-- Published: Friday, 10 October 2014 | Print | Disqus
When considering investing in Essential Resources it is important to determine not only which of these have relatively inelastic Demand but also those which have Relatively inelastic Supply.
Now is a time of Great Opportunity for Investing in certain (but not all!) Key Resources, because certain Key Resources are NOW available at Bargain Basement Prices.
The Key to Picking which ones is to focus on the Big Picture for a particular Resource, an Important Deepcaster Focus.
As well, it is important to Tune Out the Mainstream Media Hype and Spin (or Gloom and Doom, as the Case may be) and look at the Real Fundamentals.
So consider here an overview of the prospects for Four Essential Resources: Potable Water, Gold, Silver and Crude Oil.
There is a Delusion, somewhat widely accepted, that if an Essential Resource is in Short Supply, the Supply Problem can be solved if one applies enough Appropriate Technology and Capital to it.
Realistically, though, for certain Essential Resources, supply shortages, (i.e., Demand “Longages” ) can be Managed, to a point. Yes. Solved No.
This Reality provides both an Opportunity and a Threat — a Profit Opportunity for those who are aware of it, and a Threat for those who are not.
Several such Great Essential Resources Opportunity/Threats face us today. Potable Water, for example provides a Great Profit Opportunity. (Indeed, Deepcaster has already recommended taking Profit on One of our recent Water Sector Recommendations and have a current Recommendation aimed at profiting from another one in the Water Sector also.
Potable Water can be Managed to a Point, but there is no feasible (i.e., Energy and Capital Efficient) technology which can create the Vast Quantities of Potable Water Needed for Agriculture and Huge Urban Areas.
Resource Realists are already learning this Hard Lesson from the Mega-Drought now Threatening California and the rest of the West and Southwest from Texas to Oregon.
Consider excerpts from the following report on Ground water from California; California provides over of 50% by value of the USA’s Agricultural Product plus considerable Agricultural export Income.
“The ongoing disaster that is the drought in the West is leaving wells dry across California - which account for up to 60% of water usage. As WSJ reports, as groundwater levels plunge (100 feet or more lower than norm), wells are being driven further and further into the earth (500 feet in some cases) forcing the state legislature is considering regulating underground water for the first time. ‘We can't continue to pump groundwater at the rates we are and expect it to continue in the future,’ warns one engineer, adding ‘What's scary is we're not fixing anything... It's a race to the bottom.’
“‘Everybody was pumping to their heart's content, until they realized the basin isn't that big.’
“With groundwater levels falling across the Golden State—causing dried-up wells, sinking roadbeds and crumbling infrastructure—the state legislature is considering regulating underground water for the first time.
“Californians have long battled over rights to rivers, lakes and other surface-water supplies, but the drought is finally shifting the focus to groundwater, which accounts for about 40% of water used in normal years—and up to 60% in drought years, as other sources dry up….
“…groundwater tables in some parts of California have dropped 100 feet or more below historic averages. That has resulted in an estimated $1.3 billion in damage to infrastructure, such as cracked highways due to subsidence…
“One California County Supervisor
Frank Mecham said the near-doubling of the county's population to 275,000 since 1980 has put pressure on groundwater….”
“Government To Regulate Groundwater For 1st Time As California Drought Becomes ‘Race To The Bottom’,” Tyler Durden, zerohedge.com, 08/29/2014
Of course, the aforementioned Supervisor put his finger on the Primary Cause of the dramatically increased demand for Potable Water from Urban Areas – Population Growth (100% of which for the past decade has been caused by Mass legal and illegal immigration). The Potable Water supply Realities in the West and Southwest demonstrate that there are Carrying Capacity Limits (Note 3 Definition).
So where are the Investment Profit and Wealth Protection Opportunities?
Are Desalination Plants the answer? No, The Capital Expenditures are massive and Energy Requirements Substantial and amounts of Potable Water Produced are quite Small relative to Agricultural and Urban Demand.
And as to Techno-fixes, who after all really wants to drink “Greywater”?
Or consume Food irrigated with “Greywater”?
There are three Key Points here:
1) Groundwater and other Essential Potable Water Resources are de facto quite limited.
2) Essential Water and virtually irreplaceable Topsoil Resources can not support Unlimited Population Growth. See www.carryingcapacity.org.
3) Acknowledging the Reality of the Foregoing Resource Limits allows one to Profit from the Opportunity and avoid the Threats to Assets reliant on Essential Resources. Indeed, Deepcaster (an others with a “Big Picture” Perspective saw this Investing Opportunity months ago, and have already recommended water sector stocks (see Note 1).
So now consider the Fundamentals for three other Essential Resources. Gold and Silver Prices have been in a downtrend for many months and Crude Oil for many weeks.
Gold in Real Money, Silver is Real Money and Essential in High Tech and Medical Applications and Crude Oil is The Essential Portable Energy source for years to come.
Considering “Big Picture” Fundamentals, the Upside Price Potential for all three is Quite Bright. Consider a few Key Big Picture Fundamentals for these three.
Many weeks ago we first Forecast the $US would rise vis à vis the Euro, short-term, and it has and still is, because of the $US and U.S. Economy’s relative perceived (but not Real) strength.
The Eurozone is about to embark on a round of easing (i.e., Currency Devaluation just as Japan has been doing) vis à vis the $US ostensibly to combat its lousy Economy and 11.5% Official Unemployment Rate. And Japan is engaged in QE as well.
Indeed, the Major Economic Powers have been and continue to be in a War of Competitive Fiat Currency Devaluation (i.e., Purchasing Power Devaluation).
And though the USA is ostensibly on track to taper its Bond buying to zero, there is considerable evidence that it continues to purchase U.S. Treasuries (to boost the $US) using Belgium as a “Front.” (See Deepcaster’s earlier Article).
Moreover, the Eurozone Economy is still depressed, and the Chinese economy is slumping somewhat.
Thus, short-term, we can expect money to continue to flow into the $US and U.S. Treasuries, with the U.S. 10Yr. Yield Bouncing in the 2.2% to 2.6% range.
But underneath the Mainstream Media Hype, the U.S. Economy is not recovering either with Real Unemployment at about 23% and Real U.S. GDP a Negative Number per Shadowstats.com. (Note 2)
While the Official Headline Consensus puts U.S. GDP at 4.6%, as Shadowstats’ John Williams says, “The GDP also has been subject to special-purpose (usually election-related) political manipulation…over the last five decades… [resulting in… Ed] … the heavy overstatement of second-quarter GDP Growth … Happy Hype, Fluff and Guesstimates Boosted the GDP Growth Estimate… the Broad Economy … is still turning down anew.” Shadowstats #662, September 26, 2014.
Considering the foregoing, imagine the Economic Catastrophe if The Fed were to try to sell any significant amount of its $4 Trillion-plus Hoard of U.S. Treasuries back into the Market.
So, Key “Big Picture” Fundamentals for Investors are
1) the Real Continuing down turn in the U.S. Economy and
2) the ongoing Competitive Devaluation (i.e., Fiat Currency) War among Major Central Banks—a War which in principle can not continue indefinitely
Thus we forecast: The Fed will have to resume publically visible QE some time in the next 12 months, and Deepcaster aims to more precisely forecast the timing as we move closer to that event.
This will Crash the $US and U.S. Treasuries and usher in Hyperinflation, including Hyperinflation of the Prices of Gold and Silver and Crude.
We are not quite ready to make the Call as to the Specific Month, but we will make it in due course.
Indeed, one Major Geopolitical Event actually scheduled for a very few weeks from now could well touch off a massive Rally in Gold and Silver, the Essential Monetary Metals, i.e., non-Fiat Currencies.
And The Fed’s re-institution of QE which will happen (the only question is timing) will touch off a Massive Rally in these two Monetary Metals and in Crude.
As a result of all the foregoing and other key factors, Deepcaster considers that our following forecasts made a week ago are “Baked into the cake.”
In the next 12 months we forecast (and in our October Letter we identify):
— 2 Key Sectors currently in Multi-Month Downtrends will Reverse and Skyrocket.
— 3 Key Sectors in Multi-Month Uptrends will Reverse and Crash.
— A Dramatic and Sudden Event in one Essential Sector will shake Markets and Economies to the core.
— And, we forecast in October that one Major Sector will Crash
Seeing the “Big” Picture and the Real Fundamentals are essential to profiting and protecting Wealth, via Essential Resources, going forward.
October 10, 2014
Note 1: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*
• 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
• 55% Profit on Double Short Euro Call on August 6, 2014 after just 106 days (i.e., about 200% Annualized)
• 65% Profit on Energy Storage & Management Company on July7 15, 2014 after just 342 days (i.e., about 70% Annualized)
• 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
• 75% Profit on Equity Index Call on May 27, 2014 after 21 days (i.e., about 1305% Annualized.)
• 30% Profit on Equity Index Call on May 13, 2014 after 34 days (i.e., about 320% Annualized)
• 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
• 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
*Past Profitable Performance is no assurance of future Profitable Performance.
Note 2: *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 September 17, 2014
1.70% / 9.42%
U.S. Unemployment reported October 3, 2014
5.9% / 23.1%
U.S. GDP Annual Growth/Decline reported September 26, 2014
2.59% / -1.66%
U.S. M3 reported October 7, 2014 (Month of September, Y.O.Y.)
No Official Report / 4.39% (i.e., total M3 Now at $16.045 Trillion!)
Note 3: “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.
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-- Published: Friday, 10 October 2014 | E-Mail | Print | Source: GoldSeek.com