this Fact. Indeed, Ukraine itself was part of Russia for 300 years.

Lest one think that this interpretation Mischaracterizes the perspectives of ethnically Russian Ukrainians consider that the Crimean Parliament just voted to join Russia and hold a referendum in 10 days on the matter. (Ukraine’s Acting President has predictably called the referendum “a farce.”)

But Russia-China see the overthrow of the elected Russian-backed government by an unelected Cabal (with ties to the West, and Western Banking and Financial interests and NATO!) on Russia’s Doorstep, to be unacceptable.

Indeed, in their view, the Obama Adm. – facilitated Coup, and attempt to isolate Russia can not succeed because Russia-China can not be isolated. And Russia and China are now de facto allies. Together Russia-China control 30% of US Financial Assets as well as Resources around the World. And China’s Control of African and Latin American Resources, plus China’s Leadership of the BRICS-controlled BRICS summit last year, provide an alternative to US-Eurozone (and thus $US) Hegemony.

The Renminbi has already been listed at the MICEX (Moscow Interbank Currency Exchange) and Russia-China intend to use only their own currencies for bilateral trade.

The Eurozone in Particular, and the World in general need the Energy and Food Production Assets Controlled by Russia and China.

Indeed, Investor Wilbur Ross, who has made Billions by not being wrong, recently said Putin is “leader of the World.”

Result: leverage for Russia & China

Couple all the aforementioned with what Russia sees (with considerable justification) as the West’s attempt to surround it with NATO-linked Nations, to control/limit the Export of Russia’s Gas via pipeline through Ukraine and neighboring countries, and control Ukrainian Oil, Gas and Food Exports. Russia has also been aggravated by the West’s attempt to limit/stop/control the export of Iranian Oil and Gas through the Russian-Controlled pipelines and Syrian Port, and to disrupt/stop Russia’s Gazprom and other Russian companies, from clearing their Transactions through Cypriot Banks, and you are looking at an outraged Russia, in league with China and with the support of resource rich Iran.

These three constitute an Axis which can not be Economically or Militarily isolated, however much the West try.

Most important for Investors is that there is new evidence that Russia’s Outrage and China’s Self-Interest are about to lead to a serious Attack on the $US and US T-Bonds. Indeed, Russian Presidential Advisor, Sergei Glazer, recently indicated that Russia’s Response to John Kerry’s “crippling sanctions” could be that “authorities should dump U.S. Government Bonds.” And China’s recent commitment to 7.5% GDP Growth but also to a 12.5% Increase in Military Spending is not comforting.

Indeed, China has already been preparing to replace the $US as World Reserve Currency, by a Gold-backed Yuan. And Russia has indicated it would support the inclusion of Gold in a weighted basket of a new Global Currency.

In sum, longer term, given the US Fed’s QE and other Central Bank’s Money Printing Frenzy of recent years, we forecast the $US will dramatically lose Purchasing Power and be displaced as The World’s Reserve Currency by a Gold-backed Chinese Yuan, as the Russia-China Squeeze takes its effect. The Fed-led Cartel (Note 1) Profligate Printing nearly guarantees that.

Indeed, Key Major Multi-Year Technicals and Fundamentals Signal a Crash is coming largely as a result of Fed and other Major Central Bank Money-Printing Policies..

Consider that, as The Fed (eventually) increases QE to counter The Crash (or if Russia-China start to implement their Squeeze Play First), the $US will start to Collapse (first slowly and then in a cascade, as Rickards points out) and, consequently, U.S. Treasury strength will reverse and That Biggest of all Asset Bubbles will begin to deflate and then Burst.

In other words, since The Fed (and other CB’s) will have to continue, and eventually increase, QE again to keep interest rates down and Equities propped up a while longer, the already ongoing debasement of the $US Purchasing Power will become increasingly evident. Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns (e.g., China sold a record amount of U.S. T-Bonds in December, 2013) will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency.

This will impel Gold and Silver Prices much higher, notwithstanding Ongoing Cartel (Note 1) Price Suppression attempts. Gold & Silver, remarkably, as the Ukraine Crises was heating up a bit and the $US Weakened (both should have impelled Gold Higher). Gold (and Silver) showed some weakness, until the Ukraine Crises heated up a lot, then they shot up.

This tells us the Cartel is still active, and somewhat successful, in suppressing Precious Metal prices, but not nearly as effective as in earlier days.

As well, for reasons we have laid out before (e.g., increasing Physical Demand from China), we believe Cartel Price Suppression can not be sustained.

We reiterate our earlier observation that the Shortage of Physical Gold is intensifying. Asian, and especially Chinese Buying, and taking Delivery of Physical is at Record levels. And Deliverable (Registered) Physical at Major Exchanges like the Comex is at Record lows.

Couple that with China’s record January, 2014 lending (i.e., credit creation) year over year (also a 4 year high) and Fed Chair Yellen’s promise to open the Monetary Spigots in the event of a slowdown, and one can see why Gold and Silver have been rising recently. Inflation is not only already here with Real U.S. CPI at 9.2% (cf. Shadowstats.com) but it is now becoming visible on the Horizon.

Thus, our view is that a Great Launch Up for the Precious Metals is impending, and may indeed already have begun.

Regarding the Currency War’s impact on Present and Prospective Crude Oil Prices, consider that The Ukraine Dispute has multifaceted Impact. In Part it is a battle over who Controls Ukraine’s Oil and Gas reserves, and access to Russia’s (via pipelines running through Ukraine); in part about controlling Russia’s Port on the Black Sea, and in part a conflict between the Russia-Speakers in East Ukraine and Crimea, and Euro-centric Citizens of the West, and above all about the Major Powers Conflict (Currency War) Scenario outlined above.

From the Russian-Chinese perspective, The Westerners facilitated the overthrow of the Democratically elected, (albeit Brutal and Corrupt) Government, and the installation of a Rogue Cabal linked to NATO and willing to Direct Energy and Food toward the West, which exacerbated the foregoing Disputes.

Whatever develops, (except peace, which is unlikely) it will be Bullish for the Oil Price in $US terms, since we are witnessing a weakening $US.

Given our Currency Wars Analysis, it is no surprise that our Crude forecast has thus far been “spot” on, pun intended. We correctly forecast Crudes Rally back up to $100/bbl. See our recent Alerts for Updated Forecasts. Indeed, signals from the Intensifying Currency War have facilitated several quite Profitable Recommendations recently (Note 2).

Also Unsurprisingly to us, OPEC recently estimated that World Demand has now risen to 90 Million/bbl/day – an all time record. China’s demand continues to increase.

In sum, it looks as if the Fed-Generated $US Currency Devaluation will lead to an Equities Crash and another Global Financial Meltdown.

This is only one of the Many Negative Consequences flowing from The private, for-profit Fed’s Policy of supporting its Owners/Shareholders through “Monetary Morphine,” a former U.S. Representative Dr. Ron Paul explains

“‘Monetary morphine.’

“That's how some are now referring to the Fed's risky and unprecedented print-now, ask-questions-later policies. “As a doctor, I can tell you morphine is one of the most dangerous and addictive substances known to man. First, just a little of the opiate masks a patient's pain. But then, addicts crave more and more until overdoses result in death. “…the Fed has tried hard to mask many of our economic problems for years now. But today, the first cracks are starting to appear in what I believe will be nothing less than a Federal Reserve-created, global financial meltdown. “And every second Congress waits to finally audit and EXPOSE the Federal Reserve - the first step toward finally ENDING the Fed once and for all - the problems get bigger and bigger.

 

“Monetary Morphine,” Congressman Ron Paul

But the Hot War is the Intensifying War over the Future of the $US. John Williams of Shadowstats.com provides an excellent analysis and Forecast.

“…The End Game Begins .  The U.S. currency and U.S. financial system have faced an intensifying, broad range of vulnerabilities in recent months.  Negative shocks in the areas of economic activity, domestic- and global-political circumstances have continued, while U.S. government and Federal Reserve authorities increasingly have found themselves unable to address a non-recovering economy as well as the mounting risks of financial-system instabilities. 

“Under these circumstances, Russia’s military action against Ukraine, and related bellicose comments from Russia concerning the U.S. dollar and banking system, have raised the risks markedly of instabilities in the dollar and the domestic financial system.  Talk of action to abandon the dollar as the global reserve currency; to move to dump the dollar; and to damage U.S. banks financially, cannot be taken lightly.  China has been supportive of the Russian military action and also previously has called for the removal of the dollar as the global reserve currency.  There have been stories of discontent within OPEC as to the dollar’s reserve status.

“The risks here are manifold.  Keep in mind that in 2008, the U.S. financial system was on the brink of actual collapse.   All the actions taken then by the Fed and the U.S. Treasury, including creating or spending whatever money was needed, all the bailouts, guarantees, interventions, etc., were only stopgap measures.  The actions forestalled a financial-system collapse, temporarily, but they did little, if anything, to restore normal economic activity or financial-system solvency.

“The problems of 2008 remain.  A renewed crisis largely is  just a matter of timing.  As the system moves again to the brink, however, the Fed and the Treasury likely will find themselves with their ammunition much reduced, as a result of the post-2007 battle, which still is being waged in certain quarters.

“Then there is the unexpected.  Something goes wrong, and various financial triggers are pulled, as threatened or otherwise.  To the extent the rest of the world sees a pending demise in the U.S. dollar, there likely will be a number of large investors, sovereign and private, who would look to front run the Russians, or other hostile states, looking to get out of the U.S. currency while they could.

“A panicked sell-off in the U.S. dollar and dumping of dollar-denominated paper assets remains in the offing.  Where a bad economic statistic, or fiscal or monetary blunder by the government or Federal Reserve had been viewed as the most likely proximal triggers for the dollar’s demise, global political instabilities also have become a leading contender.  There likely will be a confluence of negative factors that will accelerate the decline in the dollar’s value.  How that translates into inflation and other detail, again, is covered in Hyperinflation 2014—The End Game Begins.  Physical gold and silver remain the primary hedges for those looking to preserve the purchasing power of their wealth and assets. …”

Commentary Number 605, John Williams Shadowstats.com, 03/05/2014

And regarding the USA’s Real Fiscal Deficit according to GAAP:

“Subject to possible minor refinement, the federal deficit for fiscal-year 2013 (year-ended September 30th) was roughly $6.2 trillion, versus $6.6 trillion in 2012, based on the government’s generally-accepted accounting principles (GAAP), and as adjusted for a consistent-estimation basis with 2012 and for the year-end 2013 accounting and reporting gimmicks of the U.S. Treasury, which had been operating at its statutory debt-ceiling for five months, and was on the brink of a government shutdown.  The federal government’s GAAP-Based fiscal deficit, remains beyond control and containment, and the long-term U.S. sovereign-solvency issues remain a significant concern for the global financial community.

“The headline cash-based deficit for 2013 was reported at a headline $680.3 billion, down from a $1089.4 billion headline deficit in 2012.  Before accounting for the changes in unfunded liabilities for government programs, the GAAP-based 2013 deficit was about $1,157 billion, versus $1,316 trillion in 2012.

“Total federal obligations at year-end 2013 totaled $91.7 billion, up from $85.4 trillion in 2012.  These obligations included gross federal debt and the net present value of unfunded liabilities.  The 2013 total was 5.7 times the level of nominal (not-adjusted for inflation) GDP for the full fiscal-year. …”

Commentary Number 606, John Williams, Shadowstats.com, 03/06/2014

And Richard Russell summarizes the Prospects for the Markets and Economy

“…The stock market continues to be levitated by the Fed’s quantitative easing. The risk to reward ratio for being in the stock market is negative.

“Meanwhile, the US economy remains in recession. And once the truth breaks out, the stock market will slip into crash mode. The stock market is up on Fed manipulations, and the economy is up on lies and propaganda. It’s a poisonous combination.”

Richard’s Remarks, Richard Russell, 03/05/2014

Daily monitoring of the “Progress” of the ongoing Currency War allows Investors to Be prepared for Profit and Protection.

Best regards,

Deepcaster
March 7, 2014

Note 1: 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.

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)

100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

 


Essential Knowledge for Maximizing Real Gains

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

March, 2014

“Noted investor Jim Rogers says outgoing Federal Reserve Chairman Ben Bernanke has set the stage for the collapse of the U.S. central bank within the next decade, and had turned the nation’s fiscal balance sheet into ‘garbage.’

“In a recent interview with the British financial website Mineweb, Rogers said Bernanke and his fellow central bankers in other countries have brought the global economy to the brink of disaster….

“Rogers predicted that history will remember Bernanke as ‘the guy who set the stage for the demise of the central bank in America.’

“‘It’s not a possibility,’ Rogers said, ‘it’s a probability. People will realize that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last five years, and a lot of it’s garbage.’…”

“Jim Rogers: The Federal Reserve’s Days Are Numbered,” Moneynews, 01/06/2014

Master Investor Jim Rogers’ Negative view of the private-for-profit Fed is echoed by former Director of the OMB, David Stockman, who said that The Fed has created “The Mother of All Bubbles.” We agree, and would add that the ongoing and prospective Effects of Fed Policy and Market Interventions are the Most Essential Data (among several) for Maximizing Real Gains going forward.

So it is Important to Understand How and Why Fed Policies and their Effects are Most Essential. And How can Investors and Traders Profit and Protect from them?

Indeed, Signals from Interventions, as well as Fundamentals and Technicals have facilitated Deepcaster’s recent Profitable Recommendations (see Note 3 below).

“Since its inception in 1913, The Federal Reserve Board has been responsible for almost 95% devaluation of the U.S. Dollar. All this has been achieved through its ability to continually inflate the money supply.  

“And, between 1985 and 2005, the Federal Reserve Board has increased the money supply by five times. This extraordinary money creation is merely the catalyst for debt creation. In a fiat money system, money is debt…there is absolutely no way this money can ever be repaid except by continued inflation. But, now that the credit bubble is blown up, inflation is no longer an option; bankruptcy looms.”

“The Federal Reserve…What Has It Done For You Lately?”
Ian Gordon, December 29, 2007, www.axisoflogic.com

Indeed, a few months after Ian Gordon correctly announced “the credit bubble is blown up,” it (the housing Bubble), bust and the 2008-2009 Market Crash ensued.

But there is an even greater wealth destroying effect of Fed money-printing Policies – the Destruction of the Purchasing Power of that Fiat Currency itself.

Pick any period of rising U.S. Equities Markets whether from the September, 2002 lows through the September, 2007 high, or the December, 2011 lows to the late March, 2012 highs.

These Highs lulled some investors and several commentators into believing that they had Real Gains as of September, 2007 or March, 2012. Unfortunately, when properly measured, many of these Ostensible Gains actually are not.

Deepcaster contends that the Proper Measure for Gains is “Purchasing Power.”

Consider, specifically, the rise in the U.S. Equities Markets from 2005 through 2006. If one owned shares in the S&P 500 (SPX – the market basket of S&P 500 Securities) for the 12-month period ending April 30, 2006, the value of that market basket of securities would have risen in U.S. Dollar terms.

But it would have declined over 30% since the summer of 2005 when measured by the price of Gold. The point is that, from the summer of 2005 until late April 2006 the S&P 500 was in a Bull Market in Dollar terms, but in a Bear Market in Gold terms.

As an Alternative Measure, consider also the United States Dollar. From January 2002 through late April 2006; for example, the U.S. Dollar, as measured by the USDX (the U.S. Dollar‘s value as measured by a market basket of other currencies) lost Purchasing Power in an amount exceeding 25%.

Since many, if not most, of the prices of goods and services purchased are determined in an international economy, such a loss of Purchasing Power is quite substantial. Thus, a person whose increases in U.S. Dollar income from January 2002 through April 2006 collectively amounted to less than 25% actually suffered a loss of Purchasing Power in the international economy in that period.

Such Purchasing Power losses are even Greater when one takes Account of Real Inflation. Real Inflation in the U.S. for example, is 9.17% (as of February, 2014) per shadowstats.com. Shadowstats measures Inflation the way it was measured in the 1980s before the Official Figures became Politicized and therefore Bogus (see Note 1 and Chart).

One key point is that one must decide what asset or asset class one will use as the “baseline asset” against which to measure one‘s wealth and income increase or decrease. And one must also take account of Real Inflation.

Deepcaster‘s view is that the Ultimate Measures of Value should be Gold (first), then Silver and the other Precious Metals and Key Strategic Commodities (i.e., generally, Tangible Assets including especially Crude Oil rather than Paper “Assets”).

Why? Because the Private-for-Profit Fed, the ECB, and other Central Banks are increasingly Printing/Digitizing Fiat Money and Credit into existence ($Trillions in recent years—including The Fed’s $4 Trillion Balance Sheet!) well in excess of any increase in Global Production of Goods and Services, thus diminishing Fiat Currencies‘ Purchasing Power. This is why the Purchasing Power of the U.S. Dollar (Federal Reserve Note) has declined by over 95% since The Fed was founded in 1913.

Another Key point is that this Fiat Currency Creation out of Thin Air continues to increase at an accelerating rate and thus is a sure Precursor to Price Inflation (see Note 1). Even Money of Zero Maturity (MZM) has increased 10-fold since 1980.

Thus Gold and Silver Prices should reflect this Monetary Inflation, and indeed they have with the Gold Price increasing four-fold in the past decade. But owning Gold and Silver is challenging.

In other words, one should employ this Golden Tangible Asset ―Ultimate‖ Valuation Measure but with caution because the prices of the aforementioned Precious Metals and other commodities, as well as Equities, are periodically the victims of Interventional Action by a Fed-led Cartel (see Note 2) of Central Bankers and their Allies and Agents. Indeed, some Interventions are conducted quite publicly. Interest Rate Adjustments are the most publicly visible. The August 17, 2007 Fed Discount Rate Cut is one example. Less visible, but not less potent, are the nearly daily Repurchase Agreement (Repo) injections (by The Fed, via their Primary Dealers), used, inter alia, to manipulate the levels of the Equities Markets. And there are other Potential and Ongoing, but barely visible, Interventions as well.

For example, nearly $470 billion in OTC (i.e. Dark, not Exchange Traded) Derivatives were available to suppress Gold prices alone as of June, 2011 (as reported by the BIS, the Central Bankers’ Bank based in Switzerland - www.bis.org. (Path: www.bis.org>statistics>derivatives>statistical tables). Indeed, were it not for active Gold Price Suppression by The Cartel, Deepcaster believes Gold would have exceeded $3000/oz. by now.

For example, observing the markets upon arising on Tuesday, August 19, 2008, Deepcaster noted that the two main stories headlined in the Big Financial Media were the prospective collapse of Fannie Mae and Freddie Mac, as well as the July PPI increase of 1.2% — twice what was expected.

Of course, as Safe Havens, Gold and Silver should have rocketed up on this news but, instead, Gold was taken down several dollars at the time and moved very little when the PPI number was announced.

Similarly, in mid-March, 2008 when the Financial Crisis culminated (temporarily) with the demise of Bear Stearns, Gold and Silver were smashed down, whereas in a Free Market they would have shot up.

Clearly Gold and Silver Prices were and still are subject to capping attempts, as they seem to have been nearly every time negative economic data or market developments are revealed.

However, the Cartel is finding it increasingly difficult to successfully and sustainably cap paper prices because of huge drawdown of available bullion, bullion which is increasingly being shipped to China (e.g., recent 360% increase year over year).

One insight which we garner, again, from these and many similar observations is that it is essential to consider the Interventionals as well as the Fundamentals and Technicals when making a Market Forecast or Buy or Sell Recommendation.

Thus, for example, the price of Gold and Silver on any given day may not reflect anything near their Ultimate Value. See Deepcaster‘s March, 2012 Article “Profit, Protection Despite Cartel Intervention” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.

Unfortunately, there are also ongoing Interventions in Major Markets other than the Gold and Silver markets. They are especially visible in the U.S. Equities Markets via, for example, the (nearly daily) Repo injections. [However, on the positive side, our attention to Interventions and related signals has facilitated several Profitable Recommendations recently – see Note 3].

Importantly, this fact of Ongoing Intervention is one major reason a mere ―Buy and Hold‖ strategy increasingly fails, especially as far as Equities are concerned. A Holder of the S&P through the last decade would have lost substantial value when Real Inflation is considered, and will likely lose more as Fiat Money Printing intensifies. And it Surely will.

“QE to Infinity is set in cement in the ‗European Stabilization Mechanism Treaty‘. This is the new European Union and the euro. It will be in place and operative by July of 2012.

“The European Stability Mechanism (ESM) is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism in the 17-member Eurozone. The ESM is due to be launched as soon as Member States representing 90% of the capital commitments have ratified it, which is expected in July 2012.”

Jim Sinclair, Mineset, 04/19/2012

And Ellen Brown eloquently describes the profitable consequences of the ESM bailout coup for private mega banks, some of which are shareholders of The private, for-profit Fed!

“The Goldman Sachs coup that failed in America has nearly succeeded in Europe—a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers”

“The European Stabilization Mechanism, or How the Goldman Vampire Squid Just Captured Europe,” Ellen Brown, webofdebt.com/articles, 04/18/2012, via LeMetropoleCafe.com

The Cartel’s motivation for takedown attempts of Gold, Silver, and other Tangible Assets is clear: they do not want the further legitimization of Gold & Silver (or Tangible Assets in general, for that matter) as Measures and Stores of Value (i.e. Real Money) to compete with their Treasury Securities and Fiat Currencies.

But, notwithstanding the Interventions, one can still utilize a “comparative valuation” approach. The benefit of the “comparative valuation” approach outlined above is that it actually gives one a different and illuminating perspective on Asset Inflation, Asset Deflation, and Purchasing Power. For example, if the reader chooses not to use Gold (Deepcaster‘s ―baseline asset‖ of choice) or other Precious Metals as a baseline asset, because their Paper Prices are Manipulated. We invite the reader to consider the consequences of using the Energy Assets Class instead.

But again, the Interventional Caveat applies: there exist $Trillions of OTC Derivatives available to manipulate the price of Crude Oil and other Commodities — see BIS Table referenced above.

As long as the private-for-profit United States Federal Reserve and ECB continue to profligately expand the supply of money and credit, we will see continuing debasement of the U.S. Dollar and Euro in Purchasing Power Terms and this virtually guarantees Price Inflation and another Bubble, a Financial Assets Bubble which caused Billionaire Carl Icahn to correctly call the current (3/1/2014) levels of Stock Prices a “Mirage.” Thus much of the Financial Asset, in terms of U.S. Dollars, which we have seen in recent years, is really only dollar depreciation. Indeed, the U.S. Dollar has depreciated over 30% between January, 2002 and July, 2008, for example.

In sum, therefore, if one holds appreciated (in dollar terms) financial “assets” one must consider "appreciation (or depreciation) vis-à-vis what?” Depending on one's choice, one may find that the ostensible appreciation is really depreciation. [And especially so, if one factors in the tax consequences of being taxed on a larger number of U.S. Dollars which have a substantially decreased Purchasing Power.]

Specifically, for example, measured (as of May 1, 2006, just to pick a salient date) against Gold or even other currencies, the ostensible appreciation of financial assets from late 2002 through the end of April, 2006 is arguably only a delusion . That is, it is arguably only an artifact of the Fed's profligate printing of paper money and increase of credit — enabling an unhealthy “borrowed liquidity” as opposed to a healthy “earned liquidity” (e.g. savings) to use the late Dr. Kurt Richebacher‘s (R.I.P.) superb distinction. Given this Reality, the ostensible appreciation reflects only the Increasing depreciation of the Purchasing Power of the U.S. Dollar. That is we have Prices Inflation which The Cartel and its Media Allies and Agents try to hide from us.

John Brimelow, a savvy long-time observer of Markets writes,

“Bloomberg, which in JBGJ‘s informed opinion is exceptionally top-down directed on an ideological basis even by American mainstream Media standards, has apparently been mobilized to counteract inflation fears: CPI Conspiracy Theories Fail to Die with Banana-to-Haircut Check. The invocation of the ‘Conspiracy Theory’ concept in the context of 21st Century America polemics is the most extreme form of antithematization. “Excommunication if this severity suggests alarming inflation data at least at the anecdotal level is looming.”  

JBGJ LLC, 04/18/2012

In the long run, Deepcaster believes one can find no better “Safe Haven” and Measure and Store of Value than in the Precious Monetary Metals, Gold and Silver, and selected other Tangible Assets, like basis Foodstuffs, interests in Food Producers and Distributors and Crude Oil.

BUT, we must reiterate that one essential Caveat regarding finding a “Safe Haven” and Measure and Store of Value in Precious Monetary Metals: in the short run they are still subject to the considerable price manipulation Suppression Attempts by The Cartel of Central Bankers (Note 2).

[Indeed, as long as The Cartel is in a very active interventional mode (e.g. as in taking down the price of Gold and Silver periodically) one should not be lured into thinking that the periodic up spikes in the prices of Gold and Silver necessarily present a "breakout" or a buying opportunity. As a practical matter, technical breakouts are sometimes a lure designed to suck in more "longs" prior to a subsequent deeper Takedown. Consider the parabolic spike up in both Gold and Silver prices in the hours before the Massive February 29, 2012 Takedown began.]

However, there is increasingly reason for optimism . The Cartel‘s ability to implement and sustain Takedowns has been considerably weakened recently largely because of increasing demand for Delivery of Physical Gold and Silver (as opposed to “paper,” e.g., Certain Precious Metal ETF shares) – See Below.

Moreover, Central Banks have begun to be Acquirers of Physical, and China has become (and India is) a Major net importer.

Therefore, it is essential to study the Fundamentals and Technicals even though the Interventionals can temporarily override the Fundamentals and Technicals. One must study the Fundamentals not only for all the usual reasons but also because Fundamentals somewhat constrain the timing and effectiveness of Interventions by The Cartel.

Similarly, one should study the Technicals for all the usual reasons and, in addition, because it is in The Cartel‘s interest to make its actions seem technically plausible in order to continue to “run mainly under the radar.” It is not in The Cartel‘s interest to make its Interventions any more visible than they already are. Indeed, there is Powerful evidence that The Cartel often uses and/or helps create technical patterns (aka “Painting the Charts”) which lure certain investors (such as hard asset investors) into getting “off sides” before Cartel actions such as taking down the price of Gold or Silver.

So the question is, in the next round, will The Cartel price suppressors win out when it comes to Precious Metals and other Tangible Assets prices, or will increasingly Bullish fundamentals propel them further up? Deepcaster provides his most recent Forecasts in his latest Letter and Alerts posted at www.deepcaster.com.

Whatever the answer, the mounting evidence is that the Fed-led Cartel is knowingly creating conditions designed to force the U.S (and, indeed, the entire industrialized world), to eventually choose between a Hyperinflationary Depression and the Cartel‘s ominous “End Game,” which Deepcaster has described in its Alert of 8/13/07 “Massive Financial-Geopolitical Scheme Not Reported by Big Media” and June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” all and 9/23/10 Article “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It” available at www.deepcaster.com.

As Jim Rogers and David Stockman point out, Fed Policy is impelling us to such a Climax.

In addition to acquiring Gold and Silver, another way of surmounting the Hyperinflationary Effect of ongoing Fed and ECB QE is to Invest in High Yield stocks such as those listed in Deepcaster‘s High Yield Portfolio with selections aimed at achieving Total Return (Gain plus Yield) in excess of Real Inflation (9.17% as of February, 2014 in the U.S. See Note 1)

In sum, among the key components of Deepcaster‘s prescription for achieving ―Real Gains‖ are:

1. Locating one‘s capital primarily in Tangible Assets which are in great and relatively inelastic demand, including in

2. The Agricultural Commodities, Production and Distribution Sector (which by the way, have generally begun to uptrend in late February, 2014), and in the

3. Precious Monetary Metals (e.g., Gold and Silver) but, preferably when acquired near the interim bottoms of Cartel-generated Takedowns. Timing and Selection here are key. For further details see Deepcaster‘s 12/23/07 Alert entitled “A Strategy for Profiting From Cartel Intervention in Gold, Silver, Crude, & Other Tangible Assets Markets” at www.deepcaster.com.

4. Stay informed, daily, as much as possible, regarding “The Interventionals” as well as the Fundamentals and Technicals.

5. Know the Real News and Real Statistics. Do not rely on often-spun MSM “News” and Bogus Official Data.

6. Monitor the Value of the $US, since it is the Advent of Major Climacterics.

Ultimately, the authentic stores and measures of value are Gold and Silver and other key Tangible Assets, not paper Fiat Currencies and Treasury Securities. But with the Interveners extremely active it behooves investors to regularly attend to the Interventionals as one acquires, and disposes of, and reacquires Key Tangible Assets.

Deutsche Bank assures us that the Worst is yet to come

“The worst may be yet to come in the global financial crisis as the central bank spending that kept defaults low runs out, according to Deutsche Bank AG.

Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments including Spain and Italy jumped 26 percent in the past month as the region‘s crisis flared up.

“’If these implied defaults come vaguely close to being realized then the next five years of corporate and financial defaults could easily be worse than the last five relatively calm years,’ the analysts in London said.  

Much may eventually depend on how much money-printing can be tolerated as we are very close to being maxed out fiscally.”

 “Deutsche Bank: Worst of Global Crisis Yet to Come as Rescue Cash Runs Out,” Bloomberg, 04/18/2012

That analysis, written nearly two years ago, is even more strongly applicable today.

Be Prepared!

Best regards,

Deepcaster February 28, 2014

Note 1: *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 February 20, 2014
1.5%     /    9.17%

U.S. Unemployment reported February 7, 2014
6.6%     /     23.2%

U.S. GDP Annual Growth/Decline reported January 30, 2013
2.74%        /     -1.40%

U.S. M3 reported February 15, 2014 (Month of January, Y.O.Y.)
No Official Report     /     3.07% (i.e., total M3 Now at $15.544 Trillion!)

“Only new-home sales data showed positive monthly results. Yet, with that series at 65% below its pre-recession highs, and with headline monthly and annual gains well shy of approaching statistical significance.”

“Durable Goods Orders in Downturn,” Commentary Number 603
www.shadowstats.com, John Williams, 02/27/2014

Note 2: 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.

Note 3: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

135% Profit on Equity Index Call on October 28, 2013 after just 13 days (i.e., about 3800% Annualized)


 

“Housing numbers were abysmal for January 2014. This is yet another evidence that there is a huge disconnect between Wall Street and Fedspeak, versus the real economy. The truth is, the economy stinks. Big picture stock market patterns are telling us the economy will get much worse, and an economic depression could be coming.”  

Robert McHugh, 02/19/2014

Do you own any Bonds? Does your Retirement Account hold any Bonds? Better check. And in particular check the Yield.

If the Yield is 3% or 4% or even 5%, consider whether the Real Rate of Inflation is actually eroding the Value (Purchasing Power) of that Yield to a Negative Number (i.e., to a Negative Real Interest Rate).

For the U.S. for Example, if one looks beyond the Bogus Official Numbers, one sees that the Real Inflation Rate is 9.17% per Shadowstats.com (Note 1 – Chart).

Does the after-tax yield keep pace with Inflation? Really?

And the same considerations, and questions, should be addressed for Bonds denominated in other currencies, and whether the official Numbers in those Countries are Bogus as well.

And what about Risk to Principal? Return “of” one’s money is ultimately more important than return “on” one’s money – Think Cyprus.

Consider the recent fate of Bonds issued in Argentina or Turkey. And consider what the Real Inflation Rate is in Emerging Market Countries.

The Deception/Delusion (whichever one prefers) is not only about the Real Rate of Inflation. What about “Bail-Ins” and “Super Priority” Rights of Mega-Financial Institutions in the event of another Financial Crisis (see our earlier Articles on these subjects)?

And does the country of issuance have Capital Controls? Is the after-tax Yield really sufficient to compensate for the Real Rate of inflation and Risk to Principal?

If Answers to any of these Questions Disturb you, just realize where a large Part of the Blame lies. The Fed and other Central Bankers have and are devaluing money and interest Rates to the point where Money can be borrowed at very low rates.

This has created Massive Economic, Financial and Asset Distortion – i.e., Bubbles. No wonder Savvy Investor, Carl Icahn, called current Equities levels a “Mirage.” But Bubbles Burst.

But do you want to be caught owning any of that paper?

And do you want to be caught hold any of the paper in light of another Deception/Delusion (Take your pick!) – such as “The Economy is Recovering”? Indeed, Fundamental and Technicals and Interventionals Signal Differently. Indeed, they Signal that “The Big One” is Impending. Consider recent signals via Shadowstats.

Strongest Signal for a Recession Since September 2007

“January Retail Sales Activity Plunged by 0.6% for the Month

January Annual Inflation: 1.6% (CPI-U), 1.7% (CPI-W), 9.2% (ShadowStats)

“Underlying CPI Inflation Picks Up; Economic Activity Is in Decline.    Early   indications abound of a probable downturn in the current quarter (January through March of 2014).  The increasingly likely contraction in headline first-quarter 2014 gross domestic product (GDP) has been signaled by the January 2014 reporting detail on employment ( Commentary No. 598 ), industrial production (Commentary No. 600), housing starts (Commentary No. 601) and retail sales (Commentary No. 599   and today’s Commentary).  A particular issue has arisen with real retail sales, discussed in today’s (February 20th) Commentary, along with the consumer price index (CPI).

“In addition to the various downside revisions to the economy in prior months and the reporting of weak-to-minus monthly activity in January, real retail sales (inflation-adjusted based on the CPI-U) clearly are signaling a recession.  Year-to-year change in the post-World War II series is plotted in the accompanying graph, and generally it has signaled a pending recession whenever growth dropped below 2.0%.  It hit 1.0% in January 2014, the strongest recession signal seen since September 2007.  The formal recession began in December 2007. …”

“Commentary Number 602, January CPI, Real retail Sales and Earnings,” John Williams, Shadowstats.com, 02/20/2014

[Indeed, monitoring the Preliminary Signals that the Big One is impending in recent Months has facilitated our making a series of Profitable Recommendations (Note 2 below). We aim to do the same for the Impending Big One.]

And other Data support the conclusion that it is a very High Probability that The Big One is Impending Soon.

It is important to note that the Dow topped at 16,588 on 12/31/13.

This is close to the 17,000 top which we forecast months ago.

And recently the Equities Market has been Rising on Declining Volume, but Declining on Rising Volume – a very Bearish Signal. Consider one specific example supporting the foregoing Bearish conclusion in addition to the ones we earlier laid out.

On Friday February 14, the Dow was up over 100 points (albeit on Negative Data) on Low Volume – a sign that Big Institutional Investors are Selling.

Nonetheless, short term, it is still somewhat more likely than not that there will be, one more brief Rally to a somewhat higher tops (e.g. closer to our Dow 17,000 Target). However, the Equities Market could nonetheless launch into The Great Crash at any time. Stay tuned for our forecasts.

BUT Regardless of whether The Crash starts now or in a few weeks, Equities Markets are putting in a Multi-year top .

Key Fundamentals, Technicals and Interventional confirm this.

In sum, given the Negative Fundamentals and Technicals, e.g., the Equities rising Bearish wedge and the Negative Divergence between the NYSE A/D line and stock prices, a Major Move Down of The Great Crash could begin at any time.

And here we issue one more Warning! There are many reasons to believe that The Coming Crash will be deeper and longer-lasting than the 2008-2009 Crash.

And it is important to Dispel One Other Deception/Delusion – that the Prospects for the Gold Price are Bearish. In fact, consider that ongoing Cartel (Note 3) Price Suppression attempts are being overwhelmed by Physical Demand.

Indeed, the Shortage of Physical Gold is intensifying. Asian and especially Chinese Buying and taking Delivery of Physical is at Record levels.

Couple that with China’s record January, 2014 lending y/o/y (also a 4 year high) and Fed Chair Yellen’s promise to Open the Monetary Spigots in the event of a slowdown, and one can see why Gold and Silver are rising. Inflation is on the Horizon.

Thus, our view is that a Great Launch Up is impending.

Also supporting this forecast is the fact that Gold recently closed above its 200 DMA.

Indeed, the Chinese think The Great Launch UP is coming soon and the following Credible Report so indicates:

“…how come there is such a big difference between Chinese demand reported by the WGC, 1066 tons, and wholesale demand, 2197 tons? Why is the WGC missing 1132 tons? One reason is because the Chinese are hiding it. Since 2008 the Chinese have great interest to hoard in the dark in order to diversify their US dollar reserves, strengthen their economy and protect it from external shocks. The China Gold Association (CGA) changed the way they measure demand and all other Chinese gold institutions ceased publishing reports on demand since 2011…

“Why consumer demand as presented to the world has been understated since 2008 is because the China Gold Association is manipulating the demand category net investment to suppress other categories like jewelry and bar.”

“The World Gold Council Clueless on Chinese Gold Demand?” In Gold We Trust

And lest one think that there is safety in “Cash” (i.e., in some Fiat Currency), consider Alasdair Macloed

“When US money supply measured by M2 stood at $11 trillion in December 2013, I calculate that total broad money of the next largest 50 countries ranked by GDP amounted to the equivalent of a further US$67 trillion at current exchange rates. And that's only on-balance sheet: we must add in global shadow banking, estimated by the Financial Stability Board to have been an extra $67 trillion in 2011, probably about $75 trillion today, given its recent rapid growth in China. So when we look at US broad money supply, we should be aware there is a further mountain of money thirteen times as big ultimately based on the dollar.

“As long as bank lending, industrial investment and consumption are all expanding, the sun smiles. It's when it stops that problems arise, and why markets reacted badly to the idea of tapering and are increasingly nervous about China's credit bubble and attempts to rein it in.

“More specifically the danger arises from a slow-down and possible reversal of cross-border investment, particularly with emerging economies. …

“So whatever analysis of individual countries might tell us, it has been easy to miss the threat of a deepening global recession, a risk increased by diminishing cross-border flows. What a time for the Fed and the Peoples Bank of China to decide to reduce the rate of monetary expansion for the two largest economies! These actions are too late to achieve the hoped-for orderly exit from excessive monetary expansion.

“If cross-border investment flows reverse, as they are now threatening to do, banks and multinational businesses will run for cover and the carry-trade will rapidly unwind. And when fear of losses finally triumphs over greed for profits the weaker currencies are usually the first to suffer.

“The relationship between these currencies and the dollar is now being tested in the markets. Eventually, of course, the Fed will have to resume unlimited monetary expansion to buy off a global economic and financial crisis. …

“The last crisis was just the banks. This time we are looking at a potential popping of a full-blown global currency bubble, which was generated as the solution to the last crisis. And this new bubble is all supported on an inflated US monetary base of $3.8 trillion. That's bubbly gearing of nearly 40 times, or 163 times the monetary base on the eve of the Lehman crisis.”

“All currencies are an inverse pyramid based on the dollar,” Alasdair Macloed, Goldmoney.com, 02/21/2014

Yes, indeed, The Fed will have to “resume unlimited monetary Expansion.” Consequence: The Purchasing Power of the $US will be destroyed and Gold and Silver Backed currencies (e.g., the Chinese Yuan), will Rule.

Do not allow Deceptions and Delusions to Impede your Preparation for Profit and Protection for what is Coming.

Best regards,

Deepcaster
February 21, 2014

Note 1: *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 February 20, 2014
1.5 8 %     /    9.17%

U.S. Unemployment reported February 7, 2014
6.6%     /     23.2%

U.S. GDP Annual Growth/Decline reported January 30, 2013
2.74%        /     -1.40%

U.S. M3 reported February 16 , 2014 (Month of January, Y.O.Y.)
No Official Report     /     3.0 7 % (i.e, total M3 Now at $15.54 4 Trillion!)

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

135% Profit on Equity Index Call on October 28, 2013 after just 13 days (i.e., about 3800% Annualized)

Note 3: 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.

 


Dangerous New World for Old Strategies

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so.”

Will Rogers

Knowing what “ain’t so” is increasingly important for Investors and Traders Going Forward.

Indeed, going into 2014 perhaps the most important Realization to be made is that certain Grand Investment & Trading Strategies and Assumptions which were profitable in the past (e.g., in 2013) may well not be profitable in 2014 and beyond.

“People are right to fear Paper Money.”

Warren Buffet

For one, the ongoing Currency Wars – the Competitive Devaluation (i.e., loss of purchasing power) of Fiat Currencies by Central Banks – will be an increasingly important factor, as Warren Buffet tacitly acknowledges. The Assumption that Fiat Currencies are a Reliable “Store” of wealth will be increasingly questionable.

From a broader perspective than just currencies, consider that developing and intensifying Forces recently reflected in the Economy, Markets, and Interventions make it strongly advisable that Investors and Traders consider shifting their Investing/Trading Strategies, and especially so if their portfolios were profitable in 2013.

Since the Post-Crash (Beta) Rally began in March, 2009, stocks which were excellent Bargain Values by important (Alpha) Metrics (e.g. Price-Earnings, Price-to-Book, & Price to-Cash Flow Ratios) have soared. In other words, with Beta Trends supporting top Alpha Picks, the Alpha Picks have done very well. And Equities indices are still near record Highs.

But Markets are cyclical (in other words, Beta or Primary Trends change). And Major Primary Trend Changes in Key Sectors are Impending.

Indeed, even the best Alpha Picks do not necessarily perform well, and often perform poorly when Beta Turns Against them.

In other words, when Beta does not support Alpha, Beta usually Trumps Alpha.

Moreover, (and this Critical point is often missed) Dominant Beta Trends can be Bullish in some Sectors and Bearish in others. Thus Deepcaster always aims to identify which is Dominant in each Sector.

For example, important Metrics like Inflation must be measured on a Sector by Sector Basis. Financial Assets and Energy Costs have been Inflating since the 2008-2009 Crash. Not so in other Sectors.

Moreover, but when one considers the Overall Rate of inflation, one should use the Real Numbers (cf. Shadowstats.com – Note 2) and not Bogus Official Statistics.

Considering a related example, since March, 2009, Financial Assets (e.g. Stocks) have inflated so much due to Fed Stimulus (QE) that their Values are what Carl Icahn correctly calls a “Mirage”. Too True. And Fed QE has caused considerable Price Inflation which is not reflected in the Bogus Official Numbers. Real U.S. Price Inflation is 9.08% per Shadowstats.com.

The Fed QE created Beta Trend (Inflated Assets Values) not only lifts Great Alpha Picks to New Highs but mediocre ones as well. Un fortunately, it is not sustainable, and has created a Financial Assets Bubble.

A Rising Tide lifts all Boats. But when it ebbs…

As we forecast in 2013, Beta Trends are likely to Massively Change in 2014 in Several Key Sectors. And one Major Trend change reflects the fact that a Major Market Crash in Key Sectors is likely.

Moreover, moving into 2014, we expect such Apparent Trend changes to come more often and with more Volatility. This will necessitate a Change in Strategy for many. For one thing, profits not taken quickly are often profits lost.

For example, on December 31, 2013 the Primary Trend of most Equity Sectors was very Bullish.

But as of the end of January 2014, Many Sectors had turned Bearish.

And February 2014 has thus far brought another Bullish Pulse, and increasing Volatility.

In sum, 2014 and 2015 are likely to dramatically demonstrate once again the Truth of the Adage “Buy and Hold rarely Works Anymore.” Conversely Position Trading in and out with a Multi-week rather than Multi-year Horizon does work, at least for those who wish to make and take profits, before they disappear. See our Recent Profits Taken record below to demonstrate this. (Note 1)

Now Consider certain other Key Mega-Strategy Shift Recommendations.

The U.S., Chinese, and to a somewhat lesser extent, the Eurozone economies are presently (perceived to be) the world’s strongest. But, this apparent strength is “what we know that ain’t so.”

But with nearly $3 Trillion in Vulnerable Shadow Bank Debt and a Commitment to slowing “Bridges to Nowhere” Infrastructure Spending and to increase Domestic Consumption, China is already, and promises to continue to be somewhat less of a Stimulus to Global Economic Growth than it has been.

Couple the foregoing with The Fed’s fulfilling its commitment temporarily (we seriously doubt it will last) to Tapering i.e., less Stimulus, and it is no surprise that Commodity Currency (i.e., Emerging Market) Countries (most of which supply China) and especially the Weakest Peripheral Countries’ Currencies have Crashed lately – cf. Argentina, Turkey and South Africa. But the Key Point is that the Currency Risk is not limited to Emerging Markets but ultimately extends to the Over-indebted USA and Eurozone Currencies too, because, to a degree, the USA’s and Eurozone’s Economies are tied to China’s too.

This is consistent with our forecasts for the $US and Euro, and Major Economies in General.

Considering Equities, after a down January 2014, the Dow and Transports show momentum shifting to the upside thus far in February. Indeed, we have recently forecast the Targets and Duration for this “February Rally.”

But Longer term, This January ’s Markets swoon is a harbinger of what is coming. The Underlying Economic/Structural Weakness of the U.S. and Eurozone Economies has begun to rear its Ugly Head. Coupled with a Realization of the Interlinked Nature of virtually all Major Economies (e.g. China’s slowdown effect on the USA and Eurozone), with consequent increased Recent Volatility , Major Trend changes to come in Key Sectors are predictable.

In the process of reconsidering “Old” Strategies, those who have not/do not see Gold as Safe Haven and Profit Opportunity ought to take a second look. Regarding Gold, Gold consumption in China topped 1,000 tonnes last year – growing to 1,176.4 tones with bullion demand soaring 57% – all records.

No surprise then that Gold recently broke through Major Resistance at $1275 and $1300 per ounce– The Chinese and Indians are intensifying buying and taking possession of physical, and that is driving up the price despite ongoing Cartel (Note 3) Price Suppression attempts.

In light of the following Notes from JBGJ, is it true what some claim that Gold would have to clear at least $1350 per ounce to conclusively establish an uptrend? In that connection, it is our view that there are two recent developments which make a continued Launch Up likely sooner than claimed.

We quote JBGJ:

“India’s trade deficit narrows to $9.92 bn on 77% drop in gold imports   reports  

“‘The trade ministry said it had recommended easing curbs on gold imports, prompted by the brighter trade picture.’

“JBGJ continues to think that the end of India’s gold interdiction will be the big surprise of 2014.”

“China Surprises the Bears. Next, India?” John Brimelow, Early GJ 02/10/2014

“‘Appetite from China has so far surprised on the upside. While historical seasonal patterns imply a slowdown post the Chinese New Year, interest this week seems to suggest otherwise. Volumes on the Shanghai Gold Exchange were very strong yesterday at 31 tonnes and this was corroborated by the demand we saw based on our own flows…

“‘This positive surprise from gold’s largest physical market certainly helps and is particularly encouraging considering these higher price levels.’

“It is worth remembering that Chinese demand in this order of magnitude is a new event the global gold market.”

Ibid.

Will we Precious Metal Partisans have to suffer one more Multi-Week Cartel Engineered Takedown, in light of the fact that Gold and Silver Paper Prices are increasingly resistant to ongoing Cartel Takedown Attempts? It is still entirely possible, but increasingly less likely as the days pass.

In our view, the early 2014 Gold Rise is The Harbinger of the Price Explosion to come soon. And since The Big Launch appears to be near, NOW is an excellent buying Opportunity.

The Physical Shortage is just too Critical. And Sonia Ghandi, head of India’s (the World’s 2 nd largest Importer) Congress party recently criticized the Indian Governments Persecution of Gold Merchants via Tariffs.

Moreover, Billionaire Eric Sprott recently demonstrated the Central Banks can not successfully continue their Gold Price Suppression Throughout 2014, because they are running out of Sufficient Physical Supplies to meet demand.

The Foregoing are all Key Harbingers of the Gold and Silver Price Explosion to Come soon.

Ultimately, we agree with the Strategy reflected in Neil Collins’s Financial Times Article (01/24/14) “Demand Physical Gold” because one Day Paper Price Manipulation will end “catastrophically.”

Finally, regarding that Most Honest Indicator (and one which should be central to strategic planning going forward), the Crude Oil price, we recently correctly forecast Crude’s Rally back up to $100/bbl.

Strategically speaking, if the February Equities Rally continues in the next very few weeks, we expect Crude to Rally on up beyond $100 perhaps even to $110ish. World Demand is still increasing, and above-ground supplies are tight, and the US has an increasing above-ground Crude and Distillate shortage.

Indeed, unsurprisingly to us, OPEC estimated that World Demand has now risen to 90 Million/bbl/day – a record.

Emblematic of many Trend Changes which we forecast, only the next Episode of The Great Equities Crash will likely serve to deflate Crude Demand, and thus Prices, significantly once again, but only for a while.

To Profit and protect, “Old” Strategies and Assumptions, must at the very least be reconsidered.

Best regards,

Deepcaster
February 14, 2014

Note 1: Finally! The Great Launch in a Key Sector is likely finally about to begin!

And this Rocket Launch should provide Mammoth Profits to those who jump on the Rocket soon.

Therefore, we made a Buy Recommendation for stock in a company with at least 300% Profit Potential selling for only a little over $1 per share.

To see why we think the Launch Rocket is igniting and our Buy Recommendation, read Deepcaster’s recent Alert, “Great Opportunity Launch! Buy Reco! Forecasts: Gold & Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates,” posted in ‘Alerts Cache’ at Deepcaster.com.

Btw, our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

 

135% Profit on Equity Index Call on October 28, 2013 after just 13 days (i.e., about 3800% Annualized)

 

Note 2: *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 January 16, 2014
1.5%     /    9.08%

U.S. Unemployment reported February 7, 2014
6.6%     /     23.2%

U.S. GDP Annual Growth/Decline reported January 30, 2013
2.74%        /     -1.40%

U.S. M3 reported February 7, 2014 (Month of January, Y.O.Y.)
No Official Report     /     3.04% (est) (i.e . , total M3 Now at $15.54 Trillion!)

Note 3: 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.

 


Surmounting Hostile Incoming

Posted by: Deepcaster

Tagged in: Untagged 

Deepcaster

 

“…If you view the progressive financial breakdown in America as some kind of ‘comedy of errors’ or a trial of unlucky coincidences, then there is not much I can do to educate you on the reasons behind the carnage. If, however, you understand that there is a deliberate motivation behind American collapse, then what I have to say here will not fall on biased ears.

“The financial crash of 2008, the same crash which has been ongoing for years, is NOT an accident. It is a concerted and engineered crisis meant to position the U.S. for currency disintegration and the institution of a global basket currency controlled by an unaccountable supranational governing body like the International Monetary Fund (IMF. The American populace is being conditioned through economic fear to accept the institutionalization of global financial control and the loss of sovereignty….

“The Final Swindle of Private American Wealth Has Begun,” lemetropolecafe.com, Brandon Smith, 02/04/2014

Though we do not know for sure whether the ongoing Crisis is “concerted & engineered”, that is certainly one reasonable interpretation.

We do know that there is precedent for Mega-Bank “Bail-ins” (i.e. confiscation) of Depository Accounts (cf. Cyprus and Poland) and Super-priority payments to Mega-Banks, (cf. MFGlobal) in the event of another Financial Crisis, as we and others, especially the Redoubtable Attorney and Analyst Ellen Brown, have noted.

And now we hear, in the SOTU no less, that Americans are invited to stash their wealth (such as they have left) in MYRAs, which presumably will hold Treasury Securities.

- Securities which depreciate as inflation increases.

And Investors have to cope with other “incoming” as well including Real Inflation of about 9%, Real Unemployment of 23% per ShadowStats.com.

And also we have suppression of P.M. prices. But there is a strategy for Surmounting all this Incoming and Profiting. At best American Holders of MYRA are likely to Suffer loss from inflation, and at worse loss of principal.

But arguably the more serious Incoming Threat is the Ongoing Destruction of the Purchasing Power of the $US by the private for-profit US Fed’s policies.

Consider further, Brandon Smith’s view.

If you understand that the goal of the Fed and the globalists is to dismantle the dollar and the U.S. economic system to make way for something ‘new,’ then certain recent events and policy initiatives do start to make sense….

“I stand more on the position that the Fed taper was begun in preparation for a slowdown in global markets. In fact, I believe central bankers have been well aware that a decline in every sector was coming, and are moving to insulate themselves.

“Look at it this way: The taper program distances the bankers from responsibility for any dramatic changes in our financial framework, at least in the eyes of the general public…. The Fed is creating space between itself and the economy because they know that a trigger event is coming. They want to ensure that they are not blamed and that stimulus itself is not seen as ineffective.

“We all know that the claims of recovery are utter nonsense….

“The MyRa program turns the general American public into a new cash stream, but there’s more going on here than meets the eye…

“And, are they offering the MyRA program as an easy outlet (or trap) for people to pour in what little savings they have as panic over declining equities accelerates?

“Second, the program is currently voluntary, but what if the plan is to make it mandatory? Obama has already signed mandatory health insurance ‘taxation’ into law, which is meant to steal a portion of every paycheck….

“…is this a deliberate strategy to corral the last vestiges of private American wealth into the corner of U.S. bonds, so that this wealth can be confiscated or annihilated?...

“The goal of globalists is to engineer desperation. To create a catastrophe and then force the masses to beg for help….”

Ibid.

We should emphasize that a form of Confiscation is already ongoing in the form of devaluation of the $US as revealed in the Real (as opposed to the Bogus Official Numbers) Inflation Numbers provided by Shadowstats.com. (See Note 1)

Another “Hostile Incoming” Threat is noted in Tyler Durden’s Analysis of the MYRA program — Increasing State Control of Wealth, Via (in the Case of MYRA) Nationalization of Retirement Savings, a Threat which we have earlier noted as well.

“ Simply put, the new myRA program put forward by Obama is at best a sucker's deal… or worse, it's a first step toward the nationalization of private retirement savings… .

“ Even before the new myRA program was announced, there had been whispers about the need for the US government to assume some risk for US retirement accounts. That's code for forced conversion of private retirement assets into government bonds… .

“ Of course, you can only invest in government-approved investments—like Treasuries—which probably won't even come close to keeping up with the real rate of inflation. It's like Jim Grant says: ‘ return-free risk. ’

“ In reality, a myRA doesn't really provide any significant new benefits over existing options… .

“ The net effect is the funneling of more capital to Treasury securities and thus helping the US government finance itself… .”

“The Countdown to the Nationalization of Retirement Savings Has Begun,” zerohedge.com, Tyler Durden, 02/05/2014

Yet another Hostile Incoming is a product of the Ongoing Currency Wars whereby Central Banks try to outdo each other in devaluing their Currencies. This provides temporary help to Exporters and over indebted governments but ultimately will (and in many cases has already) generated inflation.

Couple Currency Devaluation with the excesses created by the artificially low interest rates created by The Fed, QE, and one has a recipe for trouble as the Fed has begun to Taper down Stimuli. The trouble has first been obvious in Emerging Markets and has already resulted in Sudden weakness in Argentina, South African, and Turkish Currencies.

“ This Turkish cautionary tale should warn investors that the emerging-market crisis is not over. And no market -- not even the U.S.’ -- is quarantined from the damage… “ Many U.S. companies sell into emerging markets. After currency crashes, imports become unaffordable. Economies downsize and de-globalize. “ Such are the consequences of credit bubbles. Credit bubbles cannot inflate to economy-wrecking scales if they weren’t built on a foundation set by central banks. “ Here’s the sequence of events:

  • Central banks manipulate interest rates below where they would have been established in a free market
  • Bankers and borrowers go wild
  • Near the peak of the bubble, central banks tighten mildly
  • Awareness spreads that central banks -- not genuine savings -- funded the credit bubble
  • Investors sell and/or repatriate their assets
  • Calls for renewed central bank easing grow louder and louder.

“ Right now, we are somewhere between steps three and four in the above sequence. This week’s additional QE taper of $10 billion per month will prompt more investors to look for the exits. Stay defensive… ”

Strategic Short Report, 01/31/2014

So how does one surmount all the foregoing Hostile incoming.

We have long and repeatedly advocated buying Inflation–resistant Assets such as a Interests in Productive Farmland, and Water Supply/Management Resources.

And we have long advocated being buyers of Gold & Silver, with much of it held in Physical Form (e.g. Coins, bars) in one’s personal possession (i.e. Outside of the Banking System.), with some Interests in Quality Miners as well.

But it is becoming increasingly widely known that a Fed-led Banking Cartel has for years and is engaged in the Suppression if the Price of Gold & Silver. (See Note 2)

Nonetheless, the Cartel’s Price Suppression Efforts plus increasing demands from China & India have resulted in a great and increasing shortage of Physical Metal with which to make Delivery of Actual Physical.

As Brien Lundin points out.

“COMEX gold warehouse stocks have been falling dramatically, apparently in response to the massive increase in Asian gold demand (which was itself sparked by the price-takedown fostered on the COMEX exchange.)

“When you consider this along with the fact that the “gold cover” (the number of putative owners for each ounce of physical Registered gold on hand at the COMEX) has soared to an incredible 110 “owners per ounce,” then you see that the U.S. paper gold market is dancing along the precipice of potential default.

And someone may be trying to push it over the edge.”

Think of it! 110 “Owners” of each Ounce of Physical Gold in the COMEX! Suppose only a few more of them decide to demand Delivery. It is only a matter of time before the COMEX fails to make Delivery.

The COMEX will have to Default & the price of Gold will skyrocket. The market is approaching the point of No return. This is why Deepcaster provides Forecast for the timing of these Events & the prospective Equities Crash in our letters and Alerts.

Even MSM has begun to Report on the Suppression of the Gold prices. Note the following from the August Financial Times.

“From the FT’s Neil Collins: ‘Learn from Buba and demand delivery for true price of gold: One day the ties that bind the actual and the traded commodity will snap’.”

“The FT Goes There: ‘Demand Physical Gold’ As One Day Paper Price Manipulation Will End ‘Catastrophically’,” zerohedge.com, Tyler Durden, 01/25/2014

In sum to surmount Hostile Incoming acquire interests in Inflation-Resistant Assets, such as Food, Water & Gold.

Best regards,

Deepcaster

February 7, 2014

 

Note 1:

Annual U.S. Consumer Price Inflation reported January 16, 2014
1.5% / 9.08%

U.S. Unemployment reported January 10, 2014
6.7% / 23.3%

U.S. GDP Annual Growth/Decline reported December 20, 2013
1.97% / -1.70%

U.S. M3 reported January 3, 2014 (Month of December, Y.O.Y.)
No Official Report / 3.32% (est . ) (i.e, total M3 Now at $15.512 Trillion!)

From Shadowstats.com

Note 2: 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 Truth Is – I Just Don’t Know

Posted by: FusionEnterprise

Tagged in: Untagged 

FusionEnterprise

I tend to read people with whom I agree.  I confess.  This flies directly in the face of my posting about Critical Thinking.  But that is not to say that I am oblivious to the main stream media and their message about recovery, and the falling unemployment rate and their take on the relevancy of the price of gold.  I take note of the views on printing money out of thin air – oops, I’m sorry – Quantitative Easing and how it doesn’t really spell doom for the dollar.  I listen to commentators applaud Bernanke for saving our hide by coming up with innovative ways to prop up the dollar and the banking system.

I also can read a graph, and when I look at graphs published by the Fed itself, I can only come to one conclusion.  This cannot end well.  Now in the universe of people that I agree with on this point, there is a lot of chatter about how that end will play out.  Some call it a great Reset where the value of the dollar will plummet and it will either be replaced by a new face, or it will be devalued significantly to allow for the $17 Trillion debt to be serviced.  Some refer to a Great Unwinding, where $200 Trillion dollars worth of obligations unravel into a pile of paper with no intrinsic value.  Some see us Falling Off a Cliff and collapsing into chaos, martial law, toilet paper shortages, travel restrictions and a repudiation of retirement fund obligations.

And then there are those who can also read a graph but maintain that we are not in a 100 year long Ponzi  Scheme and that things will get worse, but we will not Reset or Unwind or Fall off a Cliff.  The dollar will lose its Reserve Currency status and this will affect our standard of living, but the dollar will still be a dollar and it will survive as our sovereign currency.  I call this the “muddle our way through” view and it assumes that no one will question 400 to 1 pay ratios that used to be 10 to 1, that the falling middle class will keep clawing and defending our democratic form of government and a capitalist system that rewards those who make us more productive.

This is where it is prudent to step back and take a longer view.  How does a fiat paper system fare when a government resorts to unbridled printing of new money?  How is it possible to dump thousands of tons of gold into the market in order to artificially keep the price down for fifty years, and then persuade people to believe that gold is not money?  That the citizens of India and China are deluded and they will see their gold and silver wealth crushed by a piece of paper with the face of a dead President on it?  That Fort Knox being empty is of no consequence?  That the paper profits making many bankers and financial traders billionaires were justified because they helped fuel our prosperity for 50 years?

The long historical view says to me, that this will not end well.  The dollar will lose its Reserve Status.  There will be a Bretton Woods like conference, and those with the gold will sit at the head of the table and those with empty vaults and piles of derivatives and notes and credit default swaps will sit at the foot of the table.  Bretton Woods is 70 years old this year.  Look it up and study why the dollar was given Reserve Currency status.  And while you’re at it, look up Petro-dollars and the WTO and the suppression of gold prices and how insurance is used to hedge gambling by banks. 

Yes, Critical Thinkers study history.  And the main stream media is selling us short and feeding us the company line.  The people charged with regulating our markets are turning a blind eye to overt manipulation that a fifth grader could recognize if shown 365 daily graphs.  Unemployment figures are presented with a straight face, with no attention being given to the falling levels of total employment and the falling income levels.  Inflation numbers are fudged and then fudged some more.  Yes, I conclude that it will not end well.

But I don’t pretend to know what that means and anyone who says they do is just guessing.  I don’t know if there will be a cliff or just a steady march to the bottom.  I don’t know if people will rise to the occasion and start a million local businesses that restore our productivity or if instead we are locked down by martial law to keep starving people from roaming the countryside.  I don’t know if banks will be propped up indefinitely or whether they will at last be allowed to fall into ruin.

What I do know is this.  There are things we can do that are prudent under any scenario.  Get out of debt, grow food, look for ways to be productive and form communities.  I will close with a paragraph from my very first blog entry in February 2012:

“My conclusion is that by Visualizing Intrinsic Value Alignment (VIVA) we can embark upon a journey that is appropriate for all prophetic outcomes.  For me this means I want to grow more of my own food.  Will that serve me and my family if the world economy falls apart?  Yes.  Will it still serve me if we muddle on much like we have for the last five years? Yes.  Will it serve if energy becomes scarce?  Yes.  I cannot imagine many scenarios where growing more of my own food will not be of great benefit to my well being.  I can then cast aside Future Fear and live according to my intrinsic values which assumes of course my values align with a system of productivity in community and not with derivatives and fiat currency.”

http://visualizingintrinsicvaluealignment.blogspot.com/2014/02/the-truth-is-i-just-dont-know.html

 

 

 


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