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“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.’


Rural Banking

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Read More : Importance of rural banking to banks

Rural Banking engages the attention of the bankers to a great extent. A large number of bankers are involved directly or indirectly in transformation of the rural sector. Hence the importance of rural banking to banks. The book presents different dimensions of rural banking in the country. It traces various schemes and programmes introduced for rural development, where banking system has to play an active role. The rules and regulations introduced from time to time by th...

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Opportunities from Interventions

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

“The Fed wants to kill all signs of inflation to hide the damage they're doing to the middle class. First the Fed leaves food and energy out of the CPI, and then they get the Labor Department to lie about the figures. Their last trick -- smash the price of gold and silver. What are they going to do when the bond market (fearful of inflation) collapses? You can't fool all of the people all of the time.”

 

“Richard’s Remarks,” Richard Russell

DowTheoryLetters.com, 05/20/2013

 

“The CPI is manipulated, and I believe gold is being manipulated as well. The Fed's QE4ever is inflating everything -- school tuition, hair cuts, food, gas, insurance, medicine. They've already "rearranged" the CPI, so what's left for them to do to keep us from knowing about inflation? Oh yes, it's gold, so c'mon, Bernanke, keep the lid on gold. Slam it in after-market trading in the thin paper-gold markets of the night. “I promise you, when the true forces of inflation finally break loose, the Fed won't be able to disguise what they've wrought. When the true forces break out -- it will be a national disgrace and an emergency. "Then you will know the truth, and the truth will set you free." The rest of this year should be something to behold.”

 

“Richard’s Remarks,” Richard Russell

DowTheoryLetters.com, 05/17/2013

 

 

Legendary Newsletter Writer (since 1969!), Richard Russell is now singing the same Tune that Deepcaster and others (e.g., gata.org) have been singing for years. The Key Implicit Question which we answer here, is how to Profit and Protect in an Interventional Universe.

 

Given the Massive, Continuing, Multi-Market Interventions, savvy Investors today face a Great Dilemma.

 

Whether to continue to bet that Equities Markets will continue to rise, because, they hope, The Fed and other Central Banks will continue to print Hot Money even though they, The Investors, know that Economic Fundamentals do not support the Rally.

 

OR

 

Since Economic Fundamentals do not support the Rally to bet against further Equities Rises, since they, The Investors, know this Rally is built on the Sand of mere Printed Liquidity, and cannot last forever and is likely doomed to end in Economic Stagnation and Hyperinflation – i.e., in Hyperstagflation.

 

Trader Dan Norcini had it nailed when commenting on the Release of The Fed’s Minutes and Bernanke’s Testimony.

“In summary, this is everything that was communicated (by The Fed – ed.):  “We will scale back the QE when we think the economy is strong enough to no longer need it in a full dose.”  Who among us learned anything new from that statement?  This is the same dance that the Fed has been feeding the markets for many months now. 

“It just goes to show that everyone with a functioning brain how utterly phony the stock market rally is and how dependent it is on the cocaine being force fed into it to sustain itself.  If the Fed spooks the equity markets into seriously believing that they are going to pull the plug on the QE program, what we saw yesterday afternoon with that violent downside selling wave that temporarily engulfed the stock market will look like a mini rehearsal for a massive waterfall decline.

“This is why Bernanke chose to start off his speech in a soothing fashion.  He and the rest of the FOMC governors knew they had a tiger by the tail and if they let go, there is going to be serious trouble. …

“…the Fed itself has now become the greatest source of market instability and volatility that any risk manager must reckon with in this day and age.”

 

Trader Dan’s Market Views, traderdannorcini.blogspot.com

 

Indeed, the level of the S&P, at any particular time, now has “achieved” a 90% Correlation with The Fed’s Balance Sheet (Haver Analytics, Gluskin, Sheff), so it is a no-brainer to know what would happen if The Fed stopped QE – Lookout below. But this correlation is an ominous and sad commentary on Fed Policy and the True State (sick) of the Economy.

 

Fortunately, a select few Investments are likely to be Profitable and Protective whichever Result (of the two above) is forthcoming. However, in either case, one and possibly two, Key Sectors are likely to Collapse. But those who have Independent Information Sources and Courage for the Truth are likely to know in advance which ones and when and to prepare.

 

The Dilemma is apparently made more difficult because the Millennia-tested Safe-Havens, Gold and Silver, have had their Paper Prices dramatically Smashed Down for Many Months and especially in the April, 2013 and subsequent Takedowns.

 

But it is critical to Note that the mid-April, 2013 and Subsequent Takedowns have been of the Paper Price only. Premiums for Deliverable Physical Metal have skyrocketed.

 

Why the Brutal Takedowns? And what is Next?

 

In a Superb essay, “Washington Signals Deep Dollar Concern,” (Institute for Political Economy, paulcraigroberts.org) former Asst. Treasury Secretary, Paul Craig Roberts shows how important it is for The Fed and other Western Mega-Banks to support the Dollar, Of course, if Real Money, Gold and Silver, were to skyrocket in Price, that would further weaken and delegitimize The Fed’s (and other Central Banks’) Fiat Currency and Treasury Securities. Thus the Ongoing attacks on Gold and Silver. Consider:

 

“Over the past month there has been a statistically improbable concurrence of events that can only be explained as a conspiracy to protect the dollar from the Federal Reserve’s policy of Quantitative Easing (QE)….

 

“Quantitative Easing has been underway since December 2008. During these 54 months, the Federal Reserve has created several trillion new dollars with which the Fed has monetized the same amount of debt.

“One result of this policy is that most real US interest rates are negative. Another result is that the supply of dollars has outstripped the world’s demand for dollars.

“These two results are the reason that the Federal Reserve’s policy of printing money with which to purchase Treasury bonds and mortgage backed derivatives threatens the dollar’s exchange value and, thus, the dollar’s role as world reserve currency….

“Washington has stifled the threat from other currencies by convincing other large currencies to out-print the dollar. Japan has complied, and the European Central Bank, though somewhat constrained by Germany, has entered the printing mode in order to bail out the private banks endangered by the ‘sovereign debt crisis.’

“That leaves gold and silver. The enormous increase in the prices of gold and silver over the last decade convinced Washington that there are a number of miscreants who do not trust the dollar and whose numbers must not be permitted to increase.

“The price of gold rose from $272 an ounce in December 2000 to $1,917.50 on August 23, 2011. The financial gangsters who own and run America panicked. With the price of the dollar collapsing in relation to historical real money, how could the dollar’s exchange rate to other currencies be valid? If the dollar’s exchange value came under attack, the Federal Reserve would have to stop printing and would lose control over interest rates.

“The bond and stock market bubbles would pop, and the interest payments on the federal debt would explode, leaving Washington even more indebted and unable to finance its wars, police state, and bankster bailouts.

“Something had to be done about the rising price of gold and silver….

“That the decline in gold and silver prices is an orchestration is apparent from the fact that the demand for bullion in the physical market has increased while naked short sales in the paper market imply a flight from bullion.

“What does this illegal manipulation of markets by the Federal Reserve tell us? It tells us that the Federal Reserve sees no way out of printing money in order to support the federal deficit and the insolvent banks. If the dollar came under attack and the Federal Reserve had to stop printing dollars, interest rates would rise. The bond and stock markets would collapse. The dollar would be abandoned as reserve currency. Washington would no longer be able to pay its bills and would lose its hegemony. The world of hubristic Washington would collapse.

“It remains to be seen whether Washington can prevail over the world demand for gold and silver. …

“When the dollar goes, Washington’s power goes, which is why the bullion market is rigged. Protect the power. That is the agenda. Is it another Washington over-reach?”

Washington Signals Dollar Deep Concerns,” Paul Craig Roberts, paulcraigroberts.org, 05/18/2013

Roberts raises the right question. Will The Fed be able to pull it off, i.e., protect the Dollar, continue to successfully suppress the Precious Metals Prices and in so doing, revive the Economy (of course, The Fed’s Main Goal -- to protect its Mega-Bank shareholder/Owners and other Mega-Banks -- has largely been achieved provided The Fed can continue its Money Printing Game).

 

Our regular readers know that we think the Most likely Result is that Fed and other Central Banks’ Money Printing is creating an Equities Bubble and will result in Hyperinflation (already at 8.7% in the USA, e.g., per shadowstats.com) and an eventual Economic Crash.

 

Thus, Hyperstagflation is the outcome we believe will occur.

 

But we could be wrong. The Fed and allied Central Banks and Mega-Banks could pull it off.

 

In any event, Fortunately, there are Select Investments which provide Profit and Protection in either Scenario.

 

One General Category for Profit and Protection is Food Commodities. With 80 Million People added to the World’s Population each year and hundreds of millions in the Developing World with increasing Purchasing Power, the demand is there. And supply increases are constrained by the fact that Most Arable Farmland is already in use and production increases from the “Green Revolution” have mainly reached their limit.

 

The Other Category is Real Money, i.e., Physical Gold and Silver, acquired at Current Bargain Basement Prices. But Timing and the Form of Precious Metals purchased are Critical as we explain in our June 2013 Letter at deepcaster.com.

  

In any event, Short term, (for the next few weeks or very few months) the Fed’s strategy of a Strengthening Dollar, vis à vis other Fiat Currencies, is working. The Fed has succeeded in getting other Key Major Central Banks to increase Fiat Money Printing as well.

 

Indeed, the Bank of Japan is in the lead. And the European Central Bank and Bank of Australia and others are following.

 

And to conceal the Price inflating effect of all this – but only for a while – the Central Banks have been suppressing Gold and Silver Prices, and the BLS has cooperated by dramatically understating Real Inflation.

But given The Fed’s Ongoing Orgy of printing ($85 billion per month) long-term the $US is likely toast vis à vis Real Assets. The move away from the $US has begun already, with Australia and France and others already agreeing to close deals in Chinese Yuan.

However, Short-term The Market most vulnerable to collapse is the U.S. Treasuries Market, since, considering U.S. downstream unfunded liabilities of over $100 Trillion as well as $17 Trillion in Outstanding (and unpayable, given any reasonably likely economic scenario) Debt, the U.S. is the most Heavily indebted Nation in the World. Indeed, the 10-year U.S. T-bond is already hinting at collapse with the yield popping over 2% as we write. We will be watching the Ten Year Yield very closely.

The Great Bond-Bubble Bursting is near thanks to Fed printing, the only issue is which month, or week, will the Acceleration to that Burst occur.

If (when) the US 10 Year continues down (i.e., and Yield Spikes Up), a Massive Collapse in the Bond Market (i.e., much lower Bond prices / much higher Interest rates) becomes increasingly probable. Such a Collapse would Wreak Havoc on the economy because credit would become very expensive or unavailable, as it became in the late 1970s to early 1980s and again in 1994.

Consider Goldman CEO Lloyd Blankfein’s Warning about the Prospects for a Bond Market Collapse:

“I worry now…I look out of the corner of my eye, to the ’94 period … you’d think in hindsight (it) should have been expected … (it) really was stunning.”

Lloyd Blankfein, 05/01/2013

But consider his approach to this prospect:

“We focus on how to benefit from the Crisis.”

Blankfein, Bloomberg, 05/22/2013

In sum, long-dated U.S. Treasuries and the $U.S. provide Great Opportunities for Profitable Shorting when the time is ripe. And Gold and Silver provide Great Profit and Protection Opportunities Period.

Best regards,

 

Deepcaster

 

May 24, 2013


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