Commodity Investors Fortress Assets Opportunities Coming Soon!
Commodities / Investing 2011 Jul 01, 2011 - 05:10 AM GMTBy: DeepCaster_LLC
“…the bankers are attacking all commodities…
…half of the 60 million barrels came from the U.S.’s “Strategic Reserve” – and as we all know, no government serves the interests of the international banking cabal more slavishly than the U.S. government.
…any increase in the price of oil functions exactly like a broad-based tax increase.
It raises the price of goods, lowers profit-margins… has a depressive effect on economies – and by necessary implication, on commodities… when the price of oil falls, that dynamic reverses, and is very “stimulative” and bullish for commodities…
This means the only rational response to the plunge in the price of oil for other commodities markets would have been for them all to rally sharply. The fact that commodities did not rally (i.e. after the announcement of the Crude Oil releases from The Strategic Petroleum Reserve – Ed.) …indicates that it is in fact the bankers who were behind this assault on the oil market…
To begin with, we must ask ourselves how/why commodities moved precisely opposite to the direction they should have moved…
…a single, dominant driver now rules commodities today (which even drowns-out the supply/demand fundamentals). Obviously that “driver” is the reckless, totally unprecedented money-printing by Western bankers.
Currency-dilution is the only “fundamental” which impacts all commodities in an identical manner…
The banksters do believe that their exponentially increasing money-printing now drowns out all other considerations in markets. Similarly, they are manipulating all commodities markets (lower), because obviously if you manipulate the value of goods lower this has precisely the same effect as raising the value of their paper currencies.
Indeed, the entire basis for manipulating (i.e. suppressing) the price of gold for the last several decades has been to hide the relentless currency-dilution by the Western banking cabal. The reason the bankers need to hide such dilution is that it translates directly into simple theft: we deposit (or “invest”) our dollars with these banksters, and even after the pitiful return we get on our money, the dollars we get back are always worth less than the dollars we gave the bankers…
In the absence of a gold standard there is no way to protect savings from confiscation through inflation [i.e. excessive money-printing]…
The appropriate response for all investors is to place their money where these markets must end up over the longer term, not where they are moving in the short term…”
“Bankers Declare War on Commodities”
Jeff Nielson, bullionbullscanada.com, 6/24/11
Hyperinflation is coming**, but not without Serious Fed/Government (temporarily successful) Attempts to Suppress it. Therein lie the Opportunities for Profit and Protection described in this Article.
The Achilles Heel of the Mega-Bank Cartel’s* Promiscuous and Confiscatory Money-Printing, Excess Credit-Inducing, Fiat Currency Purchasing Power Debasement Regime is the inherent Value of Tangible Commodities in relatively inelastic Demand.
Food and to a lesser extent Energy are in relatively inelastic Demand because people must have them to live.
Thus, it is no surprise that The Fed-led Cartel’s Fiat Money Creating QE 1 and QE 2 drove up the prices of Energy and Food, in some cases by more than 30%.
Increasing hundreds of billions of fiat Dollars, Euros etc. chasing Tangible Assets in Limited Supply (as, especially, Food) is bound to inflate the Price.
As well Gold and Silver are in increasing demand, because more and more Investors see them for what they are – Real Money, and thus an Antidote to Fiat Currency Purchasing Power Debasement through Operations like QE 1 and QE 2.
And an increasing number of experienced Investors are even learning how to profitably cope with Ongoing Cartel* Suppression of Gold and Silver Prices (see below).
*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.
Indeed, we should invest “where these Markets Must End UP over the longer term” as Jeff Nielson correctly puts it, and not where Cartel Manipulation may temporarily drive them at any given time.
But, in the short-term, it is clearly in the Mega-Bank Cartel’s Interest to knock down Key Commodity and Precious Metal Prices as much and as often as possible. The More Citizens around the world are outraged at Cartel-Caused Food and Energy Price-inflation, the More Vulnerable The Cartel’s Power and Wealth.
In sum, Cartel Actions to Suppress Food, Energy, and Precious Metal prices are, and will create a Buying Opportunities before Hyperinflation Seriously Sets in.
Thus both Profit and Wealth Protection Maximization requires Timing Ones Entry into these Investments, so as to minimize injury caused by Cartel* Manipulation of Precious Metal and Other Markets.
As background to our Timing and Asset Selection Strategy Guidelines, first consider that, in the long run, Hyperinflation will drive the Prices of Essential Commodities through the roof in Fiat Currency Terms.
Hyperinflation is indeed Coming.
“… the U.S. dollar remains on track for an eventual complete collapse in a hyperinflation, and the roots of that hyperinflation remain imbedded in the system. The primary hedge against losing U.S. dollar purchasing power remains physical gold (and silver), with some funds outside the U.S. dollar…
Today (May 6th), stocks are soaring as we go to press, purportedly due to an upside surprise in April nonfarm payroll growth, a gain of 244,000…
…thanks to QE2, the Fed effectively has monetized more than the entire net issuance of U.S. Treasury debt (to be held by the public) during the last five months. Ostensibly, the Fed has done this in an effort to stimulate the economy and to debase the U.S. dollar (create inflation). While the Fed has little chance of turning the economy to sustainable economic growth, it has been successful in triggering an upturn in consumer inflation. That has been seen in recent months and likely will be reconfirmed in the week ahead.
I contend that the Fed’s liquidity actions are tied more banking system solvency concerns than to the economy, which continues to stagnate, where elements such as construction are showing renewed economic contraction, after a period of extensive bottom-bouncing. Disappointing economic activity likely will provide the public excuse for QE3…
Birth-Death/Bias Factor Adjustment. Despite the ongoing and regular overstatement of monthly payroll employment—as evidenced by the regular and massive, annual downward benchmark revisions to the reported payroll numbers—the BLS keeps upping its monthly biases in post-benchmark reporting. For April 2011, there was a positive monthly bias used of 175,000 jobs, up from the revised estimate of 141,000 used in April 2010. In March, the net bias was a boost of 119,000 jobs. These upside biases reflect an ongoing assumption of a net positive jobs creation by new companies versus those going out business. Such becomes a self-fulfilling system, as the upside biases boost financial-market and political needs with relatively good headline data, while also setting up the next year’s downside benchmark revisions, which traditionally are ignored by the media and the politicians.”
“Commentary No. 367: April Labor Numbers, Money Supply, Dollar and Precious Metals”
John Williams, Shadowstats.com**, 5/6/11
Indeed, Hyperinflation (i.e. Fiat Currency Purchasing Power Debasement) must come because it is the only way to (temporarily) cope with the several ongoing Crises including too much Sovereign and Financial System Debt, and Derivatives Exposure.
Consider the Derivatives Exposure of four of the USA’s largest Banks:
Banks Derivatives Exposure Exposure for each Dollar
of Bank Capital
Goldman Sachs $44.9 Trillion $7.81
Bank of America $52.5 Trillion $1.82
Citibank $54.1 Trillion $1.82
JP Morgan Chase $79.5 Trillion $2.75
Sources: OCC & “Money & Markets” – June 27, 2011
That is a lot of Risk.
As well, consider the US Government Debt-Risk Exposure.
USA’s Government plus Government Guaranteed Agency debt (Fannie and Freddie) totals about $17.2 Trillion or 115% of U.S. GDP. And Downstream unfunded liabilities are over $100 Trillion.
This debt cannot be coped with (we do not say “paid”, because it cannot be “paid”) without Vast Monetary, and therefore Price, Inflation.
Indeed, we are already at the Threshold of Hyperinflation with, for example, Real U.S. CPI already at 11.5% per Shadowstats.com** (see chart below). Shadowstats.com calculates Statistics as they were calculated in the 1980’s before Official Data Manipulation began in earnest.
But The Cartel’s attempts to suppress Essential Commodity Price Inflation (which their own Policies Created) will create Superb Buying Opportunities. Specifically, Superb Buying Opportunities occur when the Cartel next intensifies its attack on Precious Metals and Essential Food and Energy Commodities Prices. We forecast the approximate timing of that “Next” when in our recent Alerts in the ‘Alerts Cache’ at www.deepcaster.com.
Here is what to do to prepare.
Consider that the Cartel will be desperate to restrain the Prices of the Aforementioned. Essential Commodities, and Precious Metals and while they will be unable to do so in the long term, they are still able to effect - Takedowns in the Short run. These provide superb Buying Opportunities for Tangible Assets which provide both Profit Potential and Wealth Protection. In no case is this more true than for Gold.
Gold
Throughout the Process from Monetary Inflation (e.g. in the “cheap money” 1st decade of the 21st century and in QE 1 and 2) to Price Inflation (e.g. beginning now) to Price Hyperinflation and then Depression, Gold tends to appreciate (Caveat: But beware of “Paper Gold” and Cartel* Price Suppression Attacks). Indeed, it has appreciated dramatically in the last decade in Fiat Currency Terms, performing much better than Equities-in-general which, considering Inflation, have actually lost value.
Initially, in the Fiat Currency Monetary Inflation phase, Gold, as The Ultimate Money, appreciates because all Fiat Currencies decline in Purchasing Power vis a vis Gold, (albeit in varying Degrees) as they have for the last decade.
And then, as Price Inflation becomes Price Hyperinflation, Gold Soars as Fiat Currencies’ Purchasing Power Plunges. Indeed, we have already arrived at the Hyperinflation threshold with the U.S. CPI at 11.15% per Shadowstats.com**.
After that Hyperinflation, as Economic Depression Sets in (and thus when Fiat Currencies have lost much of their value) Gold tends to Retain its value vis a vis the Damaged or Destroyed Fiat Currencies.
One other consideration relates to Gold (and other Precious Metal) Mining Shares. Their Value tends to track Bullion prices only somewhat because they are after all, and above all, Stocks. Thus, overall Stock Market performance is likely to be a substantial determinant of their Price at any given tim, rather than their Value as actual or potential Precious Metal producers.
Maximizing Value in Precious Metal shares (as opposed to Bullion) is thus in large part a matter of Timing… Generally speaking, they are better purchased near the Bottom of Equities Markets Downlegs, and/or Cartel Takedowns.
Silver
Silver, The Poor Man’s Monetary Metal, can in the Hyperinflationary Process be expected to perform similarly to Gold, except for the fact that it is also an Industrial Metal, used, and used up, by Industry.
While Gold has recently powered up to trade around its all-time Nominal High around $1550/oz, Silver has in recent years been stronger even yet, recently trading around its all time high of $50.
But it is important to note that while Silver has in recent years been acting more like the Monetary Metal that it is, rather than the Industrial Metal that it also is, its price is also susceptible to perceived Economic Prospects.
For example, the prospect of sustained Higher Oil Prices justifiably exacerbates fears that such high prices will dampen Economic Activity, thus dampening demand for Industrial Metals, including Silver. But Silver as Safe Haven Money has spiked UP along with Gold in the Past Decade. Indeed, Silver prices are spurred by a Critical and Worsening Supply Shortage of Physical.
Moreover, recently Prospects for another Economic Downturn provided the Cartel with the Opportunities to drive Silver down from $50ish/oz to a low of $33ish/oz.
Thus we have, and will continue to have, this Very Volatile situation in the Precious Metals Arena with the Contenders being: The Cartel vs. Economic and Financial Reality.
Any perceived diminishment of The Intensifying Crises around the World and/or a Major Equities Takedown will surely bring renewed and intensified Cartel Suppression Attacks on the Precious Metals Prices. But Cartel Price Suppression attacks on the Precious Metals has, in large part due to increased demand and tightening supply of physical, been less successful recently than in past years.
Therefore, we have Forecast the approximate timing and Targets for an even more Vigorous Cartel Attack on Precious Metal in our most recent Alerts.
And that will provide a test of The Cartel’s Precious Metal Price Suppression Power, which has been diminishing of late.
In the Middle and Long Run, Gold and Silver are likely going higher, much higher.
Caveat: It is essential always to bear in mind that Precious Metal Miner and Explorer shares are stocks, and thus tend to mimic overall Equities Market Movements to a degree. In other words, an Equities Takedown would tend to take down Precious Metals shares prices also, but Bullion would tend to be less affected.
And, this is The Key Point, since Silver is an Industrial Metal, we expect Silver Shares would be taken down harder in any equities Takedown. But the increasingly Severe Silver Bullion Crunch would tend to keep Bullion Prices elevated.
Food
The Third Protective Category with Profit Potential is Agricultural Products (and Producers) in relatively Inelastic Demand. Whether in a Hyperinflation, or in a Depression, people will buy Food first above all else.
Fortunately, in this Sector, there are still “Sleeper” Opportunities.
Indeed, there are still several companies in this Sector which are quite undervalued.
Deepcaster recommended two earlier this year -- one trading at just over $5/share and the Other at just under $2/share.
And more recently, we recommended a third ‘Sleeper’ Sector Industry leader, which has a huge and expanding Asian Market and a recent P/E Ratio of under 4, and which trades under 70 cents/share (in $U.S.) and has Tremendous Appreciation Potential.
To Consider these three “Best of the Best” Sleeper Sector Investments, read our latest Letter – “Main Gold, Silver & ‘Sleeper’ Sector Price Movers; ‘Sleeper’ Buy Reco.; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar, and U.S. T-Notes & T-Bonds; March 2011 Letter”, and Alert -- “Golden Green Opportunity Buy Reco.; Forecasts: Commodities, Gold, Silver, Equities, Crude Oil, U.S. Dollar, and U.S. T-Notes & T-Bonds” in the ‘Alerts Cache’ at www.deepcaster.com.
Strategy Guidelines
In sum, in the Medium and Long Run, we see the aforementioned Equities Bearish Factors overwhelming the Bullish Ones, which will have Severe Negative Consequences for Equities-in-General and for certain Commodities which are in relatively Elastic Demand.
Given this Negative Scenario Safe Havens with Great Profit Potential are Gold, Silver (with Timing Caveats, especially for Shares) and Agricultural Commodities in relatively inelastic demand (such as Wheat and Foodstuffs in general), and businesses focusing on them.
Deepcaster’s General Guidelines and Considerations for the aforementioned Sectors and in light of Cartel Market Manipulation (i.e. especially in the Precious Metals Market) are fivefold:
- Buying on Dips, coupled with a Willingness to Tolerate Great Price Volatility
- The Core Holdings of Ones’ Precious Metals Position are best held in one particular form (see our Precious Metal Recommendations) of the Physical Metals, in Personal Possession
- that Well Managed reasonably priced Miners with Substantial Reserves be bought on Dips (e.g. near the Bottoms of Cartel engineered Takedowns), and, if one is a Trader, a portion sold near interim highs
- that a portion of One’s Holdings be in a Dividend Paying Precious Metals Fund such as one which we have Recommended, and
- Regarding Silver, since it is also an Industrial Metal, it is especially vulnerable to Slowdown in Economic Activity and (especially for the Shares) Takedowns in the Equities Markets.
In sum, we expect another Markets Crisis is coming and the Fortress Assets Gold, Silver and Food are the place to be.
Gold and Silver and Essential Food Products and Producers are the most important Means to Profit and Protect regardless of Economic, Financial, or other Market Conditions, when preparing one’s Portfolio for Hyperinflation.
We reiterate, finally, that, given the aforementioned Negatives, a Crisis is likely already “baked into the cake.” The Fed’s (and Eurozone Bankers) Fiat Currency Purchasing Power Degradation via Q.E. cannot go on forever, and, in any event, Q.E. worsens the Inevitable Crash because it serves only to pile more Debt upon already Unpayable Debt.
Moreover, the Bond Markets have already been Signaling that Q.E. will result in increasing Inflation and Interest Rates which will Seriously Injure the Equities Markets, and Burst Equities and other Key Asset Bubbles.
The Bond King, Bill Gross (PIMCO) exiting the long-dated U.S. Treasury Market should be a warning to all.
The Wise are Well-Advised to prepare for the Coming Hyperinflation, by seizing Impending Fortress Assets Buying Opportunities.
Best regards,By DEEPCASTER LLC
www.deepcaster.com
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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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