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Profit Opportunities, as well as pain,
surely exist in all coming Crises-Inducing developments such as:
- Inflation
generating QE-to-Infinity and Eurozone Outright Monetary Transactions
- Fiscal
Cliff/Grand Bargain Negotiations
- Debt
Super-Saturation of most of the countries in the Developed World including
the USA, Great Britain, and France, as well as the PIIGS
Refusal to confront, or worse, Denial
of, the consequences of inevitable coming Crises in an understandable
response, but neither constructive nor profit-generating.
Indeed, Denial virtually guarantees the
Pain without the Profit.
A much more constructive response is to
Profit from those Crises which one cannot ameliorate. Given the Crises which
are surely coming, profit Opportunities abound. And thus we shall identify a
few.
For example, Japan experienced a record
trade deficit of JPY 1 Trillion in
September! Japan, a country with a long history of Trade Surpluses, this
third largest Economy in the world, is teetering, with its export sector collapsing. In part
this collapse results from decades of massive and increasing and
unsustainable government debt, wholesale Central Bank Bond Monetization, and
a two decades old Zero Interest Rate Policy (sound familiar?!). And other
Asian Tigers’ economies are contracting also, with Thailand’s
manufacturing output down 13.7% Y.O.Y. and Philippines exports down 9%, for
example.
All of the above will hurt the earnings results of Japan’s
companies which rely on exports – selected short plays should be very
profitable.
And the Eurozone presents similar
opportunities.
“You don’t have to be an economic genius to understand
that the perpetual uncertainty over the Eurozone’s future has led to a
widespread freeze on industrial investment and development. Industrial
production is collapsing at an accelerating rate, falling 7% year-on-year in
Spain and Greece, 4.8% in Italy, and 2.1% in France.
“…the old cliché about kicking the can down the
road is close to becoming no longer possible. Deferring the inevitable is
only a political option so long as there is no immediate damage from doing so.
But this is no longer true in the Eurozone… Doctors and teachers in
Greece do not get paid anymore, and it is going that way in Spain, with
regional governments surviving by simply not paying their bills. Government
is destroying society, proving the falsity of the heretofore accepted belief
(in Europe, anyway) that government makes society better. But then, anyone
who has bothered to read Hayek’s The Road to Serfdom will not be
surprised.
“What was not anticipated in Hayek’s masterpiece is the
divided state that is emerging. Greece is part of a larger EU and Eurozone
bureaucracy and cannot achieve statist ends by turning her citizens into
serfs. The government itself is subservient to higher authorities and is now
having that medicine applied to it by its peers. Every visit by the Troika
(collectively the European Central Bank (ECB), International Monetary Fund
(IMF), and the European Commission) screws the Greek government further
towards its own serfdom.
“Keep in mind just one thing: Greece is utterly broke and cannot
escape that fact. All of the posturing by the three Troika members is
designed to avoid facing this reality. The political elite drive this party
line and rigidly conform to it.
“…the ECB and other national central banks in the Eurozone
are now Greece’s largest creditors and cannot take a haircut on Greek
debt.
“This is cash for an economy that is tanking with its industrial
production collapsing. Deposits have flown from the banks, which, without the
ECB’s recycling of funds both through the TARGET2 settlement system
and… debt as collateral, would themselves default. Tax revenues,
insofar as they can be collected, are simply vaporizing.
“The concern, obviously, is that Greece is a dry run for Spain
and Italy. It is also, as I argue below, a dry run for France, which is in
terrible shape and deteriorating rapidly.”
“Europe Is Now Sinking Fast”
Alasdair Macleod, peakprosperity.com, 11/20/2012
That Eurozone “Leaders”
continue to have more meetings and to repeat claims that the Latest Band-Aid
Fix is The Solution, is not News,
but is Reality, albeit unpleasant.
The Real News, not widely reported in
the MSM at any rate, is that the Eurozone as we know it will not survive. This will adversely affect
the Earnings of many, but not all of the companies which do business in or
with the Eurozone.
Well-chosen, well-timed shorts should be
most profitable.
And it is not just a matter of shorting
companies which are vulnerable to the PIIGS economies. France’s
Industrial Production, Employment Growth, and Business Confidence are
plummeting. Why? Same reasons – a shrinking economy, higher taxes, and
more and more residents eligible for government “benefits,” i.e.
socialism come home to roost. The French Welfare State is running out of
other people’s money.
And a long-standing relatively Open
Borders Policy does not help France either. Low-skill migrants who come to
France (or the USA for that matter) to share in that Welfare States
“benefits” inevitably create a smaller piece of the pie for
everyone, because the benefits received exceed the taxes paid by them.
Indeed, an Open Borders policy is a de
facto form of socialism so far as low-skilled immigrants are concerned. In
the U.S.A., for example, 37% of all immigrants, legal and illegal, are on
some sort of welfare program (www.cis.org). And in addition, in many states
such as California, low-skill immigrants get free medical care and free K-12
schooling for their children. And all these taxpayer-provided benefits
greatly exceed the taxes low-skilled immigrants pay.
Moreover, virtually all of the countries
mentioned above have allowed their Central Banks to implement
Inflation-Inducing, Fiat-Currency degrading, Policies via, for example, The
Fed’s QE-to-Infinity, the ECB’s outright Monetary Transactions,
and Japan’s Debt Monetization. Thus consequent Superb Profit
Opportunities arise in certain Inflation Assets (see Note 1, 2, and 3 below).
Real U.S. Inflation is already threshold Hyperinflationary at 9.82% per
shadowstats.com.
All the foregoing dramatically affect Earnings, Taxation, and Economic Recovery Prospects
going forward. Given this context, notable for their Superb Profit Potential
are Gold and Silver which have rallied lately and have shown remarkable
resistance to being taken down off current levels.
Indeed, even with the recent mid-week
Takedown, Gold has held stubbornly above $1700 and Silver above $33. The
Cartel may take them even lower, short-term. But Gold and Silver are still in
Rally Mode and still poised to launch up strongly.
And Key Technicals
(e.g., Point & Figure Chart and Golden Cross) remain Bullish. And Gold is
increasingly being used as money to circumvent use of Fiat Currencies such as
the $US. Turkey, for example, is buying Iranian Natural Gas with Gold.
And Central Banks’ Gold purchases
are still increasing overall.
And the Chinese New Year (February 10)
Gold Buying Season approaches. Indeed, China’s Gold demand will exceed
1,000 tons by 2015, but China’s production will then be only 450 tons,
according to the Chinese Ministry of Industry and Information Technology.
And Silver looks especially bullish with
Strong Buyers appearing under $34 per ounce.
Thus a Significant Profit Opportunity
exists in these Precious Metals and Mining Shares, but timing is important,
especially for the mining shares, and we forecast timing in our Alerts.
In sum, if one has Courage for the
Truth, the Truth about Economic and financial Realities, Real Statistics (as
opposed to Bogus Official ones), and genuinely serious Impending Crises, then
one is in a greatly enhanced position to Profit and Protect.
Best regards,
Deepcaster
November 30, 2012
Note 1: *Shadowstats.com calculates
Key Statistics the way they were calculated in the 1980s and 1990s before
Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer
Price Inflation reported October 16,
2012
1.41% / 9.64%
U.S. Unemployment reported October
5, 2012
8.3% / 22.8%
U.S. GDP Annual Growth/Decline
reported September 27, 2012
2.21% / -2.15%
U.S. M3 reported October 16, 2012
(Month of September, Y.O.Y.)
No Official Report / 3.32%
Note 2: The $US dropped nearly
200 basis points at one point in the last three weeks. No surprise since the
Fed’s U.S. Dollar-Destructive Q.E. to Infinity Action, coupled with the
ECB’s Similar Action the week before, boosted the Euro vis-à-vis
the Dollar, as we earlier Forecast. The very recent $US bounce does not
change its weakening Trend.
This Debauchery of the
$US weakens its Purchasing Power and thus increases Burdens on the agonized
disappearing Middle Class.
The Bernanke claim that
buying $40 billion per month in Mortgage Backed Securities would Stimulate
the Economy and help the Housing Market is just a Fictitious Cover Story. In
fact, it is just another Gift to the Mega-Banks who hold Underwater Paper,
and to Wall Street which proceeded to rally on The Fed-sugared High.
Both the Continuous
Commodities Index which show Average Annual Price
Inflation of 15% and the Real Inflation Number (9.3% per year from
shadowstats.com) reveal Serious Inflation is with us and it Intensifying.
And Especially Food Price
Inflation.
To increase Yields,
Farmers increasingly employ Fertilizer.
And a recent Reco – a Fertilizer Producer – was trading
near its 52 week low at under 40¢ per share when we first recommended
it. It has moved up nicely since we recommended you buy in. But it has such
great potential that we raise our original “buy under” price to
45¢ per share.
To see our recent Buy Reco aimed at Profiting from the Fed’s Inflation
Rocket, read Deepcaster’s recent Alert,
“Buy Reco (under 40¢/share) to Ride
Inflation Rocket; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, &
Interest Rates, Gold, Silver, Crude Oil, & Equities,” recently
posted in ‘Alerts Cache’, on deepcaster.com.
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