Opportunity in the Deflation
to Hyperinflation Transition
by DeepCaster LLC, deepcaster.com | June 17, 2010Print
Deflation is the biggest worry now but it will turn into hyperinflation soon…We are poised at a heart-stopping moment in economic times…
Deflation is the issue now because money supply is actually declining…
Hyperinflation seems impossible when there is not much inflation in most economies. But hyperinflation is a monetary event, not an economic one and will happen on an overnight basis, not via a general uptrend in inflation data…
The recent rise of gold prices to a new record high and the decline in most stock markets are ominous signs…
This implies the unexpected hyper is pending, because if it were exclusively deflation ahead, gold action would be less buoyant.
Deflation Now, Hyperinflation Soon
Harry Schultz, Money News, 6/11/10
Harry Schultz, the Eminence Grise of the Newsletter Writers, is right that Hyperinflation is Coming to torment us.
Hyperinflation is the Penalty that Citizens of Major Industrial (and many) Nations will likely have to pay for allowing the private for-profit U.S. Fed and its Mega-Bankster Allies to Control their Financial Systems.
But Opportunities abound for those who know Hyperinflation is coming and prepare. To fully appreciate these we must first consider.
Although Uncle Harry is right to see that Hyperinflation is in our future – How else to even begin to pay sovereign debts, to fund Bankrupt U.S. States, or Bankrupt Eurozone States or to provide enough credit to liquefy the U.S. Middle Class, 70% of the U.S. Economy, without creating lots More Money and Credit–he fails to point out that it has already begun in certain Sectors (see below).
Such an inevitable (it has already started) explosion of credit and money is likely to result in, as we have long forecast, the severe degradation, or even destruction, of the U.S. Dollar, the World's Reserve Fiat Currency.
This is a Result Devoutly wished for (or planned for) by the Globalists, who yearn for their own "Global" Currency, (a wish already aborning in the IMF SDRs), in order to further enhance their power.
As the Purchasing Power of the U.S. Dollar (and Many Fiat, including especially the Euro currency) continues to Fall over the next few years, the prices of almost everything will rise. Indeed this has already started.
What Uncle Harry also does not point out, (in part perhaps) because Bogus Official Statistics hide it from us (likely by design), is that while we have an ongoing, but temporary Deflation in certain Sectors (M3 deflation at a negative 5.91% annualized is dangerously close to pre-Great Depression levels) in others Sectors (e.g. U.S. CPI and Many Sovereign Nations Debt) we are already seeing Hyperinflation.
The Net Effect is the Worst of Both Worlds, a slow-Motion collapsing Economy and a Nascent Hyperinflation in sectors where it hurts most, e.g. U.S. CPI already at 9.22% (according to the June 17, 2010 Shadowstats.com report). Not a Positive Harbinger of the Financial Future as it reflects the already-severely-diminished Purchasing Power of Main Street U.S.A., 70% of U.S. GDP.
Indeed, we must here briefly Focus on The Real Numbers.
|Official Numbers vs.||Real Numbers|
|Annual U.S. Consumer Price Inflation reported June 17, 2010|
|2.02%||9.22% (annualized June Rate)|
|U.S. Unemployment reported June 4, 2010|
|U.S. GDP Annual Growth/Decline reported May 27, 2010|
|U.S. M3 reported June 15, 2010 (Month of May, Y.O.Y.)|
So you see, we have a Mixture of Inflating and Deflating Sectors – Deflationary forces are apparently overwhelming Inflationary ones overall for now, but not for much longer.
Thus, the Strategic Opportunity for Profit and Wealth Protection is to Play the Inflating Sectors "Long" and the Deflating Sectors "Short".
So what are the Deflating Sectors? Well, Equities for one. We know that the March 2009 through April 2010 Equities Rally was merely a Bear Market Rally mainly generated by The Cartel*—(see below) and that the Bear has (notwithstanding the recent Equities Bounce) now reasserted himself. See Deepcaster's latest Alert: "High Profit Potential Reco. re: Forecast MEGA Move Impending!" (6/10/10) and "Mega-Move Timing in Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds in Alert 'Cartel Battles Markets'" (for week ending 6/18/10) for our Short Equity positions and Timing Forecasts.
Another deflating Sector is money supply, M3 has plunged from 16% growth in early 2008 to a Negative 5.9% Annual Decline as of the June 15, 2010 Shadowstats Report—the Deepest Decline since the early–1930s Banking Crisis.
But note immediately that U.S. CPI is still raging at 9.22%. That means that the Purchasing Power of U.S. Dollar Holders is eroding at a rate of nearly 10% per year!
Holders of Equities and U.S. Dollar are unfortunately victims of this ongoing Trend.
And it is Delusionary to think it will get any better. Just consider that for 2010, U.S. Federal Tax Receipts are estimated to be around $7 Trillion. But Expenditures are expected to be around $11 Trillion. That implies $4 Trillion of Dollar "Printing or Lending" for just one year. And Fannie and Freddie were just delisted from the NYSE and will potentially cost Taxpayers as much as $1 Trillion.
So the overall Key is to ride the Deflating Sectors with short positions and the Inflating ones with longs.
But this is a Tricky Business, especially for Short Positions, and especially given ongoing Government/Cartel* Market Intervention.
*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, 2009 Letter entitled "A Strategy For Profiting From The Cartel's Dark Interventions & Evolving Techniques - II" 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.
For example, the mid-June, 2010 Equities Bounce is further Evidence of Cartel boosting the Equities Markets. What net-positive news was sufficient, we ask, to generate the Thursday, June 10th 273 Point Dow Rally. Indeed this Rally was a Conundrum only if one is Unaware of Cartel Market Intervention. Same for the end-of-day Mini-Rally on Friday, June 11.
And for the beginning-of-the-Day Rally on Monday on June 14. The fact that that beginning-of-the-day Rally later Collapsed into a loss is Emblematic of what the Equity Markets are telling us—the Markets "want" to Fall. The Cartel wants them to rise, for now, at least. How else, on June 15th, when "Best Buy's" Retail Numbers were weaker than expected (evidencing increased retail Sector Weakness) and the NAHB Housing Market Index fell to a recent low 17 in June (evidencing Housing Sector weakness), could the Markets Rise? Cartel Intervention, that's how. Result: A triple digit gain (basis the Dow) on June 15.
But while Cartel Intervention can delay the Playing out of the Downward Momentum of the Markets for days, or a few weeks, it cannot ultimately stop it.
So for us the only issue is "when" the next leg down in the Equities Markets will be launched, not "if". See Deepcaster's latest Alerts for our Forecasts regarding Timing.
So what are the present and prospective Inflating Sectors? Presently, the Precious Monetary Metals, Gold and Silver. Prospectively, Agricultural Products in relatively inelastic demand.
But ongoing Cartel Manipulation is reflected especially in ongoing (for years) Cartel Gold and Silver Price Suppression Actions. Although Cartel Capacity to effect such price Suppressions has recently been considerably diminished, the Cartel is still Potent. Nonetheless, Deepcaster recommends their Acquisition, and has developed a Strategy which Minimizes the Risk of Suffering Financially from Cartel Precious Metals Price Takedowns. See Deepcaster's "Defeating the Cartel... With Profit, Part 2" (6/19/2009) and "Defeating the Cartel... With Profit, Part 1" (3/28/2008) in the 'Articles by Deepcaster' Cache at www.deepcaster.com. We identify key components of that Strategy here.
Guidelines for Identifying Opportunities for Profit & Protection
Indeed, with Economic Hyperinflation and Equities Markets Deflation in our Future, most Equities Market Opportunities will be on the short side through the rest of 2010 and into 2011, as we earlier forecast.
But the Equities Markets Take-downs should provide Magnificent Buying Opportunities in Key Sectors.
As well, superb Opportunities will continue to exist in Gold and Silver and we urge Gold and Silver Bullion and Mining Shares Purchases. However, unfortunately, maximizing Profit in the Precious Metals does not reliably lie in Straight-out Precious Metals Purchases or Mining Shares Purchases (i.e. without regard to Timing or Asset Form). Indeed maximizing Profit and Protection via Precious Metals purchases, or indeed in the general Equities Markets, requires a Strategy.
- Invest in Gold and Silver (and key Strategic Commodities), BUT, according to a Strategy designed to minimize the Effects of periodic Cartel Price Suppressions of Gold and Silver (and key Equities Sectors and Commodities), and, indeed, to Profit. Deepcaster has designed such a Strategy described in the aforementioned articles. And Deepcaster recently recommended two Precious Metals investments, both of which are resistant to Cartel Price Takedowns.
- Take Account of overt and covert Cartel* Interventions; that is take account of The Interventionals as well as the Fundamentals and Technicals.
See Deepcaster's articles: "Profit & Protection from Cartel Intervention" (12/23/2009) and "Gain from the Cartel Game Plan" (9/04/2009) in the 'Articles by Deepcaster' cache at www.deepcaster.com.
IMPORTANT NOTE: As indicated in the referenced Articles, much of the post-March 9, 2009 Equities Rally has been Cartel-generated.
- Make decisions based on Real Data, such as that provided by shadowstats.com (see above), gata.org and deepcaster.com, not on Bogus Official Statistics. See Deepcaster's articles: "Opportunities to Profitably Escape Paper "Wealth" in 2010" (3/12/10) and "Surmounting Deception, Distortion & Intervention" (7/17/2009) in the 'Articles by Deepcaster' cache at www.deepcaster.com.
- Implement an Investment and Personal Protection Strategy designed to cope with, surmount, and profit from The Cartel's 'End Game'. See Deepcaster's articles: "Surmounting The Armageddon Scenario & Cartel 'End Game'" (2/26/2010), "Crunch Time for the Cartel" (11/20/2009), "Surmounting the Cartels' 'End Game' Juggernaut" (9/25/2009), and "Coping with Power Moves in the Cartel's 'End Game'" (4/24/2009) in the 'Articles by Deepcaster' cache at www.deepcaster.com.
- Implement a Strategy Designed to Profitably Escape Paper 'Wealth'. Deepcaster's Strategy is described in "Opportunities to Profitably Escape Paper "Wealth" in 2010" (3/12/2010) in the 'Articles by Deepcaster' cache at www.deepcaster.com.
- Become involved in Political action designed to blunt the Cartel's Superpower-Threat and derail the Cartel's 'End Game'. See Deepcaster's articles: "Surmounting Cartel Advantages" (5/08/2009) and "Coping with the Superpower-Cartel Threat!" (1/30/2009) in the 'Articles by Deepcaster' cache at www.deepcaster.com. Work to defeat The Cartel 'End Game.' Deepcaster has laid out the evidence regarding the Ominous Cartel "End Game" in "Coping with Power Moves in the Cartel's 'End Game'" (04/24/2009) in the 'Articles by Deepcaster' cache at www.deepcaster.com. Clearly (and the recent U.S. Dollar bounce) The Cartel is sacrificing the U.S. Dollar over the long-term to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever. See Deepcaster's July 2008 Letter in the 'Latest Letter' Archives at www.deepcaster.com.
- Develop an Investment and Trading Strategy designed to address all of the above. See Deepcaster's articles: "Avoiding Wealth Confiscation... With Profit!" (2/05/2010), "Profiting in 'the whipsaw year' 2010" (1/08/2010), "Middle Class Outrage, Solutions, & The Markets" (12/11/2009), and "Protect and Profit Before the Coming Storm" (11/13/2009) in the 'Articles by Deepcaster' cache at www.deepcaster.com.
In sum, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover, engaging in the Actions suggested above can help prevent The Cartel's obtaining Superpower status, and aid in achieving wealth protection and profits as well.
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