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Big Kahuna Profit Opportunities Coming Soon!

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

“Highly accommodative monetary policy for the foreseeable future…”

Ben Bernanke, Fed Chairman, 7/10/2013 and 7/17/13


“… in June, 2013, inflation was about 9.4%, up from 9.0% in May and Real Unemployment up to 23.4% from 23% in May.

Real Retail Sales and Real Earnings contracted in June… (The Official Reported) June Retail Sales Gain Reflected little more Than Rising Inflation”

Shadowstats.com, 7/15/13

 

With the aforementioned statements Bernanke’s Fed took yet another Giant Step toward unleashing The Big Kahuna. It is a step forecast by us and several other independent analysts. But it is the significant consequences of these steps toward the Big Kahuna for the Markets and Economy and the Opportunities and Risks they create for Investors that count.

Translating the phrase “highly accommodative monetary policy” yields a Clearer Fed Policy statement – the Fed will continue to print money primarily for the benefit of its Mega Bank owners/allies for the foreseeable future.

Indeed, Goldman Sachs, Citigroup, and Wells Fargo have just reported Record Profits, but wages are stagnant and Real Unemployment and Real Inflation are both rising. And by Bernanke first uttering those words the predictable result occurred – the U.S. Dollar tanked dramatically basis USDX, i.e. vis a vis other Major Fiat Currencies.

From one perspective, the Fed was impelled to make that $US-debasing Policy Statement because Major Central Banks in Europe, Japan, and elsewhere are intensifying their debasing of their Fiat currencies also. The Currency War is now in full swing.

But there is a problem with this path, especially for the USA and other debt saturated countries. Money Printing eventually entails a crashing Dollar, and a crashing Dollar means crashing Purchasing Power, i.e. Price Inflation leading to Hyperinflation and an eventual bursting of the U.S. Treasuries Bubble. Thus investors will, and already are, demanding higher yields on U.S. Treasuries to compensate for their debased dollars. And the same dynamic is becoming Manifest in other debt-saturated Fiat Currency based nations. And higher rates mean that at some point Sovereign (and other) debt repayments become unpayable.

So consider specific Consequences already becoming Manifest and the Opportunities, and Risks, this provides.

For most developed nations such currency debasement serves, temporarily, to make their exports sell more easily and to provide the illusion that their citizens’ financial assets are appreciating, when in fact they are losing Purchasing Power, just as the Fed’s ongoing QE is generating Intensifying Inflation and Unemployment which is hidden by Bogus Statistics, as the Shadowstats quote indicates.

But there are two asset classes in which the already-intensifying inflation is hard to hide. The first is U.S. T-Bonds and T-Notes, and MBS, The Fed has been buying these at an $85 billion per month clip to attempt to suppress/hide rising inflation (by keeping Treasury yields artificially low) and bolster the balance sheets of their Mega-Bank owners/allies. But, as the recent spike up in Treasury yields demonstrated, this is not a policy which can succeed indefinitely.

The mere talk of Tapering a few weeks ago catalyzed a 10-year Note weakening in which the yield shot up 100 BPS from 1.7ish to 2.7ish on the U.S. 10-year. Frankly, the Magnitude of the Spike Up in yields is yet another indication that argues that Real inflation is already intensifying.

And, when the timing is right, we expect to recommend seizing the Opportunity to Short the long-dated U.S. Treasuries once again.

Note well that Intensifying Real Inflation is also already showing up in Crude Oil.

The Crude Price is much harder for the Cartel (Note 1) to manipulate than Prices of other “Hard” Assets, (and harder even than their manipulating long bond prices as The Fed has done with some success thus far) because Crude is essential and gets used up soon after production. And, relative to other essential Commodities, Crude Demand is somewhat Inelastic. If, for example, the price of wheat spikes, consumer can switch to rice, corn, or soy. But so far as portable energy sources go, there is no good substitute for Crude Oil.

It is not merely that Crude Prices have been elevated by Fears of Intensified Mideast Conflict in Syria and Egypt. So long as War and Revolution are percolating in the Mideast, WTI Crude should remain high. Specifically so long as Egypt is unstable and thus the Suez Canal Oil Transport Corridor is at risk, expect Crude to remain elevated. If that Risk diminishes, (unlikely soon) one might expect a drop.

But note that it is not merely the Suez and general Mideast War Risk (to Supply) that has impelled WTI Crude to $105ish as we write, it is the very Real Ongoing QE-generated intensifying Price Inflation already being baked into the economy. Bogus Official Statistics serve to hide it but the Crude Price “tells the truth” and reveals it. And Fracking, much-hyped by the Big Media has thus far only increased U.S. production to about 50% (from 40%) of U.S. consumption. Thus, it is no surprise to us that U.S. Crude inventories fell 5.1% in just two recent weeks, the biggest plunge since 1982, according to the EIA.

We emphasize that, notwithstanding “fracking” the USA still has to import half its oil consumption, which, coupled with increasing Import Demand coming from China, the Eurozone, and Japan as well, supports Prices. By the way, given even the most optimistic “Fracking” Production Projections, do not expect the USA to produce more than 60% to 65% of its own oil consumption, unless there is a Major Depression.

But there is a third Factor Contributing to Crude Price rises. Sophisticated Investors know that Equities are artificially levitated and, thus overbought and over bullish, that Treasuries are no longer a Safe Haven, and that Prices of the Real Safe Havens, Gold and Silver are subject to Cartel Price Suppression. Opportunity: thus Crude Oil is becoming a Safe Haven of Choice as a Relatively Reliable Store of Value with Great Appreciation Potential.

Conclusion: Both rising U.S. Treasury yields and rising Crude Prices tell us: Inflation is intensifying.

One other indication which, but for Cartel Prices Suppression, would have already told us that inflation is intensifying, is Gold and Silver Prices.

Four straight Up Days for Gold last week legitimately gave encouragement to us Gold and Silver partisans as did the intensifying Massive Physical demand.

“Physical Gold delivered by buyers by China’s largest bullion bourse [Shanghai] in the first half of this year matched the entire amount taken from its vaults in 2012, and was more than double the country’s annual production. Output in China, the world’s largest Gold producer, reached a record 403 tons last year…”

“Gold Deliveries From Shanghai Bourse Jump on Physical Demand”
Bloomberg News, 7/15/13

 

But all of us should acknowledge that technically, so far, that Up move is only a mini-Rally in Gold’s trading range in what is still technically in a Bear Market for Gold and Silver. Indeed, The Cartel is still quite active in the Price Suppression “Game”. We are not baffled by Gold Price Suppression, unlike Grant Williams.

“..the bizarre price action of the last six months has run counter to most logical assumptions and has been a source of great frustration to many – including Grant Williams. Cyprus should have been a hugely positive tailwind for gold. But it wasn't. The ongoing money printing should have provided support for gold. But it hasn't. The talk of tapering should have had a minor but noticeable effect on gold, given its healthy recent correction. But it didn't. Sustained data suggesting a voracious appetite for the physical metal not only in Asia but in Western countries, too, should have led to a bounce on the COMEX. But it hasn't.

The whole thing is as baffling as Kim Kardashian's fame.”

ZeroHedge, 7/16/13

 

JBGJ’s comment about price suppression is surely true.

“Wednesday was as clear a demonstration as any reasonable observer could need that there is a supervising force active in gold.”

But, even given the aforementioned, these are an increasing number of catalysts impelling a dramatic Upside reversal at some point (Regarding our Specific Forecasts see Notes 2, 3, and 4 below). Physical Demand (as above) is still intensifying, especially from India and China (now importing more than it produces), and China is now the World’s number one Producer and that Physical Demand is the ultimate Catalyst for a launch.

In addition, the dramatic recent increase in U.S. Treasury Yields may provide yet another catalyst (as an inflation indicator) and in the next few weeks too. (Interest rate levels are not themselves a Precious Metals Price Suppressor, unless they approach Volcker-era highs.) And that would be helped along by the Bullion (Cartel) Banks Massive Reduction of their Short Positions, which they have already achieved. Indeed, the Central Banks continue to accumulate Physical and East to West Demand for Physical intensifies. And then there is the matter of the rapidly depleting Comex and LBMA Inventories of Physical which we have discussed before!

Nonetheless, The Cartel is still Quite Active in Precious Metals Price Suppression. But The Cartel is having increasing difficulty sustaining its Takedowns, and a Great Launch Up for Gold and Silver Prices will come. (Regarding Timing, see our Forecasts.) So there is now a Great Profit and Wealth Preservation Opportunity in purchasing Physical Gold and Silver at these prices.

Regarding Commodities-in-general, then we expect to see the whole Commodities Sector take off sooner rather than later, for many of the aforementioned reasons. After all, Major Central Banks are intensifying their Money Printing War and this is price inflationary for Commodities (including Precious Metals) as well as Equities. And Key Technicals support the forecast of a Commodities Launch sooner rather than Later.

Regarding Equities, mainly because of ongoing Inflation-generating QE (i.e. Quick and Easy profits for Wall Street and the Mega-Banks) Equities Markets have again made all-time highs. Indeed, Equities-in-general are still technically in Rally mode, despite worsening Fundamentals.

Indeed, the Technicals virtually all show the Fundamental Equities Trend is still Bullish, for Now.

In sum, we continue to forecast that that Last Gasp Rally will take Equities to new all-time highs, as a result of Central Bank Money Printing to be followed by an Equities Crash about which we have been warning (as do seven recent Hindenburg Omen signals).

By that time, the Chinese bubbles will be seriously deflating, so expect no Salvation from China. Indeed, thanks to The Fed, the Chinese Yuan will then have become the World’s Reserve Currency, because The Big Kahuna, Fed-generated Inflation- will have destroyed the Purchasing Power of the U.S. Dollar.

 

Deepcaster
July 19, 2013

 

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: We live in an era in which Juice (Central Bank Juice, not orange juice) is The Major Force moving most markets. Witness, after all the talk of Tapering, the market response to Bernanke’s recent comment that the Fed would continue “highly accommodative monetary policy for the foreseeable future...”

The $US tanked by over 100 BPS and Equities launched to all-time highs. But that consequent Equities Strength is not a result of Economic Health. With Real Inflation and Unemployment rising in the U.S. (per Shadowstats.com) and Eurozone, Equities markets cannot stay artificially levitated forever.

But there is one indication that tends to “tell the truth” about Real Inflation more than other more easily manipulable Asset classes. And it is now Flashing.

So how to play Juiced Markets? Consider that Flashing indication and our Strategic Comments and Forecasts in our latest Alert, “Juiced Markets Strategy & Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Crude Oil, Gold & Silver, & Equities” posted in ‘Alerts Cache’ on deepcaster.com.

Note 3: Since the May highs, Equities Markets exhibited a sideways chop with a downward bias, until just the past few days mini-Rally which has impelled Equities above their 2013 highs.

But within the next few weeks we can expect certain Key Sectors to begin Rallying hard and others to Fall dramatically.

Deepcaster identifies these Key Sectors and indicates why they can be expected to Rally hard or Fall dramatically in the next few weeks or very few months, in Deepcaster’s Alert, “Key Sectors to Rally/Fall; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Equities, & Crude Oil,” recently posted on Deepcaster.com.

And you will note there is one Critical Sector which we expect to dramatically plunge.

Note 4: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.

And there is an Extraordinary Buy Opportunity in One Key Sector.

To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s  ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” posted in the ‘Alerts Cache’ on deepcaster.com.


By  Michael Lombardi, MBA for Profit Confidential

 


The eurozone is still a mess. Instead of improvements, I just see more troubles. Economic slowdown in the region’s debt-infested nations is already staggering, but even those that were able to fight it are now experiencing huge problems.

Around this time last year, the European Central Bank (ECB) was very clear about its plan for the eurozone crisis. It said that it’s “ready to do whatever it takes.”

Back then it was the greatest relief to the market—the announcement calmed the rising debt rates in the eurozone and sent a wave of optimism toward the key stock indices.

But it was just a short-term fix. Take my word for it: economic slowdown in the eurozone is here to stay for a long time.

Take, for example, France—the second-biggest economy in the eurozone. France used to have a credit rating of AAA, according to credit rating agency Fitch Ratings, which is the best rating among its other eurozone peers. But France has since been downgraded a notch by the credit rating agency. (Source:Wall Street Journal, July 12, 2013.)

Fitch cited that the eurozone country’s national debt compared to its gross domestic product (GDP) reached 91.7% in the first quarter of 2013. It expects the French national debt ratio to peak at 96.0% in 2014.

Fitch also provided an anemic outlook for the French economy. The credit rating agency expects the country to witness an economic slowdown this year, following mediocre growth in 2012. Unemployment in this France is also troublesome. It stands at a 15-year high of 10.9%.

Germany, the biggest economic hub in the euro region, is experiencing turbulence as well. It’s not seeing an outright economic slowdown, but it’s certainly not far from it. Exports from the country plummeted nine percent in May to 38.1 billion euros. German investor confidence also declined for the first time in three months—suggesting that the economic outlook isn’t very bright. (Source: Bloomberg, July 16, 2013.)

Here’s what all the economic slowdown in the eurozone comes down to: the corporate earnings of the companies trading on key stock indices.

Dear reader, you need to keep in mind that the eurozone, all 17 member nations combined, consumes a significant amount of goods and services. If the unemployed in the region hits a record high, major hubs start to slow down, and demand becomes the next victim.

In the first quarter, we saw 11 of the 30 Dow Jones Industrial Average companies provide their sales figures from the eurozone. Nine of the 11 reported a decline year-over-year. (Source: FactSet, May 28, 2013.)

We are currently in the midst of second-quarter earnings season. I expect more companies to show struggles in the region. My reason is very simple: even if we disregard the already struggling eurozone nations like Greece and Spain, stronger nations like France are suffering an economic slowdown, and Germany is struggling. There will be consequences.

Michael’s Personal Notes:

Face it: there is no real economic growth in the U.S. economy. The only reasons the key stock indices keep rising are nothing more than easy money and false optimism. They are anything but a key indicator, and you should not use them as one.

The reality of the U.S. economy is completely the opposite of what’s happening in the markets.

I often say in these pages that economic growth only occurs in the U.S. economy when consumers feel good and spend money. But I see more and more evidence of consumers not spending—many are actually struggling. Don’t buy into the mainstream media’s belief in economic growth.

Instead, look at indicators like the U.S. retail and food services sales for June. They increased 0.4% from the previous month to $422.8 billion and have increased 5.7% from June of 2012. In the second quarter (April through June), retail and food services sales in the U.S. economy were up 4.6% from the same period a year ago. (Source: U.S. Census Bureau, July 15, 2013.)

While that might sound impressive, the chart below will show you something you won’t see the in the mainstream. It shows the percentage change in retail and food services sales from a year ago.



Clearly, the retail sales increases aren’t nearly as amazing as they seem at first glance. The rate of change is actually slower than it was a year ago—and has been trending downward since 2011.

But there’s further proof consumers are not buying. Manufacturing and trade inventories for the month of May have increased 0.1% from April, and 3.8% from a year ago.

And some industries are feeling it worse than others. Inventories at motor vehicle and part dealers were up 12.7%, and inventories for clothing and clothing accessories stores increased 4.6%. (Source: U.S. Census Bureau, July 15, 2013.)

Here’s what is actually happening: consumers in the U.S. economy are spending their money on basic needs. From April to June, consumer spending at gas stations has increased little more than 3.3%.

What’s even more troubling is that crude oil prices have jumped due to tensions in the Middle East. That means that gas prices will soar even higher. And that will result in even more trouble for consumers in the U.S. economy.

On top of all this, contrary to economic growth, Americans have another problem. Instead of getting full-time jobs, many are only able to get part-time work. This year, on average, the number of part-time jobs that have been added each month in the U.S. economy, seasonally adjusted, sits at 93,000. But only about 22,000 full-time jobs have been added. (Source: Wall Street Journal, July 14, 2013.)

Dear reader, I find myself tired of saying this, but numbers don’t lie. They are saying economic growth in the U.S. economy is simply a myth. You must keep in mind that consumers are the driving force behind any economic growth in the U.S. economy. The longer they suffer, the longer it will take the U.S. economy to get back on its feet.

We may see higher corporate earnings from big-cap companies for now. They are buying back their shares, but consumers are the ones who buy their products. The numbers will eventually catch up, and their corporate earnings will suffer.


“Shadowstats Alternate Unemployment Measure rose to a series high 23.4% in June up from 23% in May, 2013.”

shadowstats.com, 7/5/2013

 

Three Key Economic/Resource Realities provide Opportunities (or Threats if unacknowledged) for Investors going forward.

Deepcaster periodically publicizes and analyzes such Opportunities/Threats because much of the Mainstream Media either fails to report, or blacks out, or spins and distorts such Critical Information.

First, Deepcaster periodically provides Updates on the Real Numbers on the U.S. Economy and other economies so Investors will not have to Rely on Bogus Official Ones in making Investing decisions.

In fact, Real unemployment is increasing in the U.S.A., and has now risen to a record 23.4%! (Note 1)

This is significant not only because of the devastating impact on the poor souls who cannot find work, (and reflects indeed the increasing impoverishment of the USA’s middle class) but also because it means that the U.S. Consumer – 70% of the U.S. Economy – is not going to be able to generate or sustain an economic recovery.

Shadowstats numbers also “Warn” that the U.S. is already Threshold Hyperinflationary with Real CPI at 9% (generated by ongoing Massive Central Banks’ QE) and Real GDP a Negative -1.98%. See Shadowstats Chart (Note 1). These increasing CPI numbers signal an Opportunity for those who Invest with an eye to the coming Hyperinflation and a Threat to those who do not. See Notes 2, 3 and 4 below re Specific Recommendations.

The Focus of another Opportunity/Threat is on the Prospects for Stability in the Mideast and its effect on Crude Oil supplies and Prices.

We have earlier pointed out that even with the increased Oil Production resulting from fracking, total oil production now in the U.S.A. has now risen to only half of consumption, and (contrary to Mainstream Media generated Opinion) not likely ever to exceed 2/3 of consumption, absent a Depression. And other Major Developed and Developing Economies such as the Eurozone and China consume much more then they produce, and will likely do so for a long time to come.

Therefore, the U.S. and Developed world will continue to rely on the Mideast for Crude for the foreseeable future.

But consider the prospects for Mideast stability, and specifically the ability to safely ship Oil through Egypt’s Suez Canal, in light of the following

“…it's worth revisiting   the analysis Chris wrote 2 years ago…

“While the power players are now different, the underlying factors persist.

 

“Here are a few quite relevant statistics about Egypt

 

The relentless math:

 

Population 1960:  27.8 million
Population 2008:  81.7 million
Current population growth rate: 2% per annum (a 35-year doubling rate)
Population in 2046 after another doubling:  164 million

 

Rainfall average over whole country:  ~ 2 inches per year
Highest rainfall region:  Alexandria, 7.9 inches per year
Arable land (almost entirely in the Nile Valley):  3%
Arable land per capita:  0.04 Ha (400 m 2)
Arable land per capita in 2043: 0.02 Ha
Food imports: 40% of requirements
Grain imports: 60% of requirements

 

Net oil exports: Began falling in 1997, went negative in 2007
Oil production peaked in 1996
Cost of oil rising steeply
Cost of oil and food tightly linked (since portable fuel, i.e., oil/gasoline is the primary energy source for food production –Ed.)

 

The future of Egypt will be shaped by these few biophysical facts -- a relentless form of math that is hardly unique to Egypt, by the way -- and it matters very little who is in power.

“The interesting part is that these facts have been in plain view for decades, building into economic and social pressures that were suddenly unleashed in a wave of social and political unrest. How was it that such obvious things escaped notice for so long before they suddenly reared up into plain view? Instead of being a surprising exception to the rule, we should instead brace ourselves against the idea that this is just the way things tend to work. 

“Back to the main story. Without persistent (and rising) food imports, Egypt cannot feed itself. It has managed to cover up the shortfall by having enough oil to export, but, like every country, their oil reserves are finite and eventually they'll face a day of reckoning.  

“The oil situation in Egypt has only very recently become an enormous and unavoidable issue.

 

“The re-emergence of political turmoil we're witnessing is quite predictable from the "relentless math" Chris laid out. Or perhaps more directly put:   resources don't care about politics .” (Emphasis added)

 

“Revisiting Egypt’s Warning,” Adam Taggart, peakprosperity.com, 07/03/2013

 

The principles reflected in the foregoing facts (e.g., regarding population carrying capacity) about Egypt can be applied to every country.

They reveal one (of several) demographic fallacy(ies).

That is the Fallacy that Population Growth is always or usually Good for an Economy and the Citizens of that Nation. (See carryingcapacity.org for more on Population/Resource carrying capacity.)

Egypt’s population has been doubling every 35 years and it has a huge cohort of unemployed youth.

Apart from the fact that such a huge Youth Cohort creates high Revolutionary Potential, (as we are now witnessing) there are other Negatives.

Consider the high and rising Unemployment Rate (well in the double digits for Youth).

But how is it possible for an economy to increase jobs if virtually all of its arable land is already under cultivation, it is a net food importer and a net energy importer. Providing the essentials --- food, potable water, and energy – are the necessary conditions for any other kind of sustainable economic health or development.

No amount of Tech Prowess can significantly increase Food Production without a “reservoir” of arable land and potable water, or increase hydrocarbon reserves at all, if the hydrocarbons are not there.

In short, in light of its resources base, Egypt has already overshot its Optimum Population Carrying Capacity. [ Carrying capacity refers to the number of individuals who can be supported in a given area within natural resource limits, and without degrading the natural social, cultural and economic environment for present and future generations. The carrying capacity for any given area is not fixed. It can be altered somewhat by improved technology, but not to an unlimited degree. Mainly, it is changed for the worse by pressures which accompany a population increase. As the environment is degraded, carrying capacity actually shrinks, leaving the environment no longer able to support even the number of people who could formerly have lived in the area on a sustainable basis. No population can live beyond the environment's carrying capacity for very long.]

Thus the consequences for Mideast stability and future Crude Oil Availability are not promising. But they do provide an Opportunity to profit from Crude Oil Price Rises.

Ominously, other countries in the developing (and developed) world present similar problematic profiles (consider India and Bangladesh, for example).

Such “Net Importer” low carrying capacity countries, when overpopulated, present a Real Drag on the economy.

The Third Opportunity/Threat is provided by The Fed’s apparently Intentional Policy of Creating Confusion. Will they taper or won’t they, and if so, when?

For example, the “News” dribbling out before the FOMC Minutes were recently released suggested they would begin Tapering this year, probably in September.

But when Bernanke subsequently indicated that The Fed’s QE would continue as long as necessary – and The Fed would adopt “a highly accommodative policy for the forseeable future” -- it had the effect of boosting Equities to all-time highs. The critical Fact is that these all-time highs are artificially created by Q.E. and not by fundamental Economic Strength.

In fact, (as we have argued elsewhere) The Fed can not end QE (Witness what happened in the Markets when they just hinted they would) until “Forced” to do so because the consequent Hyperinflation has spun out of control and/or we have Serious Stagflation. Indeed QE to Infinity is with us until such occurs.

Meanwhile, Investors can invest and profit and protect wealth from knowing that QE is not going away any time soon, and that it will inevitably create Hyperinflation, and by acting on that knowledge.

Best regards,

Deepcaster July 12, 2013

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 June 18, 2013
1.36% / 8.99%
U.S. Unemployment   reported July 5, 2013
7.6% / 23.4%
U.S. GDP Annual Growth/Decline   reported June 26, 2013
1.62% / (negative) -1.98%

U.S. M3

  reported July 5, 2013 (Month of June, Y.O.Y.)
No Official Report    /
(e) 4.37% (i.e, total M3 Now at $15.189 Trillion!)

Note 2: Since the May highs, Equities Markets exhibited a sideways chop with a downward bias, until just the past few days mini-Rally which has impelled Equities back near their 2013 highs.

But within the next few weeks we can expect certain Key Sectors to begin Rallying hard and others to Fall dramatically.

Deepcaster identifies these Key Sectors and indicates why they can be expected to Rally hard or Fall dramatically in the next few weeks or very few months, in Deepcaster’s latest Alert, “Key Sectors to Rally/Fall; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Equities, & Crude Oil,” just posted on Deepcaster.com.

And you will note there is one Critical Sector which we expect to dramatically plunge.

Note 3: Are two Key Sectors reversing powerfully?

Or are we just witnessing Head Fakes, soon to be re-reversed powerfully?

There is increasing evidence that the Reversal of one Key Sector is For Real and that this is the time to jump on board. The other appears to be a Head Fake.

To consider the evidence, consider our Forecasts in our recent Alert “Key Sector Reversals?!!; QE Forecast Shocker; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Crude Oil, Equities, Gold & Silver,” posted at deepcaster .com.

And we just issued a Shocking Forecast for QE.

Note 4: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.

And there is an Extraordinary Buy Opportunity in One Key Sector.

To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s recent ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” posted in the ‘Alerts Cache’ on deepcaster.com.


Inflation adjusted income

Posted by: satgent03

Tagged in: Untagged 

satgent03

I was attracted to this blog because of the multiple articles documenting how income has been degraded due to inflation and policies over the last 40 years or so.  It seems I read either here or somewhere else that 40% of US workers now make less in inflation adjusted wages than someone working for minimum wage in 1964.  Anyone know if that is true and what rate of inflation was used in those calculations?


Mega Trend Nuggets for Investors

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

“More than three quarters of Americans say they are living paycheck to paycheck, with barely enough to scrape by in an emergency. In a survey of 1,000 adults, fewer than one in four said they had enough money to cover expenses for six months. Half said they had less than a three month cushion, while a quarter said they had no savings at all.”

CNN.com, 7/2/2013

Successful Investors are typically those who keep in mind the Great Trends And Fundamental Realities when making their decisions. And these Trends are not usually those on which the MainStream Media, with its addiction to “reporting” Politically Correct GroupThink, focuses.

For example, it is widely reported that the citizens of Greece, Portugal, Italy, and Spain are in increasing economic difficulty. But it is not as widely reported (and when reported, not focused on) that a majority of Americans, for example, are increasingly living on the economic edge, and that therefore, one cannot expect that consumer spending (70% of U.S. Economy) will Buoy an Economic recovery.

But even though the Trends and Realities may be Negative (as is Americans’ impoverishment described above) they often provide investors with Opportunities for Profit and Wealth Protection.

And the other Key Trends and Realities on which we focus here are vastly underreported,  if reported on at all.

“The compounding debt is the monster that is easting the U.S. The only way out is to renege on the debt or try to pay it off with inflation or hyper-inflation. The bull market in bonds is over. From now on, we’ll be dealing with a bear market in bonds, at which time natural forces will drive bonds down, and as bonds fall, interest rates will rise. 

“Since 1982, rising bond prices in the bond bull market and falling interest rates have buoyed stocks and encouraged Americans to borrow and leverage. Them days are now gone. Coming up is payback time. That’s the down-to-earth story. All else is daily news and noise and rumors and waiting. 

“Medical and Social Security costs are due to soar as 10,000 people a day will turn 65 for the next 17 years. 

“Interest rates will devour the U.S. By 2024 interest payments on the Federal debt will quadruple. Thus, even if the yearly deficit declines, the national debt will grow.”

 Richard Russell, DowTheoryLetters.com, 7/2/2013

We are not alone in reporting the ongoing Sovereign Debt Hyper-saturation and its consequences. But, unpleasant as it is, that Reality will be with most developed and key developing, Nations (e.g. China, India and many Eurozone nations) for years. It will therefore limit political and economic options and require hard choices for years to come.

But Debt Hypersaturation also carries a considerable threat for investors – Bail-ins – as Gene Frieda notes.

Eurozone banks' legacy debt problems must be cleaned up first—

“The newly agreed bank recovery and resolution directive swings Europe from one extreme - a system laden with implicit government guarantees that protected bank creditors from bearing losses - to the other. 

“The regime creates a serious time inconsistency problem by requiring private bank creditors to cover any significant losses without first cleaning up legacy debt problems. Without comprehensive efforts to restructure corporate debt, clean up banks' balance sheets and fortify the European Stability Mechanism, bail-in will leave Europe much more prone to old-fashioned bank runs than in the past.

“In 2010-11, most of the periphery economies ran large current account deficits. When foreign funding for these deficits dried up, the periphery experienced a sharp rise in public and private borrowing costs that plunged their economies into deep recession and, in several cases, threatened default and exit from the euro area. Foreign ownership of public debt fell by a third in Italy and by half in Spain. Not only did the periphery experience a sudden stop in capital flows, but the stocks of past foreign investment began to unwind. The outright monetary transactions programme stopped the stock unwind, but did little to generate a return of foreign investment. 

“The risks ahead are twofold. First, given the need to deleverage, periphery GDP growth will be weak and persistently vulnerable to shocks. But in the context of the new bail-in regime, a second, arguably more urgent risk has been introduced: that of a renewed unwind of past foreign investment, and indeed capital flight by domestic bank creditors intent on avoiding being bailed-in. 

“Bail-in increases the loss that prospective creditors suffer in the event of a bank failure or resolution event. Against that backdrop, what should periphery bank creditors do in response to the threat of bail-in? Holders of senior unsecured debt should feel least secure, since they are now at the top of the pecking order. Given the persistence of high sovereign borrowing costs, this form of debt may well disappear in the riskier parts of the euro area. Uninsured depositors will move one step closer to being bailed in. (emphasis added) 

“Secured lenders to banks will still lend against good assets, and the banks will in turn need to rely more on such funding. As the share of encumbered assets rises, unsecured creditors, including depositors, become ever more nervous. The bank is, after all, pledging its best assets to minimize its cost of funding.” 

“Market Insight: Bail-in regime risks old-style bank runs”
Gene Frieda, global strategist for Moore Europe Capital Mgmt, 7/3/2013

Indeed, insured Depositors will likely be bailed-in (Have their deposits confiscated) as well as Ellen Brown points out.

 “When Dutch Finance Minister Jeroen Dijsselbloem told reporters on March 13, 2013, that the Cyprus deposit confiscation scheme would be the template for future European bank bailouts, the statement caused so much furor that he had to retract it. But the ‘bail in’ of depositor funds is now being made official EU policy. On June 26, 2013, The New York Times reported that EU ministers have agreed on a plan that shifts the responsibility for bank losses from governments to bank investors, creditors and uninsured depositors. 

“Insured deposits (those under €100,000, or about $130,000) will allegedly be ‘fully protected.’ But protected by whom? The national insurance funds designed to protect them are inadequate to cover another system-wide banking crisis, and the court of the European Free Trade Association ruled in the case of Iceland that the insurance funds were not intended to cover that sort of systemic collapse. 

“Shifting the burden of a major bank collapse from the blameless taxpayer to the blameless depositor is another case of robbing Peter to pay Paul, while the real perpetrators carry on with their risky, speculative banking schemes.” 

“Think Your Money is Safe in an Insured Bank Account? Think Again.”, Ellen Brown, via LeMetropolecafe.com

And of central importance as well as the Debt Saturation and Systemically Risky Mega-Banking Crises are Bogus Official Statistics in the U.S., China, and elsewhere. Regarding the U.S. for example, Real Inflation is 8.99%, Real Unemployment 23%, and Real GDP a (Negative) -1.98% (see Shadowstats chart in Note 1 below).

And then there are the Slowdowns and Bubbles (which make the slowdowns more difficult to deal with). China, for example, claims GDP growth is 7.7%. But the hard numbers (e.g. Chinese electricity growth of 2.7%) indicate it is far lower than that.

And regarding bubbles, China has them in spades. Wang Shi, Chairman of the huge Chinese property developer China Vanke Co., when asked on 60 Minutes if there is a property bubble, said “Yes, of course. …if that bubble [bursts] – that's a disaster,” (3/3/13).

“Traders took solace in comments from Ling Tao, a deputy director of the Shanghai branch of the People's Bank of China, who attributed the recent spike in interbank lending rates to ‘seasonal factors’… 

“Tao’s comments may signal the end of the recent scare but by no means indicate that China’s banking system is on the road to recovery, according to Jim Rickards, senior managing director at Tangent Capital and author of Currency Wars….

“‘It’s a giant Ponzi scheme,’ Rickards says of the wealth management products being marketed by Chinese trust companies. ‘There’s a lot to be concerned about.’

“In a nutshell, the ‘shadow’ banks borrow from China’s state-controlled banks, use the funds to finance construction projects and sell bonds tied to those projects with yields far above bank savings rates.

“‘The Ponzi scheme is going on with retail investors…they don’t want 1% or 2% in the bank or even less,’ Rickards explains. ‘The quasi banks come along and say ‘we’ll give you 6%-7%-8%.’ They take the money, invest in these assets that are completely non-productive [with] no way to be able to pay off the debt.’…

“In true Ponzi scheme fashion, the key here is that the shadow banks use the proceeds from the latest asset sale to pay off investors from prior ventures. “They never sell the assets,” Rickards says. ‘They sell [new] products and use that money to pay off the old guys.’

“China’s leadership is well aware of this problem, he adds, which explains why they’ve recently stood by as the spike in interbank lending rates caused a cash crunch and accompanying market freakout.

 “…’there’s no good outcome.’

“China’s ‘Giant Ponzi Scheme’ Won’t End Well: Jim Rickards”
The Daily Ticker, finance.yahoo.com, 06/25/2013

And we have been calling attention for months to the all-time largest Bubble – the U.S. T-Bond Bubble, a Bubble which had already started to deflate, as rising rates which we forecast attest. But there is Good News on the Horizon – the Cartel’s (Note 2) thus far successful Precious Metals Price Suppression Attempts may be ending.

“The singular more important development in the gold market in my 53 years being involved in gold is the Russian cash bullion market now in the process of development. This is a new broad public means of gold price discovery that sits ready to replace the paper gold manipulative fraud market. 

“Russia and China cannot be pleased by the Fed utilizing the Gold banks to move gold around so violently. Yes, they can buy cheap but so can you. Are you happy with the COMEX paper gold ability to manipulate price at will? You can buy gold cheap, but I hear precious few voices enthralled with the opportunity the COMEX knuckle draggers have offered us at $1187. 

“With a cash exchange functioning in Russia, the bombastic paper offering of multi-year world production will get its hand called and head handed to the paper manipulators. On this exchange you deliver the real gold or get bought in real gold. 

“I would love to have a membership on that exchange. 

“After one more try in late 2014 the manipulators will be flattened by Russia’s ‘Free Gold’ friends.” 

“The Russian Cash Bullion Market”
Jim Sinclair, jsmineset.com, 6/30/2013

Indeed. Demand for Physical continues to Skyrocket with Chinese imports via Hong Kong up 68% in May, year on year. We and other Independent Analysts have been recommending (and still do) buying physical Gold and Silver to Profit and move assets outside of the Banking System. And regarding Deepcaster’s related recommendations for Purchasing Power and Wealth Protection, see Notes 3, 4 and 5 below.

Given Russia’s development of the Physical Gold Exchange and impending Hyperinflation, the question of timing becomes important. Consider John Williams very well-informed Analysis.

“U.S. Dollar Remains Proximal Hyperinflation Trigger.  The unfolding fiscal catastrophe, in combination with the Fed’s direct monetization of Treasury debt, eventually (more likely sooner rather than later) will savage the U.S. dollar’s exchange rate, boosting oil and gasoline prices, and boosting money supply growth and domestic U.S. inflation.  Relative market tranquility has given way to mounting instabilities, and severe market turmoil likely looms, despite the tactics of delay by the politicians and ongoing obfuscation by the Federal Reserve.

“This should become increasingly evident as the disgruntled global markets begin to move sustainably against the U.S. dollar.  As discussed earlier, a dollar-selling panic is likely this year—still of reasonably high risk in the next month or so—with its effects and aftershocks setting hyperinflation into action in 2014.  Gold remains the primary and long-range hedge against the upcoming debasement of the U.S. dollar, irrespective of any near-term price gyrations in the gold market.

“The rise in the price of gold in recent years was fundamental.  The intermittent panicked selling of gold has not been.  With the underlying fundamentals of ongoing dollar-debasement in place, the upside potential for gold, in dollar terms, is limited only by its inverse relationship to the purchasing power of the U.S. dollar (eventually headed effectively to zero).  Again, physical gold—held for the longer term—remains as a store of wealth, the primary hedge against the loss of U.S. dollar purchasing power.”

“Gold Price and Market Instabilities, No. 537”
John Williams, shadowstats.com, 6/30/2013

Many of the foregoing Trends and Realities may seem Daunting and Depressing but, in fact, most are also Knowledge-Nuggets providing Opportunities for Profit and Wealth Protection. 

Best regards,

Deepcaster
July 5, 2013

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 June 18, 2013
1.36%     /     8.99%

U.S. Unemployment reported July 5, 2013
7.6%     /     23.4%

U.S. GDP Annual Growth/Decline reported June 26, 2013
1.62%        /     -1.98%

U.S. M3 reported June 17, 2013 (Month of May, Y.O.Y.)
No Official Report     /     4.24% (i.e, total M3 Now at $15.126 Trillion!)

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: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.

And there is an Extraordinary Buy Opportunity in One Key Sector.

To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s  ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” posted in the ‘Alerts Cache’ at deepcaster.com.

Note 4: “The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck with that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.” --Paul Volcker, Former Fed Chairman, June, 2013

Indeed! The St. Louis Fed’s adjusted Monetary base shot up from $800 Billion in 2009 to $3.2 Trillion in June 2013.

And as Shadowstats correctly notes, Real Inflation in the USA is Already a Threshold Hyperinflationary 8.99%.

And if you are in an indebted Country in the Developed or Developing World, there is now a probability that your bank deposits will be confiscated. First Cyprus. Now Japan. Tomorrow (Your Country?!) – The aforementioned are Indicators that three MEGA Developments are coming.

To consider The Three MEGAS coming soon and how to prepare to Profit and Protect, read Deepcaster’s recent Article, “Prepare! – Three MEGAS Coming & What to Do,” posted in ‘Articles by Deepcaster’ on deepcaster.com.

Note 5: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, nearly 9.0% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.

One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.99% per year in the U.S. per Shadowstats.com).

To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%,  8%, 15.6%,  8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4%  when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’


Analyst Fabrice Taylor on Apogee Silver

Posted by: kingscorpion

Tagged in: Untagged 

kingscorpion

The top five TSX rookie stocks of the year

 

No. 623Apogee Silver Ltd.

Get your bling on the cheap. Apogee can be considered a “near-producer” because its Pulacayo-Paca deposit in Bolivia has 95 million ounces of silver, has gone through a preliminary study and already produces small batches. The company has completed a financing in which insiders—down to the mine manager—participated. That’s almost unheard-of in this business. So what do you pay to buy silver in the ground by investing in Apogee’s stock? About 15 cents an ounce. Many full-fledged producers trade for about $4 per ounce, and near-producers for $1 to $2. Eventually, Apogee’s discount will be recognized, and its share price will climb. And Apogee’s chairman is Scott Paterson, the hard-driving head of Yorkton Securities in the late 1990s, who certainly displayed a flair for getting new issues to market, but then was fired and paid $1 million to settle an Ontario Securities Commission investigation into conflict of interest.


CLIMACTERIC EFFECTS & INVESTMENT STRATEGY

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

“’The Fed can continue to spew out QE until the bond market says it can’t.’ - Richard Russell. PS: The bond market has said that ‘it can’t.’”    

Richard Russell, dowtheoryletters, 06/21/2013

“The real menace of our Republic is the invisible government which like a giant octopus sprawls its slimy legs over our cities, states and nation. At the head is a small group of banking houses…This little coterie…runs our government for their own selfish ends. It operates under cover of a self-created screen…seizes…our executive officers… legislative bodies…schools…courts…newspapers and every agency created for the public protection.”

John F. Hylan, Mayor of New York, 1918-1925
via lemetrepolecafe.com

“Some even believe we (the Rockefeller Family) are part of a secret cabal working against the best interests of the United States, characterizing my family and me as internationalists and of conspiring with other around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”

David Rockefeller, Memoirs, page 405
via lemetrepolecafe.com

“The Critical Trend toward higher interest rates has begun,” Deepcaster has been saying for several weeks now. And yields on the most important rate in the world – the U.S. 10-year Treasury – have popped up to 2.6%ish from well below 2% just a few weeks ago.

And all this simply because The Fed announced a conditional (confirmed by Fed Governor Dudley) plan to begin tapering stimulus, later this year. But isn’t it true that since the initial Negative reaction to this conditional tapering plan was so severe – witness the consequent Bond and Equities Markets sell-offs – that The Fed will likely not be able to remove stimulus according to plan by 2014?!

In any event, the consequences of this Climacteric Trend of increasing Interest Rates for Investors, Markets, and Economies are considerable regardless of whether The Fed tapers according to plan. Consider just Brazil, Australia, Japan, Spain, and Italy, as examples.

On the news from The Fed, Brazil’s 10-year rate shot up over 200 BPS from 9.5%ish to 11.5% and, consequently, Brazilian interest rates to businesses and consumers shot up too. Coupled with the slowdown in Chinese demand for raw materials from Brazil and China’s curtailing of Credit to businesses, this puts a considerable crimp in Brazil’s Emerging Market economy. And Australia too has suffered similar effects with a shock to its Equities Markets and a dramatic drop in the Exchange Value of its Currency. And if the Yield on the Japanese 10-year reaches 2%, 80%  of Japan’s Tax Revenue would be required to service that Debt.

And so too does the interest rate spike and upward Rate trend for the economies of Spain and Italy, and ultimately the U.S.A. Rate spikes increase the debt servicing burden, and dangerously so for over-indebted countries such as Japan, Spain and Italy. None of the Eurozone’s structural problems has been solved and increasing rates will make achieving a Real Solution more difficult, if not impossible.

And all this occurred simply on the Catalyst of the announcement of The Fed’s conditional plan for tapering. But consider implications of the fact that increasing rates will make debt service that much more difficult (and impossible for some), and not just for Japan, Spain and Italy, but also for the USA and other Debt Saturated Nations.

All the foregoing implies that any Economic Recovery will be that much more difficult everywhere. And that implies that The Fed (and other Central Banks) will not be able to end QE according to schedule. Or, until Hyperinflation forces them to.  In sum, QE to Infinity, (i.e. until likely Hyperinflation and then collapse), looms on the horizon. Key Investment Strategy: Be prepared for much Higher Inflation [of course, Key Official Sources dramatically understate Inflation already – for example, Real Inflation is the U.S. is already nearly 9% per Shadowstats.com].

Another consequence of the U.S. Treasury Rate Spike was a boost for the $US vis-à-vis other Fiat currencies. The $US was up nearly 200 BPS on the news. Not surprising, because two major determinants of a currency’s strength are Interest Rates and Purchasing Power Parity. Result: Interest rates UP, therefore Dollar UP (but only for the short to medium term as our analyses published elsewhere show).

Consider finally one other development with profound Investment implications:In the week of The Fed’s Tapering announcement,  Bonds fell along with Equities. Typically, Bonds strengthen when Equities fall because they are deemed a Safe Haven. Both falling together is Ominous. See our Forecasts & Notes 2, 3, 4, and 5 below for the forward looking implications.

Given the Hyperinflationary Threat resulting from the Central Bank’s Money Printing, Investors wisely would turn to Real Money, Gold and Silver, as Safe Havens.

But Real Money is a Mortal Threat to the Central Banks Fiat Currencies & Treasury Securities (witness e.g., the Indian Central Banks/Government’s repeated increases in Tariffs on Imported Gold).

And predictably, The Fed-led Cartel (Note 1) is using $US strength as a pretext to yet again take down the paper prices of Gold and Silver.

Significantly, however many Central Banks are using this Paper Price Takedown as an opportunity to purchase Physical as are Investors in China and India in increasing amounts.

We have earlier advised, and do still advise, that investors seriously consider taking their cue from the Central Banks, Chinese, and Indians to Buy, and take personal delivery of Physical while it is cheap. This will allow you to move some of your assets outside of the banking system. We forecast you will be very happy you did that in the not too distant future.

Cyprus “Bail-ins” (making large Depositors liable for Banks’ liabilities—e.g., Sovereign Debts not being Repaid) are likely to be writ large in countries around the world. In other words, if Sovereign Debts can not be paid due to rising Rates (already the case for some countries) then “Bail-Ins” for Banks hold the Toxic Paper become highly likely. Indeed, Mega-Banks around the world are prospectively legitimizing “Bail-Ins” of Depositor Funds.

“Have you protected yourself from the inevitable bail-in? Theft is coherent only to thieves. The banks lost the money.  You did not. You can be sure the banksters are fully protected from bail-in….

“France Finance Minister: Including ESM Option in Bail-In Makes Whole Deal Coherent

“BRUSSELS–Including the European Stability Mechanism bailout fund in the plans for rescuing banks creates "solidity and solidarity" for the bloc, France’s finance minister Pierre Moscovici said in the early hours of Thursday morning, after EU finance ministers reconvened following inconclusive talks in Luxembourg last week.

"’Some countries didn’t think on Friday the ESM should be included, we thought it should, be, it is–and it makes the whole thing coherent,’ he told reporters after the meeting. ‘It didn’t seem coherent to me to put in place on the one side a direct mechanism for recapitalization through the ESM, and on the other side, to exclude the ESM from the flexibility.’

“He said while the deal need to be finalized in the trialogue process, which involves the European Parliament and European Commission, the deal overall is "entirely satisfactory for France."

Jim Sinclair’s Commentary

“This says it directly. You as a depositor are an unsecured lender to the bank. You are screwed.

EU makes bank creditors bear losses as Cyprus bail-in becomes blue-print for rescues 
New European Union “bail-in” rules to impose the losses of failed banks on shareholders, bondholders  
and some large depositors were agreed early this morning by Europe’s finance ministers.
--
“By Bruno Waterfield, Brussels, 9:38AM BST 27 Jun 2013”

“The Banksters Are Fully Protected From Bail-In,”
Jim Sinclair, jsmineset.com, 06/27/2013

Optimistically, the dramatic ongoing increase in Treasury Yields may provide a catalyst for a launch up in the Gold and Silver Markets and possibly beginning in the next few weeks too. And that would be helped along by the Bullion (Cartel) Banks Massive Reduction of their Short Positions in recent months, which they have already achieved. Indeed, the Central Banks continue to accumulate and East to West Demand for Physical intensifies. And then there is the matter of the depleted Comex and LBMA Inventories of Physical which we have discussed before!

And clearly, the linchpin of the Mega-Banks’ Cartel’s strategy is to depress the prices of all important Real Assets (witness commodities recently) but above all Gold and Silver prices. Indeed, the Paper Gold Price has now been pushed below the cost of Production for some Miners.

With Bonds and Equities both Tanking and China slowing, and Interest Rates increasing it is no surprise that the US$ has shown and will continue to show strength, short-term.

Thus, the perceived Ostensible Strength of the U.S. economy vis-à-vis other major ones should help keep the $USD trading near the top of its 80-84 trading range (basis USDX) for a while longer. But we reiterate that the massive and unrelenting printing of $US (the Fed’s balance sheet is now over $3 Trillion!) has already pushed Real U.S. Inflation to the Hyperinflationary Threshold (8.99% per shadowstats.com). Indeed, it bumped up from 8.70% to 8.99% in just the last month. The Trend is there for those with the Courage for the Truth to see. 

Long-term the $US is still doomed to lose half its Purchasing Power vis-à-vis Key Real Assets: Oil, Food, Gold, and Silver, and hard currencies (e.g. AU$ and CA$). That key underlying trend prompts us to call the Trend of Rising Interest Rates what it is: a Massive U.S. Treasury Bond bubble. And it is a Bubble that is beginning to Burst.

In sum, given that Equities and several other Key Markets are now (pathetically) mainly dependent on the Reality and Prospect of Q.E., it is highly unlikely that The Fed or other Key Central Banks will actually taper any time soon. It is likely they will periodically talk tapering (i.e. Jawbone as they recently did) because it helps achieve their purposes of aiding their Mega Banker owners/Allies and keeping rates low. But QE to Infinity (almost) is here, and “bail-ins” are on the horizon. 

In sum, notwithstanding the Fed’s $85 Billion per month Bond Purchases which will continue for a while longer per the recent announcement, the critical trend toward higher interest rates has begun. As Paul Volcker (the last competent Federal Reserve Chairman) recently said, “Once you have the idea that a little bit of inflation is a good thing, it is very hard to get rid of it.”

A long-term bet on weakening US Treasuries and strengthening Physical Gold and Silver Prices should be most profitable. 

Best regards, 

Deepcaster
June 28, 2013

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: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, nearly 9.0% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.

One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.99% per year in the U.S. per Shadowstats.com). 

To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%,  8%, 15.6%,  8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4%  when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’ 

Note 3: “The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck with that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.” --Paul Volcker, Former Fed Chairman, June, 2013

Indeed! The St. Louis Fed’s adjusted Monetary base shot up from $800 Billion in 2009 to $3.2 Trillion in June 2013.

A wise Deepcaster Subscriber correctly noted regarding:

“…The St. Louis Federal Reserve Bank estimate of the total Quantity of US dollars in circulation and in banks as reserves…

“This number appears to me to be similar to the old M3, which the Fed stopped publishing in 2005. John Williams at www.shadowstats.com continues to estimate M3.

“The huge and sudden increase of money supply [M] – far in excess of goods and services being produced – in monetary inflation. If the public should catch on to this potential for devaluing the value of their dollars, they will start to spend very fast, while the money is still worth something.

“When the velocity of money changing hands [V] increases, we will see sudden price inflation. M x V = PRICES.”

And as Shadowstats correctly notes, Real Inflation in the USA is Already a Threshold Hyperinflationary 8.99%.

And if you are in an indebted Country in the Developed or Developing World, there is now a probability that your bank deposits will be confiscated. First Cyprus. Now Japan. Tomorrow (Your Country?!) – The aforementioned are Indicators that three MEGA Developments are coming.

To consider The Three MEGAS coming soon and how to prepare to Profit and Protect, read Deepcaster’s recent Article, “Prepare! – Three MEGAS Coming & What to Do,” posted in ‘Articles by Deepcaster’ on deepcaster.com. 

Note 4: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.

And there is an Extraordinary Buy Opportunity in One Key Sector.

To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s  ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” posted in the ‘Alerts Cache’ at deepcaster.com.

Note 5: All good Forecasts reflect probabilities not promises, guarantees, or certainties. We do not issue Forecasts unless our analyses reflect at least more-likely-than-not probabilities. But occasionally our Forecasts indicate, IMO, a higher, i.e. a much-more-likely-than-not probability for certain Key Sectors we cover.

And a short time ago, one of those weeks happened in which Key Fundamental, Technical, Interventional, and Political reflected not certainty (and certainly not a guarantee) but rather, a much-more-likely-than-not probability, for one Key Sector we cover.

To consider these Forecasts see our Alert “17.97% Yield Buy Reco & Remarkable Forecasts: Equities, Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, & Crude Oil,” posted in ‘Alerts Cache’ at www.deepcaster.com.

And to consider our “Blue Chip” Buy Recommendation yielding 17.97% when added to the Portfolio, and selling, as we write, for under $5/share, read that same Alert.


Surmounting Rigged Markets -- Key Tips

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

Prepare! – Three MEGAS Coming & What to Do

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

“The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck with that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.” 

Paul Volcker, Former Fed Chairman, June, 2013

Indeed! The St. Louis Fed’s adjusted Monetary base shot up from $800 Billion in 2009 to $3.2 Trillion in June 2013.

A Wise Deepcaster Subscriber correctly noted regarding:

“…The St. Louis Federal Reserve Bank estimate of the total Quantity of US dollars in circulation and in banks as reserves… 

“This number appears to me to be similar to the old M3, which the Fed stopped publishing in 2005. John Williams at www.shadowstats.com continues to estimate M3. 

“The huge and sudden increase of money supply [M] – far in excess of goods and services being produced – in monetary inflation. If the public should catch on to this potential for devaluing the value of their dollars, they will start to spend very fast, while the money is still worth something. 

“When the velocity of money changing hands [V] increases, we will see sudden price inflation. M x V = PRICES.”

And as Shadowstats correctly notes, Real Inflation in the USA is Already a Threshold Hyperinflationary 8.7%. Witness MEGA #1. 

And if you are in a deeply indebted Country in the Developed or Developing World, there is now a probability that your Bank Deposits will be confiscated. First Cyprus. Now Japan. Tomorrow (Your Country?) Witness MEGA #2

Japan to adopt ‘bail-ins’ force bank losses on investors if needed, Nikkei says Tue, Jun 11, 2013 2:19 PM EDT 

“Japan’s Financial Services Agency will enact new rules that will force failed bank losses on investors, if needed, via a mechanism known as a ‘bail-in’ according to Nikkei. Mitsubishi UFJ (MTU), Mizuho Financial (MFG) and Sumitomo Mitsui (SMFG) are among those proposing amendments to allow them to issue the types of preferred shares or subordinated bonds that would be used in such cases, the report noted.” 

“A Mission to Inform the Sleeping,” Jim Sinclair
jsmineset.com, 06/12/2013 

Specifically through “Bail-ins” -- a Euphemism for Confiscation. 

So what to do? 

First do not rely on Official (often Bogus) Statistics. Do rely on the Best Estimates of Deepcaster, Shadowstats and other Independent Analysts. Robert McHugh explains 

“On Friday, we got the latest phony Jobs report from the Bureau of Labor Statistics of the Labor Department. The BLS reported without blushing that the U.S. economy created 175,000 new jobs in May. This occurred while the unemployment rate did not change, remaining at 7.6 percent. How is this possible? The truth? According to the BLS’s own CESBD report, where they guess how many jobs were created by new businesses they think may have started that month, and then they add this estimated make believe figure to the count that gets reported to us as the new jobs number, huge fudge numbers were added to their count. In April, 2013, the BLS reported that 149,000 net new U.S. jobs were created. But, they also reported that 193,000 of these were a guess on their part of new jobs they hope were created by new business that probably started up in April. Which means the actual count showed the U.S. lost 44,000 net jobs in April (149,000 minus 193,000 fudged figure). For May, the actual count showed that the U.S. lost 30,000 net jobs (175,000 reported less 205,000 fudged figure). This helps explain why unemployment is not going down. The true new jobs created figures are vastly overstated by the BLS. The numbers they reported the past two months are pure hogwash. 

“The U.S. stock market happily bought the lie.” 

Robert McHugh’s Market Forecasting & Trading Report, 6/07/2013

The Market Manipulators, Bogus statistics Purveyors, and Mainstream Media Spinners were hard at work last Friday to convince Investors and the public that the (Bogus) Jobs number of 175,000 was “just right” to justify the Equities Rally (200 points per the Dow). “Not so high as to impel The Fed to taper QE and not so low as to signal ongoing Economic Weakness” was the Gist of the Spin.

Given the Intensifying scandals coming out of Washington these days – threatening reporters, using the IRS to target political enemies, surveillance of internet and phone users, hiding the $6.3 Trillion Net loss prospectively caused by the Immigration “Reform” Bill, Benghazi, Fast and Furious – it is a wonder anyone believes anything emanating from Washington, D.C. anymore. Indeed, the recent Equities and Bond Crash resulting from Japan’s (already) counterproductive QE, is Fair Warning. 

And how does one explain the seemingly contradictory Sell-Off earlier this week in Stocks, Bonds, and Gold at the same time?!

However, Market and Data Manipulation “Games” can provide the Opportunity for Profit and Wealth Protection for cognoscenti as we indicate in our Forecasts and Notes below.

And important to consider is Another Honest Warning Sign 

WTI Crude has chopped in the low to mid-90s for the last month or so. But in spite of adequate above ground supplies it ended last week higher. And as we write, WTI is bouncing around $96/bbl.

Key Point: Crude is telling us the Truth – Price Inflation is intensifying. Generally, one can expect the Crude Direction to track the direction in Equities… thus the Rally last Friday in both. As well, recent strength results in part from increasing Risks to supply in Iraq (possible Civil War) and Iran – possibly focus of an attack.

Recent $US strength (over 80 basis USDX) exists mainly because the $US is the least Dirty Shirt in the Major Fiat Currency laundry. As well, the perceived relative strength of the $US Economy and Markets has been helping to keep the $US above 80 as the US attracts capital flows.

Also WARNING is the recently begun Uptrend in the U.S. Interest Rates. The U.S. 10-year yield has moved up to near 2.25% – a 50ish basis point move in the past few weeks. Any Significant Equities Takedown should temporarily halt or reverse the Uptrend. But inflation is intensifying and the weakening Treasury Securities trend is in place nonetheless. The Bond Bubble is closer to Bursting. Witness MEGA #3. 

Legendary Financial Writer, Richard Russell expresses justifiable concern

“Turning to Bernanke, he practically guarantees that the stock market will go up. Join him and make a guaranteed easy killing. Me, it’s all too much for me. I’m watching the show, and frankly, I’ve never seen anything like it. As for Obama – he has no respect for privacy rights, freedom of the press or due process of the law. The country is going a bit crazy, and the stock market reflects it. As my old friend, the late Eliot Janeway, put it, when the president is in trouble, the market is in trouble. And this president has a lot more troubles than he can handle. 

“As for the US, I have the feeling that the wheels are coming off the limousine. The IRS turns out to be a political weapon. Our Attorney General is a liar. We’re being spied on via every e-mail and every telephone call we make.”

Richard Russell, Dow Theory Letters,
Dowtheoryletters.com, 06/11/2013”

And the Eurozone is no closer to reviving its Economy. Official Unemployment Rates in Spain and Greece are 26%. 

Continuing QE, whether from The Fed, or Bank of Japan or European Central Bank, not only is a long-term negative (because of the Inflation it is already igniting) but also because it cannot last.

John Mauldin explains one of several reasons why:

“If interest rates on Japanese bonds rise to a mere 2.2%, 80% of tax revenues will go just to pay the interest on their debt. At a 245% debt-to-GDP ratio, they are in desperate straits, and they know it.”

John Mauldin, “Banzai! Banzai! Banzai!,” 6/09/2013

With over 100% Debt to GDP and with over $100 Trillion in downstream unfunded liabilities, and with rates increasing, the USA is not in much better shape. So much for the alleged U.S. Economic Recovery. Ditto the Eurozone.

But as our regular readers know the Mega-Banker Cartel continues to Try to suppress Prices of Gold and Silver – the Warning Signs of Impending Inflation and have succeeded in suppressing the Paper price.

Most recently, as JGBJ pointed out this past Monday, last Friday saw another Cartel Bear Raid. Trader Dan Norcini is quite likely right when he says that until Gold can convincingly clear $1420 (and 300 on the HUI), the specs will continue to sell rallies, thus becoming de facto allies of the Price Suppressing Cartel.

But there are catalysts for an Upside reversal. Physical Demand is still intensifying especially from India and China and that is the ultimate Catalyst for a launch. In addition, the dramatic ongoing increase in Treasury Yields may provide just that and in the next few weeks too. And that would be helped along by the Bullion (Cartel) Banks Massive Reduction of their Short Position, which they have already achieved. But the ROT has Spread Well beyond the Economy and Financial Markets.

“Most of you who have read this blog for any length of time are by now familiar with my common refrain that we are witnessing an America in decline. I believe the symptoms cut across the cultural, financial, political and educational aspects of the nation. 

“Vice is encouraged, commended or praised by elitists as traditional standards of righteousness or morality are ridiculed or even mocked. The monetary system is hopelessly corrupted as it is addicted to cheap credit. Economic "growth" depends upon various forms of stimulus and the creation of revolving bubbles moving from one sector to the next now seems to be a permanent fixture. The public education system has produced a generation which seems to have little if any understanding of history and practically no ability to deeply think (witness the proliferation of one reality TV show after another where instead of living their own lives, the viewers live the lives of others).

“The thing that really troubles me however is the corruption of our political system, in particular the ever-increasing size and role of the federal government. I am watching in stunned disbelief that a government agency, the IRS, could target and harass American citizens merely because they happen to share an opposing view of government than the current administration. We watch reporters have their phones bugged and reporters doing their jobs to ferret out truth either being charged as criminals by the government or harassed in other manners. If that was not frightening enough, we now learn that phone calls and communications of our citizens are being monitored effectively destroying any privacy rights that we might have. 

“Additionally we have American citizens killed in Benghazi because apparently an election was upcoming and news of that nature was not conducive to the re-election efforts. We have regulatory agencies such as the EPA answering to no one who are running roughshod over the property rights of many law-abiding citizens as further evidence that the Administrative State, the 4th branch of government, no longer seems to have any constraints on its power.”

Further Signs of Internal Weakening in the US,”
Dan Norcini, traderdannorcini.blogspot.com, 06/09/2012

What to do? Deepcaster and other Independent commentators have been giving Specific Recommendations for Profit and Protection for Months now.

But respected Market Guru, Jim Sinclair, succinctly sums up certain (but not all) Key Elements of the Prescriptions:

 “My Dear Extended Family

 

“But still you do nothing. Why?

“You do not diversify. Why?

“You do not direct register. Why?

“You still do not certificate. Why?

“You let ignorant brokers talk you out of protecting yourself. Why?

“You keep your shares in street name of CEDE and Company and do not even know it. Why?

“You trust computer based banks. Why?

“Everything you have done with computer based banks is in public record and this is not a problem for you. Why?

“I am on a mission to inform you, yet you look the other way as if asleep. Why?”

 

IBID, Jim Sinclair
jsmineset.com, 06/12/2013

 

Be Prepared for “Bail-Ins,” Bonds Bursting and Hyperinflation… Three MEGAS.

Best regards,

Deepcaster
June 13, 2013

Note 1: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, over 8.7% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.

One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.7% per year in the U.S. per Shadowstats.com).

To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%,  8%, 15.6%,  8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4%  when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’

Note 2: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.

And there is an Extraordinary Buy Opportunity in One Key Sector.

To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s latest ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” recently posted in the ‘Alerts Cache’ at deepcaster.com.

Note 3: Central Bank and Major Government Actions lately increasingly have the Odor of Desperation about them.

-        Japan and the U.S. Central Banks are creating Fiat Money at all-time record levels. And Australia just joined the Fiat Currency weakening War. But Japan’s counterproductive QE is roiling the Markets.

-        India has tripled the tax on and imposed restrictions on Gold Imports.

-        Cyprus’s Gold and Bank “Deposits” have been confiscated.

-        U.S. job and Inflation numbers are becoming increasingly unbelievable.

-        And evidence of Central bank and Government Intervention continue to increase in a wide variety of Markets.

-        Witness the mid-April Precious Metals Paper Price Takedown, which resulted in a rush for Physical world-wide and doubling of Premiums for Physical.

And the main reason for these Actions by the Powers of the Developed World is that the Market performance of Key Sectors has become farther and farther divorced from Economic Fundamentals and the US$ is becoming increasingly Vulnerable. And, ultimately, Fundamentals will prevail. All of this has led to the increasing likelihood of a Massacre in one Huge Sector, according to one very highly placed Financial System Insider. And Deepcaster agrees with him, and has been saying the same thing for weeks.

To consider how this Warning is justified and what Opportunities for Profit and Protection it provides, read our Alert, “Insider Warns Key Sector Mega-Crash Impending; Reco. Prep.; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” recently posted in ‘Alerts Cache’ at deepcaster.com.

Note 4: All good Forecasts reflect probabilities not promises, guarantees, or certainties. We do not issue Forecasts unless our analyses reflect at least more-likely-than-not probabilities. But occasionally our Forecasts indicate, IMO, a higher, i.e. a much-more-likely-than-not probability for certain Key Sectors we cover.

And a short time ago, one of those weeks happened in which Key Fundamental, Technical, Interventional, and Political reflected not certainty (and certainly not a guarantee) but rather, a much-more-likely-than-not probability, for one Key Sector we cover.

To consider these Forecasts see our recent Alert “17.97% Yield Buy Reco & Remarkable Forecasts: Equities, Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, & Crude Oil,” posted in ‘Alerts Cache’ at www.deepcaster.com.

And to consider our recent “Blue Chip” Buy Recommendation recently yielding 17.97% when added to the Portfolio, and selling as we write for around $5/share, read that same Alert.


Real News Spells Opportunities

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

“We’ve made rich people richer. This is great for the Buffetts and for others who can take advantage of this multiple of great money and cheap money that’s been available. The question is, what have we done for the working men and women of America? Right now, (companies are) using cheap money to buy back their stock, pay extra dividends, etc. etc. We all know what is going on.”

Richard Fisher, Dallas Fed President, 5/20/2013

Yes, in a Remarkable Moment of Candor for a Fed Board Member, Richard Fisher admits that QE has mainly helped the very Rich and Well-connected.

Indeed, much of the proceeds of QE have not and are not flowing into the Real Economy. For example, Major Banks are depositing their proceeds from QE back into The Fed where they “earn” 25 basis points.

Free Money(!) benefiting only the Mega Banks and Not the Real Economy.

But recently, the Fed and other Central Banks ongoing Deluge of Liquidity has created Extraordinary Profit Opportunities for “Retail” Investors.

The First Key to Revealing these opportunities is to separate the MainStream Media Spin from the Real News.

One example is the Alleged U.S. Housing Recovery.

Fitch gives us a good reason to believe the Housing Recovery isn’t.

“Fitch Ratings believes the recent home price gains recorded in several residential markets are outpacing improvements in fundamentals and could stall or possibly reverse. Many of these areas are in California, which has seen price increases of 13% over the last year 

“…especially in cities that never fully unwound the mid-2000s bubble, rapidly increasing price levels are a potential cause for concern. For example, in Los Angeles, prices are up more than 10% in the past year despite a stubborn unemployment rate that remains above 10% and real incomes that have declined over the past two years. Prices are now more than 75% above pre-2000 levels.

“Several factors are combining to form an environment supportive of brisk home price growth, but few are capable of providing long-term support to sustain the recent pace of improvement. Primarily, restricted supply and bolstered demand factors are bidding prices up.”

“US Residential Recovery Too Fast in Some Local Economies” Fitchratings.com, 5/28/2013



So where are the Opportunities and Risks, given the Real News and the Flood of Ongoing QE?

QE is not without its very considerable Risks and an evaluation of Risks reveals key opportunities as the Japanese experience with Abenomics QE recently shows.

That Bank of Japan’s QE initially raised Equities levels all right, but in so doing, domestic investors started to sell their bonds as a hedge causing yields to spike (interest rates to rise) panicking both Equities and Bond Markets… uncontrolled Inflation is the Ultimate Risk.

Inflation being perhaps the Greatest Negative of QE, Marc Faber, explains the Ultimate Result.

“The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn't increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market—things like stocks, bonds, art, wine, jewelry, and luxury real estate.

Money-printing boosts the economy of the people closest to the money flow. But it doesn't help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.

“The neo-Keynesians would argue that if the Fed hadn't flooded the system with money, things would have been much worse. That might be true, but they would have been worse for a shorter period of time.

“I am suggesting that in the fourth year of an economic expansion, near-zero interest rates will lead to a further misallocation of capital. I thought the U.S. market would have a 20% correction last fall, but it didn't happen. I also said the market might explode to the upside before the correction occurred. We might be in the final acceleration phase now. The Standard & Poor's 500 is at 1650. It could rally to 1750 or even 2000 in the next month or two before collapsing. People with assets are all doomed, because prices are grossly inflated globally for stocks, bonds, and collectibles.” 

“Bubble, Bubble, Money and Trouble”
Marc Faber, Barrons.com, 6/1/2013

People with “Stocks, Bonds and Collectibles” “are doomed” says Faber, and his considerable record of Success impels us to take his comments seriously.

Our answer is “Yes” their Stock and Bond portfolios (i.e., Financial Assets) and collectibles are probably doomed in the mid-term (See Deepcaster’s latest Letter and Alerts for specific temporal forecasts and Targets).

Faber is quite right that QE has and is causing a great Misallocation of Capital and that it does not help the Real Economy or the Middle Class.

 But the Key Point is that it has grossly and artificially (Mohammed El-Erian, CEO of PIMCO’s word) inflated Stock and Bond Prices. 

More than that it has already caused Threshold Hyperinflation if one reviews the Real Numbers (e.g. 8.7% U.S. CPI per Shadowstats – See Note 1) rather than the Bogus artificial ones.

That is why legendary Newsletter Writer, Richard Russell, recently called attention to the Great Megaphone Jaws of Death pattern (as Deepcaster has for months) in the Equities Markets which signals “Crash is Coming.”

“…holders of stocks must make a personal decision. Sell or take the consequences – if, indeed, the great megaphone pattern in the Dow is in the early stage of crashing. 

“Personally, I never wanted to be in this position. I have already made the judgment that this market was over-bought, over-valued, and over-loved. I also noted that margin borrowing on the NYSE was near a record high – investors were borrowing heavily and greedily to increase their positions in this market. Treasury bonds were sliding and interest rates were rising. 

“Incidentally, I note that there are now five distribution days for the S&P and four for the Nasdaq. And one churning or stalling day on Thursday. This tells me that institutional money wants OUT of this market, which is another indication that being out of this market is the correct position. A stalling day is a session in which the market is up only slightly on rising volume. 

“We’re now in June which, historically is the worst month for stocks.” 

Richard Russell, DowTheoryLetters.com, 6/3/2013

We do not think it likely The Big Crash will come this June, but later, as we forecast.

But the Key Point for Profit and Protection is explained by Bill Murphy, Midas of Le Metrepolecafe.com.

“An entire diatribe could be written on why it was done, but simplistically put, the Fed/US is in a NO SOLUTIONS environment for the financial/economic predicament it has evolved into. The only way out, as they saw it, was to print money, etc. The best way to defuse the longer term ramifications of this action was to SHOOT THE MESSENGER, to disfunctionalize the barometer of US/world financial market health, that being the price of gold. Sister market silver was included because of its relationship to gold… a price dichotomy between the two could be tolerated. 

“The escalated war on gold and silver was underway. But this time, The Gold Cartel included other countries, other bullion banks, various hedge funds, etc. It led to the unprecedented attacks on them on April 12 and April 15, as you know all too well.” 

Bill Murphy, LeMetropoleCafe.com, 6/4/2013

Murphy is quite right that “the Fed/US is in a NO SOLUTIONS environment” which we add, is mainly of their own making … thus they keep printing.

This creates both Opportunities and Risks.

The Opportunity, as Murphy also points out, is in Real Money, Gold (and Silver) as the Antidote to Fiat Money and this explains why The Fed and other Cartel (Note 2) Central Banks have been so keen to suppress the Price.

But recently, there are significant signs this suppression will become dramatically less effective and soon, and this should allow a Massive launch up in Precious Metals prices.

Excellent Precious Metals Analyst, Turd Ferguson, explains why: 

“…All you need to know is this: The Bullion Banks have now reduced their net liability in gold by over 75% and, in silver, by over 83%...all since the game-changing announcement of QE8 last September. Rather than once again trying to cover into rising prices with disastrous results (see April of 2011 in silver and August of 2011 in gold) an evil, insidious and outright criminal plan was made and executed to crush the paper price of both metals. By flawlessly executing this plan, The Bullion Banks have so reduced their potential liability that there can be no doubt that prices will soon be allowed to rise again. When? That’s impossible to say, of course. Maybe not until the BBs are not long both gold and silver. Who’s to say for certain? But I do know that we are very, very close to a price bottom here when you take this COT situation and the physical market demand into consideration. Plain and simple.”

via lemetropolecafe.com, 06/01/2013

In sum, recent Commitment of Traders (COT) Reports for Gold and Silver have sent a Remarkable Signal. They tell us it is highly likely that a launch back up for Gold and Silver is not far off, as we have already forecast.

Of course, as Ferguson realizes, the COT and the increasing Physical Shortage Situation are Major Forces in the Market, but The Cartel is still a force to be reckoned with.

Couple that reduction of Short Positions by the Cartel / Bullion Banks with the fact that after the last Precious Metals Price Takedown the Demand for Physical Skyrocketed around the World, and we are looking at a Great Opportunity. 

Simply put, there is increasing evidence that there is an increasing Supply Shortage of Physical Gold and Silver, i.e., that the Bullion Banks do not have adequate Physical Metal to cover their short Positions, especially in light of increasing demand.

This has caused increasing desperation in the Bankers (motivated by the desire to maintain the credibility of their Fiat Currencies and Treasury Securities) World as evidenced by the Indians’ Central Bank placing an additional Tariff on Physical Gold imports bringing it up to a record $117 per oz.!

And the desperation is evidenced especially by the recently added Disclaimer to the COMEX Warehouse Stock Report. This warehouse holds Stocks of Physical Gold and Silver, but now has apparently disclaimed liability for the Reliability of reports on Physical Precious Metals Stocks in its own Warehouse!!

“In a brilliant catch, The Golden Truth has reported the ominous news that COMEX has suddenly added a disclaimer to the COMEX warehouse report: 

The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.” – disclaimer now posted on the Comex gold and silver daily warehouse stock report as of Monday, June 3, 2013. 

“See ‘The Comex Confirms That Its Gold and Silver Inventory Reports are Fraudulent’ 

This does not look good.” 

John Brimelow, 6/5/2013

In short, the Physical Situation is so Tight that now is the time to buy Physical for those who do not have their desired allocation.

The other exceptional Opportunity is in Inflation-Protective Assets such as Food Commodities and Interests in Quality Companies of those dealing in them. (And see notes 3 and 4 regarding Specific Recommendations.)

Inflation is intensifying.

The Foregoing “Real News” provides the Foregoing Real Opportunities.

Best regards,

Deepcaster

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 16, 2013
1.06%     /     8.70%
U.S. Unemployment reported June 7, 2013

7.6%     /     23.0%

U.S. GDP Annual Growth/Decline
 reported May 30, 2013
1.78%        /     -1.98%

U.S. M3
 Growth reported  May 25, 2013 (Month of April, Y.O.Y.)
No Official Report     /    4.41% (i.e, total M3 Now at $15.26 Trillion!)

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: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors.

And there is an Extraordinary Buy Opportunity in One Key Sector.

To see the Differences for these Key Sectors and the Buy Opportunity, read Deepcaster’s latest ‘Alert’, “Near-Term Versus Mid-Term Forecasts & Buy Reco: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold & Silver, Crude Oil, & Equities,” just posted in the ‘Alerts Cache’ at deepcaster.com.

Note 4: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, Negative Real GDP growth, over 8.7% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.

One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (8.7% per year in the U.S. per Shadowstats.com).

 

To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 17.97%, 10.6%, 18.5%, 10.7%, 26%,  8%, 15.6%,  8.6%, 10%, 6.7%, 14.9%, 8.8%, 10.4% and 15.4%  when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’


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