-- Posted Friday, 7 June 2013 | | Disqus
“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(!) benefitting 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
June 7, 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 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.’
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
-- Posted Friday, 7 June 2013 | Digg This Article
| Source: GoldSeek.com
