-- Posted Sunday, 6 May 2012 | | Disqus
“[Fed Chairman Ben] Bernanke and the Fed have zero credibility… Bernanke has never been right about anything.
“We have inflation in the U.S., and it’s going to get worse.
“They’ve printed staggering amounts of money. They’ve taken staggering amounts of debt on their balance sheet. Much of it is garbage.
“Throughout history, when governments debase their currencies, you protect yourself by owning real assets.
“I’m not selling my gold by any stretch. The surprise with oil is going to be how high it goes.”
“Bernanke Has Never Been Right, Inflation Will Get Worse”
Jim Rogers, Moneynews.com, 4/27/12
Legendary Billionaire Investor Jim Rogers is right. The inevitable result of The Feds (and ECB and other Central Banks’), Printing Money in excess of any Real increase in the value of Goods and services, is Highly Inflationary.
But it is important to realize that it usually takes a few months for that Monetary Inflation to manifest itself as Price Inflation. But in the U.S., for example, (and elsewhere) it is already showing up as Inflation in Food and Energy Prices.
Indeed, the Real Numbers (as opposed to the Bogus Official Ones) show that the U.S. is already at a Hyperinflationary Threshold of 10.28%/yr per shadowstats.com.
Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported April 13, 2012
2.65% / 10.28%
U.S. Unemployment reported April 6, 2012
8.2% / 22.2%
U.S. GDP Annual Growth/Decline reported April 27, 2012
1.62% / -2.17%
U.S. M3 reported April 21, 2012 (Month of March, Y.O.Y.)
No Official Report / 3.72%
Thus it is no surprise that inflation is already reflected in Key Commodities Prices.
Consider:
Copper
Like a Sugar High, Massive Central Bank Liquidity injections are boosting Economically Sensitive Commodities like Copper Short-term.
No surprise then that Copper is now bullishly Trending above its 120 day M.A.
And even though we expect periodic pullbacks, short-term, we expect Copper to Bullishly Rally for a while (see deepcaster.com for Forecast Timing and Targets), as the Central Banks-supplied Massive Liquidity works its way into the Economy via Higher Prices.
Crude Oil
Contrary to claims that high Crude prices result from “Speculators,” the fact is that Crude Production Globally has been flat at approximately 73 to 74 million barrels per day for some 8 years now.
But for all these years, China and other Emerging Markets’ demand for Petroleum Products has continued to surge.
Indeed, Crude Price Momentum (per the MACD) continues to be UP. Not surprisingly, U.S. consumption has not dropped significantly over this 8 year period. Indeed, Distillate (gasoline, jet fuel etc.) Inventories have recently dropped, going into the Summer driving season – a sure fire formula for even Higher Prices.
In sum, Crude is an International Market, and the Emerging Markets Economies continue to demand increasing amounts.
And notwithstanding increasing amounts of “Shale” Oil being produced (with a very much lower EROI (Energy Return on Investment) than the big “easy” Elephant Fields of decades past) Crude Production is forecast to increase by only less than 1% (i.e., 0.9%) per year over the next decade, as the Big Easy (i.e., High EROI) Elephant Fields continue to be depleted.
Therefore, mid-to-longer term, Fundamentals and Technicals dictate inexorably rising Crude and therefore Gasoline and other distillate Prices.
Soybeans
Soybeans have been (and still are) in a Massive Price Uptrend for months, in part because they are a favored food in Asian nations. Expect more Bullishness.
So being long Copper and Crude and Essential Foods like Soybeans, have been and are likely excellent Antidotes to Increasing Price Inflation (See Note 3).
One other Antidote is Selected High-Yield Equities whose prospective Total Return (Gain plus Yield) exceeds Real Inflation (See Note 1).
But what about Gold and Silver. Some readers will already know that a Cartel (See Note 2) of Central Bankers and Factota periodically engage in Precious Metals Price Suppression to try to maintain legitimacy for their Treasury Securities and Fiat Currencies.
Not surprisingly, at this time Gold seems to be stuck in Bear Trend territory, trading below its 120 day M.A. of $1679ish.
However, notwithstanding continuing Cartel Price Takedown Attacks (e.g., the April 24 to May 2, 2012 increase in Short Interest by 20,455 lots was a Precursor/Set-up for the May 3 Price Takedown by the Cartel), Mega-Buyers (including Central Banks!) are buying the Metal in the low to mid $1600s.
Most Important: However, both from a Long-Term Fundamental and a long-term Technical Perspective, Gold (and Silver) is now in a (still) Solid Uptrend.
And as the Massive & Increasing Central-Bank-Provided Monetary Liquidity increasingly becomes reflected in Prices, Gold and Silver Prices are likely to launch up to New Highs notwithstanding Cartel Price Manipulative Operations which are so eloquently described by Jim Grant:
“This is a world of Immense Wall-to-Wall Manipulation. The Fed is The Giant Squid.
“They have manipulated Virtually every price in the Capital Markets.”
Jim Grant, Interest Rate Observer
Bloomberg (05/03/2012)
However, Short-Term, it is more likely than not that Gold and Silver and the Miners Shares have more downside in them. (For specific Timing and Targets Forecasts see Deepcaster Alerts.)
Even so, if Investors fail to Buy near Interim Lows for fear these Precious Metals and their Miners will be taken lower, they risk not getting in when these Metals and their Miners are Dirt Cheap, and are ready to launch up.
Therefore, with another round of QE likely later this year, we stand behind our earlier Bullish Forecast for Gold and Silver, for the Mid and Long term.
Significantly, it is becoming increasingly hard for the Cartel to sustain Takedowns, as the Mini-Takedown and launch back up of April 10, 2012 showed.
In sum, the Best Antidotes to The Most Investment-Destructive Force – Inflation – are The Monetary Metals, Gold and Silver, and the Essential Tangible Assets like Food and Energy.
Best regards,
Deepcaster
May 3, 2012
Note 1: We are not so Negative about the Near-Term Prospects for Nominal Asset Price Growth in Certain Sectors as we were six months or a year ago.
That is mainly because the E.U., Mega-Banks, and the Fed, have already de facto launched a Massive Quantitative Easing 3, with more likely to come.
This QE will serve as a Major Force impelling (but not necessarily successfully) Nominal Asset Prices UP in certain Sectors, for example, for Equities.
But before one becomes too enthusiastic about the Prospects one should consider the implications of our Forecast for Nominal Assets Prices Strength in certain Sectors.
The practice of issuing Bogus (U.S. and other Key official) Inflation figures obscures the Fact that Monetary Inflation (generated mainly by reckless Q.E.) is very rapidly depreciating the purchasing Power of most Fiat Currencies – by 10.28% per year in the U.S. e.g. (per shadowstats.com).
Our High Yield Portfolio is aimed at achieving Total Return in excess of Real Inflation. Stocks in that Portfolio with Recent Yields of 18.5%, 8.6%, 10.6%, 26%, 6.7%, 8%, 10.6%, 10% and 15.6% when they were added to the Portfolio.
Also important to note is that, while massive Q.E. is a Major Inflationary Force tending to pump up Prices in certain sectors, there are Powerful Deflationary forces operating as well – the depreciating Housing Markets in the U.S. and China come to mind. Real Estate in some areas in China is down over 25%, but Food prices are up 9% year over year.
The key to identifying The Great Opportunities (and Great Potential Losses) is knowing which Sectors will likely have Inflating Asset Prices and which will have Deflating ones.
Investors failing to Evaluate Inflation/Deflation Prospects on a Sector by Sector Basis will have missed Great Opportunities and fallen into a Dangerous Trap.
Deepcaster’s Letter --“A Great Opportunity and A Dangerous Trap; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar, U.S. T-Notes, T- Bonds, & Interest Rates; February Letter” -- posted in the ‘Latest Letter & Archives’ Cache at www.deepcaster.com, identifies which Sectors will likely be helped (albeit temporarily) by this Massive QE3 and which will likely be hurt, and provides Forecasts for all. And in his March Letter, “The Pause Before The Great Bull; 3 Buy Recos! Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, March Letter”, Deepcaster makes 3 Buy Recommendations designed for Protection and Profit.
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: Key Sectors, but certainly not all, are moving into Bullish Trends short to mid-Term.
This is due in large Part to the Massive Additional Liquidity ($1Trillion) pumped into the Eurozone economy from December 2011 through February 2012 by the European Central Bank (with help from The Fed, i.e., ultimately the American Taxpayer).
While this money Printing will have Seriously Negative Consequences Long-term, Short-term it is boosting Key Sectors, and Depress Others as our Forecasts Reveal.
That is this Massive Liquidity is boosting Key Asset Prices Short-Term, but will generate General Price Hyperinflation mid and long-term, and already is generating Hyperinflation in certain Sectors.
To see which Sector Bulls should be profitably ridden, read our latest Alert, “Ride the Bull; Forecasts: Key Commodities: Including Gold, Silver, Copper, Crude Oil; U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates” in ‘Alerts Cache’ at deepcaster.com.
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
-- Posted Sunday, 6 May 2012 | Digg This Article
| Source: GoldSeek.com
