Investors Profit and Protect from The Great Race to Debase
Stock-Markets / Financial Markets 2013 Nov 16, 2013 - 02:12 PM GMTBy: DeepCaster_LLC
"’I would like to see the truth come out of these confirmation hearings to discuss how completely clueless Janet Yellen was during the housing bubble,’ Schiff suggests by way of warming to the topic. Not only did Yellen fail to see the crash coming, but she was dismissive of the dangers related to our over-leveraged housing economy even as Schiff himself was doing his best to alert the public. ‘She was wrong about everything in the past and I think she will continue to be wrong once she's chairwoman.’
“Schiff says it is Yellen's faith in the fed's ability to cure what ails the economy that will prove to be America's undoing. Having learned nothing from the crisis Yellen will continue to print money until the long-anticipated currency crisis arrives and ‘brings an end to the madness,’ he argues.
“In a sense, the best case scenario is one involving a total meltdown as Schiff sees it. For six years the Fed has enabled an almost total lack of fiscal discipline. Easy money has forestalled a total collapse without ever allowing any corrective economic action. The economy has been in a medically induced coma since 2009. If Yellen is truly as inept as Schiff believes, maybe it's not too much to hope that hyper-easing will be disastrous enough to get America to snap out of it….”
“‘Clueless’ Yellen Will Trigger Collapse (Hopefully): Peter Schiff,” Jeff Mackle, Breakout, finance.yahoo.com
Major Nations around the World are competing in The Great Race.
In the course of this Great Race there will be Great Risks and also Great Opportunities for Profit and Wealth Protection, Opportunities of which we have been, and intend to continue, keeping readers apprised.
We know that The Great Race will continue for a while longer.
We also know that the Race will end Very Badly for Most National Economies and for their Unprepared Citizens, including Unprepared Investors and Traders.
Consider this recent report on the Status of The Great Rac
“The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest level since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is ‘uncomfortably high….’
"The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a ‘currency war,’ barely two months after the Group of 20 nations pledged to ‘refrain from competitive devaluation’."
“Race to Bottom Resumes as Central Bankers Ease Anew: Currencies”
Bloomberg News, 11/11/13
The Action in the U.S. Dollar/Euro just last week ($US up, Euro down) provides a Sterling example of how The Race is playing out.
The Race is The Race of Major National (and Regional) Banks which print Fiat Currencies to competitively Devalue those currencies.
Major Nations are competitively devaluing their currencies, in an effort to support, above all, their Commercial Bank clients/owners, and secondarily to help their economies, their exporters and apparently (given the results of several years of QE) last, their unemployed..
These Devaluations have not broken into open Currency (or Hot Military) Wars, yet. But they may when the Negative Consequences of Devaluation, e.g., Price Hyperinflation, become more apparent, and felt. Competitive Currency Devaluation is a Zero Sum Game.
In sum, these Currency Devaluation “Wars” will continue until they must stop (because, inter alia, they generate Hyperinflation of the Prices of Essential Tangible Assets). That is because most Major Economies are burdened with Unpayable Debt and Sluggish or Contracting Economies and Currency Devaluation is one way to reduce the Burden, but only temporarily.
In order to Profit and Protect, consider two Tangible Assets whose Price is determined in part by Currency Devaluation – the Monetary Metals, Gold and Silver.
Trader Dan’s recent analysis is excellent
“This week and last week, the US Dollar has been higher. Guess what happened to gold over those same two weeks? Yep - it went lower.
“The two weeks previous to those the US Dollar was weaker. Guess what gold did back then? Yes - it went higher.
“It is all coming back to the US Dollar once again. Simply put, rising interest rates in the “US tend to favor additional strength in the US Dollar as traders fear that apparent stronger economic readings will bring the Fed back in on the TAPER SIDE of the QE equation.
“When you toss in the fact that Euroland just got hit with a surprise rate reduction yesterday, is it any wonder why traders are favoring the US Dollar right now? It is also helping the greenback immensely that foreign investment appetite for US equities which continue their one-way trek higher is boosting demand for the US currency as well.
“All of this adds up to some very difficult headwinds for gold to overcome.”
“US Dollar Strength Derailing Gold,”
Traderdannorcini.blogspot.com, 11/8/2013
But what is not mentioned is that Cartel (Note 2) Price Suppression has been the Main Force keeping the Prices of the Tangible Asset “Canaries” in the Monetary “Mine,” Gold and Silver, suppressed thus far!
We hasten to say that $US Strength (vis à vis Gold, Silver and Stronger Real Asset Based Currencies) will not last for much longer. Indeed, long-term the $US is likely doomed as the World’s Reserve Currency
Thus, one Great Opportunity for Profit and Protection is to play the “Hyperinflation is Coming” Card. Consequently, Deepcaster intends to continue to keep readers apprised of probable timing. By the way, it is quite important to note that Official Figures regarding Inflation are Bogus in the U.S., China and other Key Major Nations. For example, The Real Numbers show the U.S. is Threshold Hyperinflationary already with CPI at 8.80% (Note 1).
However, notwithstanding ongoing Cartel Precious Metals Price Suppression attempts, which have been successful so far, the probability of that Great Precious Metal Launch up beginning soon (see our timing forecasts) and being sustained, increases as time passes. And the Miners stocks should explode upward as well.
Recent Positive Price Action in the HUI is encouraging – as Bullish Mining Share Prices often lead Bullish Bullion Moves. Indeed, recently, the HUI generated two Reversal Days in a row recently, and is technically set to launch higher soon but that launch has thus far not occurred. Only Cartel Price suppression can keep Mining stocks down, and that is not likely to last much longer. Unfortunately, it is entirely possible that the Prelude to the Great Launch up will be one more Brief but Major Takedown.
Remember that it is in The Cartel’s interest to demoralize Precious Metal Partisans with repeated Takedowns, and that they may well succeed with Takedowns for a little while longer.
On the Positive Side, Physical Demand will likely soon force even Paper Gold and Silver Prices higher. In the past 6 months Physical Gold eligible for COMEX delivery (so called “Registered”) has been shrinking fast… to 660,000 ounces.
Consider,
The Demand for Bullion in China and India is huge.
If a mere 2% of “longs” hold their positions and ask for delivery, COMEX inventory will be exhausted.
If/when that occurs, there will be a massive spike up in prices.
Hold your Gold and Silver Bullion and Mining Shares for future Protection and Profit.
Another Consequence of The Great Race toward Currency Devaluation has been the “ongoing” Equities Rally fueled by The private, for-profit Fed’s QE. The QE is aimed mainly at helping their shareholders/owners, the Mega-Banks. When we take a comparative look at Equities Charts (e.g. the Dow) over time they reflect our earlier, and continuing, forecasts.
A long term Equities Chart (e.g., The Dow) with its Expanding “Jaws of Death” Wedge is quite Bearish, a harbinger of The Great Crash to come. Indeed, according to The Buffet Rule one should not invest in Equities Now.
We paraphrase that Rule
-- Investors should be buyers of stocks when the aggregate market cap of the largest 5,000 companies in the US, as measured by Wilshire 5,000, falls in the range of 70% to 80% of US GNP. Today, that ratio stands at 109%. (Since 2009, the Wilshire 5,000 has risen 68%. But US Economy has grown just 17%.)
Consider other signs of the coming Great Equities Crash
--The Shiller P/E of the S&P 500 (the index divided by the 10-year average of inflation-adjusted earnings) is now above 25 – a level that prior to the late-1990s dot-com bubble was seen only in the three weeks prior to the 1929 stock market crash.
--The Price-revenue ratio of the S&P 500 is double its pre-1990s bubble average.
--Over the past 40 years there have only been two other times when the DJIA has risen as fast and as far as it has off its 2009 low. The first was in the run-up to the 1987 crash. The second was in the late 1990s, during the dot-com frenzy.
But monthly and Weekly Dow Charts are Bullish…and this is consistent with our earlier forecast for an Equities Rally (now occurring) prior to The Great Crash. Therefore, re Crash Launch Timing, see our forecasts.
Stay tuned as the Jaws of Death come ever closer to closing.Best regards,
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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