-- Posted Friday, 27 April 2012 | | Disqus
“The Fed is transferring immense wealth from the middle class to the most affluent, from the least privileged to the most privileged.”
Mark Spitznagel, Universa Investments L.P., 4/19/12
Since late February, 2012, The Cartel* has ground Gold and Silver Bullion and the Mining Shares Prices Down. This is especially frustrating for those invested in Mining Shares, because they have been Technically “Due” for a Powerful Breakout for weeks. (As “Paper” Securities, Mining Shares are especially susceptible to Cartel Price Suppression.)
But the Fundamentals for Bullion and Mining Shares are ragingly Bullish. With Central Banks having added Trillions in various forms of QE (i.e., Money Printing) in the last three years, the Purchasing Power of the Fiat Currencies increasingly continues to erode.
This is what happens to all Fiat Currencies when the Nominal Value of the Money Printed exceeds the Real Value of Increases in Goods and Services produced. So it is not surprising that The Cartel continues to relentlessly attack Precious Metals and Tangibles Prices.
The Cartel wants to have investors continue to be wedded to its Paper Fiat Currencies and Treasury Securities because they are the source of its Power and Wealth.
In sum, by its ongoing Precious Metals Price Suppression operations, the Cartel is conducting an intensifying War against Positive P.M. Sentiment.
But Price Suppression of Gold and Silver Shares and Bullion can not last.
Jim Sinclair explains why
“The European Stabilization Mechanism Treaty due to pass in July this year will take care of whatever money is required by Spain or any other Euroland nations for effective bailout. It starts with $700 billion in capitalization and has an open call for additional capital infusion with no limit placed on these calls and no further agreements required.
“New additional capitalization called on by this treaty is mandatory, not elective and therefore will go to infinity.
“The member nations have 7 days to pay up when ordered to by the management of the EMS who are protected against any form of attack or litigation to legislation. It will be backed by the US Fed via swaps while the US publicly denies it is adding any capital to the IMF or this new entity, ESM.
“It is the mechanism for QE to infinity in Europe.
“QE to infinity, properly understood, is debt monetization on steroids. Denials will be legion, but this debt monetization on steroids will not and cannot be avoided.
“The advent of the ESM Treaty establishing the European Stabilization Mechanism is economically Earth shaking and recognized by almost no one out there. It cannot be otherwise, it cannot be avoided. It can be denied but it will occur.”(emphasis added, ed.)
“ESM Will Supply Whatever Money Is Needed In Euroland”
Jim Sinclair, JSMineSet.com, 4/24/12
“QE to Infinity” (i.e., Money Printing to Infinity) entails continuing Diminishment of the Purchasing Power of Currencies printed.
Think Weimar Republic, and , more recently, Argentina and Zimbabwe. (One is reminded of the “No Zim Dollars in the Loo, Please!” sign.)
“Debt Monetization on Steroids” does not provide Solutions, it just buys time, while it worsens The Problem.
Unfortunately, Money Printing to Infinity also necessarily entails eventual Price Hyperinflation.
Indeed, Price Inflation is already occurring; it is just concealed by Bogus Official Figures.
The U.S., for example, is already at Threshold Hyperinflation with Real Inflation of 10.28%.* Thus, The Purchasing Power of Money Vanishes.
“Issuing debt and printing money do not create wealth. All they can create is a temporary illusion of wealth.
“I could have written "if all the money vanishes," but that would be misleading, for all unbacked money will most certainly vanish into thin air. The only question is when, not if. Frequent contributor Harun I. explains why:
Those who fail to understand that the Status Quo is impossible to maintain will be shocked when the disintegration is undeniable. …Words like capitalism and meritocracy are thrown around to make people feel good when, in reality, we have never owned anything, not even ourselves.
How can we own ourselves when the very thing we use for subsistence can be cheapened or reduced to nearly nothing, not by market forces, but by central banks acting at the behest of governments? When a person does not control his labor, what is he?
I wait patiently for people to come to the understanding that the only way for everyone to get their money would be to destroy its value completely…
As the exponential debt curve moves closer to the pure vertical, the rate at which debts come due will approach infinity.
How many more food items be made smaller and sold at the same price? In effect this is a slow starvation of those at the margin. The 46 million American souls on food stamps will soon find their food stamps to be worthless.
Those who assert that a credit system cannot go hyper-inflationary may not have thought through the exponential effects on the relationship of the debt and productivity curves within the context of all money is debt and the only way to create money is for debt to be created. Eventually the debt curve accelerates away from the productivity curve, then the productivity curve collapses all together. Sovereign debt crises caused by governments stepping in to keep the debt system going is the last stage. Then comes the debt/currency collapse.
“Thank you, Harun. Many observers have addressed the key concept here, which boils down to this: paper money is an abstract representation of the real world.
“Here is the primary point: issuing debt and printing money do not create wealth. All they can create is a temporary illusion of wealth.
“Creating debt and paper money does not create real goods and services or real wealth.
“Just as on the desert island, the growth of actual goods (and services –Ed.) in the real world lags the growth of money, i.e. abstract representations of real goods.
“The U.S. Central State (Federal government) has borrowed and squandered $6 trillion over the past four years, and the actual production of goods and services has not risen at all when adjusted for inflation. The central bank (the Federal Reserve) has expanded its balance sheet by $2 trillion, and yet all the assets it have tried to force higher are actually lower when measured in real goods such as gold, oil, wheat, etc.
“It's easy to expand the money supply and difficult to expand the actual production of real goods in the real world.
“This is why Greek towns are reportedly reverting to barter, the exchange of real goods for other real goods. We can anticipate that silver and gold will soon enter the barter as means of exchange that can't be counterfeited or printed by wise-guys (central bankers).
“What Happens When All The Money Vanishes Into Thin Air?”
Charles Hugh Smith, OfTwoMinds.com, 4/24/12
Indeed, the Key Reason Gold and Silver (and essential Tangibles like Oil and Wheat) will launch up is that Gold, Silver, Crude Oil and Wheat (e.g.) are Tangible Stores and Measures of Value.
As the Central Bank-created Hot Fiat Money Winds its way into Prices (as it is already doing with Crude), the Price of these in Fiat terms will (and is already in some Sectors, if one considers mid and long term trends) soar (Deepcaster forecasts Timing and identifies P.M. Assets with especially Excellent Potential in his recent Alerts.)
Specifically regarding Gold, that is because
“…Gold is not just another market. It is the currency of last resort with no liabilities attached to it and certainly no connection to the Western Powers which are presiding over their own financial downfall by their insistence on papering over their structural problems.
“The gold shares, as exemplified by the HUI continue getting more and more undervalued in relation to gold itself. At some point, these shares are going to be the trade of the decade. You now have to move as far back as early 2002, a FULL DECADE AGO, to find the shares at this level of valuation against an ounce of gold. Heaven help the shorts in these shares when the tide reverses - there will be no one left to sell to as they try to cover.”
“Gold Chart and Some Comments,” Dan Norcini, 4/24/12
Short-term other Assets (such as High-Yielding Securities) can be (and should be) profitably held (See Note 2) as Profitable Antidotes to Real Inflation.
But for the Mid and Long Term, Gold and Silver and mining shares and selected Tangibles are Essential Core Holdings to Garner both Gain and Protection.
April 26, 2012
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 11% 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 (10.28% per year in the U.S. 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%, 14.9%, 10% and 15.6% when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio’.
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
-- Posted Friday, 27 April 2012 | Digg This Article | Source: GoldSeek.com