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Gaining from the Inflation/Deflation Conundrum



-- Posted Friday, 16 December 2011 | | Disqus

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

DEEPCASTER HIGH POTENTIAL SPECULATOR

Wealth Preservation         Wealth Enhancement

 

Amid the Chaos of the Financial Markets and The Economy, One Essential Key to Successful Investing in 2012 is Clear as a Pure Toned Bell.

 

That One Key Reveals itself to us upon considering just a very few facts.

 

Via its promise to keep interest rates low until 2013, The U.S. Fed is already engaging in (and prepared to engage in more) QE 3. For example, Operation Twist does provide more liquidity by lengthening Treasuries’ Terms.

 

The Swiss National Bank is committed to printing unlimited amounts of Money to keep the Swiss Franc from appreciating.

 

And the Bank of England launched a 75 Billion Pound QE 2 just this past Fall.

 

And even the ECB, which has for now refused to increase its bond-buying, is engaging in its own Operation Twist and Rate Reduction. (We forecast the ECB will eventually print Euro-Bonds, thus further devaluing the Euro.)

 

The Key Point is that all these Actions Create Great Monetary Inflation, which is a Surefire Invitation to Great Price Inflation.

 

But there are Great Price Deflationary Forces at Work as Well.

 

The Great Debt Destruction Derby which was manifest recently, for example, in the Mega-Bankers “agreeing” to take a 50% Haircut in the Greek Debt Restructuring Package (and which is also manifest in similar programs around the developed world like e.g. the HAMP Programs in the USA in which a portion of Homeowner’s debt is written off) has only just begun!

 

And Economies around the World are Slowing and that too is quite deflationary.

 

So The Question is what will it be going into 2012 and beyond – Inflation or Deflation?

 

One thing is sure; we will continue to have Monetary Inflation – the Central Banks have promised us that.

 

But what about Price Inflation? Given the aforementioned Massive Existing Deflationary Forces, will Price Inflation be a problem?

 

The answer is Yes, very much so! But Why? and Where?

 

The Fundamental Reality (essential for Investing Success going forward) is to see that the Deflationary Forces are limited primarily to certain Sectors while the Inflationary Forces affect others.

 

To broadly (and somewhat over-simply) identify them, many Financial Assets (e.g. European Sovereign Bonds and most Stocks) and, beginning very recently, Basic Materials critical to Economic Expansion (e.g. Copper and other Building Materials) have begun to either deflate in price or “appreciate” at a slower rate and will continue to do so for the foreseeable future.

 

In contrast, Essential Tangible Assets in relatively inelastic and increasing Demand (e.g. certain Agricultural Products, and, subject to Caveats, Energy, as in Crude Oil) either are (as Crude Oil), or can be expected to, appreciate in price. That is why Deepcaster plans to make a specific recommendation next week which we expect will appreciate dramatically as a result of this trend.

 

In sum, the Fundamental Reality going forward is that we expect to have Inflation in some Key Sectors and Deflation in others, so it is essential to consider the Inflation versus Deflation issue on a Sector by Sector basis.

 

So overall which Sector Forces are Prevailing? The Price Inflationary Forces or Price Deflationary Forces?

 

Overall Price Inflation (i.e. Fiat Currency Purchasing Power Debasement) is already Prevailing. Indeed, it is already threshold Hyperinflationary.

 

How do we know this? For the U.S., we know this from looking at The Real Numbers, for example.

 

**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 November 16, 2011
3.53%     /     11.12% (annualized October, 2011 Rate)

U.S. Unemployment reported December 2, 2011
8.6%     /     22.6%

U.S. GDP Annual Growth/Decline reported November 22, 2011
1.51%     /     -2.89%

U.S. M3 reported December 3, 2011 (Month of November, Y.O.Y.)
No Official Report     /     2.74%

 

Note that annual U.S. CPI at 11.12% is already Threshold Hyperinflationary.

 

Similar “Real Inflation” Numbers (as opposed to Bogus Official Numbers) can be found in other developed and emerging economies with Fiat Currencies.

 

The aforementioned Real Inflation Numbers imply that considerable Purchasing Power Degradation for certain Fiat Currencies is either already occurring or is on the Horizon. Therefore, with a view to profiting from this trend, we recently recommended shorting one of these.

 

A consistent and profitable approach is to invest in securities where Total Return (Gain Plus Yield) is likely to exceed Real Inflation (see Note 1 below).

 

As well, acquiring Gold and Silver because they are Real Money with Profit potential and with no counterparty risk (N.B. quite unlike Fiat Currencies) is the Ultimate Refuge from Degrading Fiat Currencies.

 

But Gold and Silver are under ongoing Price Suppression attacks from a Cartel (See Note 2) of Mega-Bankers.

 

Therefore, profit maximizing-Investments in Gold and Silver rely on Good Timing and wise choices as to the Form of the Investment (See Note 3 below).

 

In sum, proper Sector Evolution and Selection to take advantage of Inflation or Deflation (as the case may be) is important for Wealth Protection and Profit.

 

Best regards,

 

Deepcaster

December 16, 2011

 

Note 1: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, negative Real GDP growth, over 11% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.

One Sector full of Opportunities is the High-Yield Sector. Several of our High yield stocks have moved up when the Equities Market was tanking.

That Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (11.12% per year per Shadowstats.com).

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

 

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: Using such Guidelines facilitated Deepcaster’s making buy and sell recommendations resulting in remarkable profits recently if acquired and liquidated when we recommended, approximately*:

34% Profit on Gold Royalty Streaming Company on December 5, 2011 after just 166 days (i.e. about 74% annualized!)

 

42% Profit on Volatility Index Futures ETN on October 3, 2011 after just 292 days (i.e. about 52% annualized!)

36% Profit on Double Short Euro ETF on September 7, 2011 after just 43 days (i.e. about 300% annualized!)

35% Profit on Double Long Gold ETN on August 23, 2011 after just 41 days (i.e. about 280% annualized!)

26% Profit on Double Long Gold ETN on August 17, 2011 after just 35 days (i.e. about 260% annualized!)

25% Profit on Gold Stock on August 8, 2011 after just 201 days (i.e. about 45% annualized!)

150% Profit on Gold Stock Calls on July 13, 2011 after just 56 days (i.e. about 975% annualized!)

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


-- Posted Friday, 16 December 2011 | Digg This Article | Source: GoldSeek.com

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