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Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Macro-Trends – Keys to Macro Profits in 2011, Gold and Silver Ultimate Wealth Protection

Stock-Markets / Financial Markets 2011 Jan 08, 2011 - 05:13 AM GMT

By: DeepCaster_LLC

Stock-Markets

Best Financial Markets Analysis Article“Nothing has changed fundamentally to improve the outlook for the U.S. economy.  It remains in a protracted downturn that has started to deepen anew and that shows no signs of sustainable economic recovery in the year ahead…

…the economy in 2011 should remain much weaker than generally is expected, with ongoing negative implications for systemic solvency, for the federal budget deficit and for U.S. Treasury fundings.  Such also implies a likely accelerating expansion of the Federal Reserve’s "quantitative easing," reflecting active monetization of U.S. Treasury debt and debasement of the U.S. dollar.


The Fed…It always can force an economic downturn by contracting broad liquidity, but its ability to expand the economy is problematic.  It always can create inflation by debasing the U.S. dollar, but bringing inflation under control can be quite difficult when the inflation is not driven by strong economic demand.  The inflation being pursued by the Fed, at present, is of the "difficult" kind.  The nascent inflation is driven by distorted monetary policy, with resulting foreign-exchange weakness in the U.S. dollar…Here, the higher prices do not reflect increasing economic demand…

All these factors favor an environment that should see significant selling of the U.S. dollar — eventually an outright dumping of the U.S. dollar and dollar-denominated paper assets — and the onset of an increase in consumer inflation that likely will open the door to hyperinflation.”

“No. 342: Economic, Market and Systemic Outlook for 2011”
John Williams, ShadowStats.com, 12/30/10

“The EU torture policy of thrusting yet more debt on crippled states already caught in a debt trap – and then forcing them even deeper into downward spiral with a 1930s policy of wage cuts and "internal devaluation" – is an intellectual disgrace.

Let it never be forgotten that Ireland and Spain are struggling because EMU caused a collapse in real interest rates to -1pc or -2pc, setting off an uncontrollable boom.” (Ed. Note: An object-lesson for those who would give up their National Sovereignty to Regional or Global Monetary, Fiscal, or Political Entities!)

“Self-righteous Germany must accept a euro-debt union or leave EMU”
Ambrose Evans-Pritchard, The Daily Telegraph, 12/19/10

“What should be permanently stamped in your minds is that the financial carnage we have experienced is the fault of the Fed and the financial sector and that same Fed bailed out the crooks and left the public high and dry with 22-3/8% unemployment and a shattered residential and commercial real estate sector that is still two years from the bottom and perhaps 30 years away from appreciation.

It is despicable for Mr. Bernanke to have insinuated he helped avert higher unemployed when it was the policy of the owners of the Fed and Wall Street and banking, which was the cause of the worst depression since the “Great Depression” of the 1930s. It should be noted that the end of the damage is nowhere in sight. Throwing trillions of dollars at a problem doesn’t solve it, and in this case will only make it get worse. In addition, trillions of dollars in wealth were destroyed and as a reward for their greed the Fed, which allowed the public to pay for the Ponzi scheme, protected the financial sector.

As far as we know the Fed has already purchased with taxpayer funds about $1.5 trillion in MBS, known as toxic waste, which was created by the financial sector. The question is how much more has been purchased by the Fed and are they going to purchase more to bail out financial institutions and others? One of the things that is never mentioned is restitution for all the money these crooks stole. In a civil action concerning $5 billion in bogus MBS and other derivative products, Goldman Sachs, neither admitted or denied, and was found guilty of civil fraud, and paid a fine of $500 million. They got to keep the other $4.5 billion – another sweetheart deal to permanently protect them of criminal charges…

Now banking and Wall Street gets interest-free money, but the public does not.

Due to the current power of the Fed and other interconnected central banks, all other factors take a back seat to credit creation and their creation of money supply. Under mercantilist Keynesianism, which we prefer to call an economic plan for corporatist fascism, the greater the distortions the deeper the depression. This is the method of perpetual political and social control, which in one way or another has been successful over the centuries. These are the same people who have deliberately created economic cycles, which are extremely profitable, and when things are not going as planned they simply have another war. None of what you have seen has happened by chance, it has been planned that way.

As George Wallace said, “there isn’t a dime’s worth of difference in either party.” He was right. What he should have said was both parties are almost totally owned by Wall Street, banking, insurance, big Pharma and transnational conglomerates.”

“What should be permanently stamped in your minds is that the financial carnage we have experienced is the fault of the Fed.”
Bob Chapman, International Forecaster January 2011 (#1), 1/3/11

Among successful Investors, it is widely understood that it is much easier to achieve Profits and avoid losses, if one invests with Macro-Trends (i.e. “Beta”), than if one invests “against” them.

Merely “Seeking Alpha” (i.e. Appreciation via Individual Stock Selections) if an Alpha Selection/s is of a Stock in a Sector which is Declining (i.e. investing against ‘Beta’), often results in a loss, even though that Stock would have been a leader had that Sector been in an Uptrend.

Ideally one Invests “with” Beta Trends and seeks Alpha via Individual Selections which are consistent “with” the prevailing or prospective Trend, whether Up or Down.

Thus it is essential to get the Macro-Trend, whether Up or Down, “Right” to maximize the chances for Profit and Protection.

So what are the Key Prevailing or prospective Macro-Trends for 2011?

  1. First and Foremost, we know that the Q.E. (Money Printing will continue--) The Private for-Profit Fed has told us so (and the E.U. just keeps doing it). This ongoing Reality will create or facilitate other Macro-Trends.
  2. For example, this will facilitate, but not ensure, the continued growth of Asset Bubbles which Currently exist, particularly the Equities-in-general, and U.S. Treasury Securities, Asset Bubbles.
  3. This Q.E. will also increase the Vulnerability of the U.S. Dollar (and Euro) and continue the enrichment of the Mega-Financial Institutions (which are the Fed’s Constituency and some of whom are its Shareholders) via Equities Price Boosting and de facto Zero-percent money (zero percent for the Mega Institutions only).
  4. It also facilitates the borrowing which loads more Debt onto U.S. (and similarly for Eurozone) Taxpayers. Unsustainable Debt burdens will increase.
  5. Default Risk of Sovereign and Private Debt and Defaults will continue to increase. Note well that The Swiss National Bank announced on January 5, 2011 that it would not accept Irish Sovereign Debts as collateral for loans made from it to the rest of Europe. What Sovereign Debts are next to be thus rejected?!
  6. Surely, the U.S. Muni Debt Arena will see Hair cuts and defaults this year. Caveat Emptor!

The ongoing Liquefaction of Major National Economies, far in excess of their GDP Growth will, and is, ensuing Monetary and Price Inflation; i.e. a degradation of the Purchasing Power of Fiat Currencies the world over.

Official Statistics from the U.S. (and certain Eurozone and Asian Nations) are Bogus. Note Below that Real U.S. CPI is already over 8.5% well above the 1.14% Official Numbers.

Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest.

Bogus Official Numbers      vs.      Real Numbers (per Shadowstats.com)

Annual U.S. Consumer Price Inflation reported December 15, 2010
1.14%                            8.54% (annualized November, 2010 Rate)

U.S. Unemployment reported December 3, 2010
9.8%                              22.6%

U.S. GDP Annual Growth/Decline reported December 22, 2010
3.25%                            -1.44%

U.S. M3 reported December 18, 2010 (Month of November, Y.O.Y.)
No Official Report             - 2.90%

Note also the Negative Real U.S. GDP “Growth”.

In sum, we are facing increasingly Stagnant Economies and increasing Inflation.

Given this Scenario, Investments for Profit and Protection are, provided they are implemented at the right time:

  1. Tangible Inflation Assets’ such as Agricultural Products and other Tangibles in High Inelastic Demand are the Place to Be. Also, the Monetary Metals, with the Caveat below.
  2. Short the U.S. Dollar and Euro – Money Printing is destroying the Purchasing Power of the U.S. Dollar and Euro. Short the U.S. Dollar and Euro, at the Right Time and, typically, vis a vis Tangible Assets (see our Latest Alert)
  3. Short Long-Dated U.S. (and Eurozone Nations) Treasuries – just as Hyperinflation is launching
  4. Short Equities (see latest Letter and Alert for timing) and
  5. Continue to be “long” the Monetary Metals Gold and Silver with the following Caveat:

Gold and Silver for years have suffered from Cartel* Price Suppression Attacks, though they have become less vulnerable to these attacks in recent months. See Deepcaster’s Article “Opportunities to Profitably Escape Paper “Wealth” into 2011 (10/07/10)” in the ‘Articles by Deepcaster’ Cache, for details.

Indeed, Financial and Economic Conditions are such that we do not recommend shorting Gold and Silver, even in advance of a likely Cartel* Takedown attempt.

Fortunately, The Cartel has lost considerable Power to Suppress Prices in recent Months due to Revelations by GATA, Deepcaster and others that various Bullion depositories likely do not have the Metal they say they do with the result that increasing Numbers of Investors are demanding physical Delivery and Possession of their Bullion, as well they should.

But as recent weeks' action shows the Cartel still has some Power to Temporarily Suppress Prices.

*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 Deepcaster’s website. 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 Deepcaster’s website 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.

Gold and Silver will be the Ultimate Wealth Protection and Profit Providers in the Coming Years.

Best Regards,

By DEEPCASTER LLC

www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation         Wealth Enhancement

© 2010 Copyright DeepCaster LLC - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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