“The Fed is transferring immense wealth from the
middle class to the most affluent, from the least privileged to the most
Mark Spitznagel, Universa
Investments L.P., 4/19/12
Since late February, 2012, The Cartel*
has ground Gold and Silver Bullion and the Mining Shares Prices Down. This is
especially frustrating for those invested in Mining Shares, because they have
been Technically “Due” for a Powerful Breakout for weeks. (As
“Paper” Securities, Mining Shares are especially susceptible to
Cartel Price Suppression.)
But the Fundamentals for Bullion and
Mining Shares are ragingly Bullish. With Central Banks having added Trillions
in various forms of QE (i.e., Money Printing) in the last three years, the
Purchasing Power of the Fiat Currencies increasingly continues to erode.
This is what happens to all Fiat
Currencies when the Nominal Value of the Money Printed exceeds the Real Value
of Increases in Goods and Services produced. So it is not surprising that The
Cartel continues to relentlessly attack Precious Metals and Tangibles Prices.
The Cartel wants to have investors
continue to be wedded to its Paper Fiat Currencies and Treasury Securities
because they are the source of its Power and Wealth.
In sum, by its ongoing Precious Metals
Price Suppression operations, the Cartel is conducting an intensifying War
against Positive P.M. Sentiment.
But Price Suppression of Gold and Silver
Shares and Bullion can not last.
Jim Sinclair explains why
Stabilization Mechanism Treaty due to pass in July this year will take care
of whatever money is required by Spain or any other Euroland
nations for effective bailout. It starts with $700 billion in capitalization
and has an open call for additional capital infusion with no limit placed on
these calls and no further agreements required.
capitalization called on by this treaty is mandatory, not elective and
therefore will go to infinity.
nations have 7 days to pay up when ordered to by the management of the EMS
who are protected against any form of attack or litigation to legislation. It
will be backed by the US Fed via swaps while the US publicly denies it is
adding any capital to the IMF or this new entity, ESM.
“It is the
mechanism for QE to infinity in Europe.
infinity, properly understood, is debt monetization on steroids. Denials will
be legion, but this debt monetization on steroids will not and cannot be
“The advent of
the ESM Treaty establishing the European Stabilization Mechanism is
economically Earth shaking and recognized by almost no one out there. It
cannot be otherwise, it cannot be avoided. It can be denied but it will
occur.”(emphasis added, ed.)
Supply Whatever Money Is Needed In Euroland”
“QE to Infinity” (i.e.,
Money Printing to Infinity) entails continuing Diminishment of the Purchasing
Power of Currencies printed.
Think Weimar Republic, and , more recently, Argentina and Zimbabwe. (One is
reminded of the “No Zim Dollars in the Loo,
“Debt Monetization on
Steroids” does not provide Solutions, it just
buys time, while it worsens The Problem.
Unfortunately, Money Printing to
Infinity also necessarily entails eventual Price Hyperinflation.
Indeed, Price Inflation is already
occurring; it is just concealed by Bogus Official Figures.
The U.S., for example, is already at
Threshold Hyperinflation with Real Inflation of 10.28%.* Thus, The Purchasing
Power of Money Vanishes.
and printing money do not create wealth. All they can create is a temporary
illusion of wealth.
“I could have
written "if all the money vanishes," but that would be misleading,
for all unbacked money will most certainly vanish
into thin air. The only question is when, not if. Frequent contributor Harun I. explains why:
Those who fail to
understand that the Status Quo is impossible to maintain will be shocked when
the disintegration is undeniable. …Words like capitalism and
meritocracy are thrown around to make people feel good when, in reality, we
have never owned anything, not even ourselves.
How can we own
ourselves when the very thing we use for subsistence can be cheapened or
reduced to nearly nothing, not by market forces, but by central banks acting
at the behest of governments? When a person does not control his labor, what
I wait patiently for people to come to
the understanding that the only way for everyone to get their money would be
to destroy its value completely…
As the exponential
debt curve moves closer to the pure vertical, the rate at which debts come
due will approach infinity.
How many more food
items be made smaller and sold at the same price? In effect this is a slow
starvation of those at the margin. The 46 million American souls on food
stamps will soon find their food stamps to be worthless.
Those who assert that
a credit system cannot go hyper-inflationary may not have thought through the
exponential effects on the relationship of the debt and productivity curves
within the context of all money is debt and the only way to create money is
for debt to be created. Eventually the debt curve accelerates away from the
productivity curve, then the productivity curve
collapses all together. Sovereign debt crises caused by governments stepping
in to keep the debt system going is the last stage. Then comes
the debt/currency collapse.
“Thank you, Harun.
Many observers have addressed the key concept here, which boils down to this:
paper money is an abstract
representation of the real world.
“Here is the
primary point: issuing debt and printing money do not create wealth. All they
can create is a temporary illusion of wealth.
“Creating debt and paper money does not
create real goods and services or real wealth.
“Just as on the
desert island, the growth of actual goods (and services –Ed.) in the
real world lags the growth of money, i.e. abstract representations of
Central State (Federal government) has borrowed and squandered $6 trillion
over the past four years, and the actual production of goods and services has
not risen at all when adjusted for inflation. The central bank (the Federal
Reserve) has expanded its balance sheet by $2 trillion, and yet all the
assets it have tried to force higher are actually
lower when measured in real goods such as gold, oil, wheat, etc.
“It's easy to expand the money supply and
difficult to expand the actual production of real goods in the real world.
“This is why Greek towns are reportedly
reverting to barter, the exchange of real goods for other real goods. We
can anticipate that silver and gold will soon enter the barter as means of
exchange that can't be counterfeited or printed by wise-guys (central
When All The Money Vanishes Into Thin Air?”
Charles Hugh Smith,
Indeed, the Key Reason Gold and Silver
(and essential Tangibles like Oil and Wheat) will launch up is that Gold,
Silver, Crude Oil and Wheat (e.g.) are Tangible Stores and Measures of Value.
As the Central Bank-created Hot Fiat
Money Winds its way into Prices (as it is already doing with Crude), the
Price of these in Fiat terms will (and is already in some
Sectors, if one considers mid and long term trends) soar (Deepcaster
forecasts Timing and identifies P.M. Assets with especially Excellent
Potential in his recent Alerts.)
Specifically regarding Gold, that is
not just another market. It is the currency of last resort with no
liabilities attached to it and certainly no connection to the Western Powers
which are presiding over their own financial downfall by their insistence on
papering over their structural problems.
shares, as exemplified by the HUI continue getting more and more undervalued
in relation to gold itself. At some point, these shares are going to be the
trade of the decade. You now have to move as far back as early 2002, a FULL DECADE
AGO, to find the shares at this level of valuation against an ounce of gold.
Heaven help the shorts in these shares when the tide reverses - there will be
no one left to sell to as they try to cover.”
and Some Comments,” Dan Norcini, 4/24/12
Short-term other Assets (such as
High-Yielding Securities) can be (and should be) profitably held (See Note 2)
as Profitable Antidotes to Real Inflation.
But for the Mid and Long Term, Gold and
Silver and mining shares and selected Tangibles are Essential Core Holdings
to Garner both Gain and Protection.
April 27, 2012
*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 January 19, 2012
2.96% / 10.57% (annualized December, 2011 Rate)
U.S. Unemployment reported February 3, 2012
8.3% / 22.5%
U.S. GDP Annual Growth/Decline reported January 27, 2012
1.56% / -2.70%
U.S. M3 reported February 13, 2012 (Month of December, Y.O.Y.)
No Official Report / 3.87%
And Official Source Disinformation
continues, consider Shadowstats comments on the
January 6, 2012 release of U.S. Employment data:
seasonally-adjusted 200,000 jobs surge in December 2011 payrolls included a
false, seasonally-adjusted gain of roughly 42,000 in the “Couriers and
Messengers” category. That gain was an artifact of the
seasonal-adjustment process and will remove itself in the January 2012
problem is that this 42,000 gain is part of a seasonal pattern that fully
reverses itself each January…”
Payroll Seasonal-Adjustment Problem”
John Williams, 1/6/12
Note 2: Deepcaster addresses the questions of Profit and
Protection in light of Fiat Currency Purchasing Power Destruction and
provides Guidelines in his article – “Essentials for Wealth
Acquisition Acceleration” found in ‘Articles by Deepcaster’ Cache.
Using such Guidelines facilitated Deepcaster’s
making buy and sell recommendations resulting in remarkable profits recently
if acquired and liquidated when we recommended, approximately*:
45% Profit on
Platinum ETF on February 8, 2012 after just 42 days (i.e., about 390% annualized!)
40% Profit on March 2012 $55 Dollar GDX
Calls on January 27, 2012 after just 23 days (i.e., about 635% annualized!)
34% Profit on Gold Royalty Streaming Company on December 5, 2011 after just
166 days (i.e., about 74% annualized!)
42% Profit on Volatility Index Futures ETN on October 3, 2011 after just 292
days (i.e. about 52% annualized!)
36% Profit on Double Short Euro ETF on September 7, 2011 after just 43 days
(i.e. about 300% annualized!)
35% Profit on Double Long Gold ETN on August 23, 2011 after just 41 days
(i.e. about 280% annualized!)
26% Profit on Double Long Gold ETN on August 17, 2011 after just 35 days
(i.e. about 260% annualized!)
25% Profit on Gold Stock on August 8, 2011 after just 201 days (i.e. about
150% Profit on Gold Stock Calls on July 13, 2011 after just 56 days (i.e.
about 975% annualized!)
*Past Profitable Performance is no assurance of future Profitable
Great Opportunity and A Dangerous Trap; Forecasts: Gold, Silver, Equities,
Crude Oil, U.S. Dollar, U.S. T-Notes, T- Bonds, & Interest Rates”
– February Letter
Fed doesn’t have a clue about markets or economics. They are dangerous
Printing money is not good for the world and will lead to more problems for
“What the Federal Reserve is doing now is ruining an entire class of
Jim Rogers, Bloomberg Interview, 6/29/11
We are not so Negative about the Near-Term Prospects for Nominal
Asset Price Growth in Certain Sectors as we were six months or
a year ago.
That is mainly because the E.U., Mega-Banks, and the Fed, have already de
facto launched a Massive Quantitative Easing 3, with more likely to come.
This QE will serve as a Major Force impelling (but not necessarily successfully)
Nominal Asset Prices UP in certain Sectors, for example, for Equities.
But before one becomes too enthusiastic about the Prospects one should
consider the implications of our Forecast for Nominal Assets Prices Strength
in certain Sectors.
The practice of issuing Bogus (U.S. and other Key official) Inflation figures
obscures the Fact that Monetary Inflation (generated mainly by reckless Q.E.)
is very rapidly depreciating the purchasing Power of most Fiat Currencies
– by about 11% per year in the U.S. e.g. (per shadowstats.com).
Yield Portfolio is aimed at achieving Total Return in excess of Real
Inflation. Stocks in that Portfolio with Recent Yields of 18.5%, 8.6%, 10.6%,
26%, 6.7%, 8%, 10.6%, 10% and 15.6% when they were added to the Portfolio.
important to note is that, while massive Q.E. is a Major Inflationary Force
tending to pump up Prices in certain sectors, there are Powerful Deflationary
forces operating as well – the depreciating Housing Markets in the U.S.
and China come to mind. Real Estate in some areas in China is down over 25%,
but Food prices are up 9% year over year.
The key to identifying The Great Opportunities (and Great Potential Losses) is knowing which Sectors will likely have Inflating
Asset Prices and which will have Deflating ones.
Investors failing to Evaluate Inflation/Deflation Prospects on a Sector by
Sector Basis will have missed Great Opportunities and fallen into a
Deepcaster’s Letter --“A Great
Opportunity and A Dangerous Trap; Forecasts: Gold, Silver, Equities, Crude
Oil, U.S. Dollar, U.S. T-Notes, T- Bonds, & Interest Rates; February
Letter” -- posted in the ‘Latest Letter & Archives’
Cache at www.deepcaster.com, identifies
which Sectors will likely be helped (albeit temporarily) by this Massive QE3
and which will likely be hurt, and provides Forecasts for all. And in his
March Letter, “The Pause Before The Great Bull; 3 Buy Recos! Forecasts: Gold, Silver, Equities, Crude Oil, U.S.
Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, March
Letter”, Deepcaster makes 3 Buy
Recommendations designed for Protection and Profit.