Since
2007, the world’s Central Banks have collectively put more than $10 trillion
into the financial system since 2008. To put that number into perspective,
it’s equal to roughly 15% of global GDP.
This kind of money printing is literally unheard of in modern history. And
it has set the stage for a roaring wave of inflation to hit the financial
system. Indeed, the first signs are already showing up... not in the
“official” Government data (which is bogus) but in how those who run
businesses around the globe are acting.
Most people believe that when inflation hits, prices have to go higher.
This is true, but higher prices can be manifested in multiple ways. Firms
usually do not simply raise prices in nominal terms
because it would hurt sales.
Instead, companies resort to a number of strategies to maintain profit
margins without hurting their sales. One of them is to simply leave part of a
package EMPTY, thereby selling LESS product for the SAME price (a hidden
price hike).
Food manufacturers, like the politicians currently debating health
reform, may have a solution to the obesity crisis: Feed Americans a lot of
hot air. But this heated air is not just a figure of speech for packaged
goods companies including Ralcorp Holdings' (RAH) Post Foods and PepsiCo
(PEP) subsidiaries Frito-Lay and Quaker.
In many packaged products, as much as 50% of the contents is just
empty space, an investigation by Consumer Reports reveals. And we
consumers are buying that nothingness every day.
http://www.dailyfinance.com/2009/12/08/how-much-for-the-air-as-much-as-half-of-food-packaging-is-empty/
Another tactic corporation use is to simply sell smaller packages for the
SAME price (another means of selling less for MORE= a price hike).
U.S. Companies Shrink Packages as Food Prices Rise
Large food companies have recently announced that they will raise
the prices they charge grocery retailers for commodities-based products. For
example, a chocolate bar will cost more soon: Hershey last week announced a
10% increase for most of its confectionery goods.
Of course, straightforward price hikes could cause consumers to buy
less of those products or to choose less costly store brands. So in many
cases, food companies are trying a different tactic: Keeping the price of an
item the same while decreasing the amount of food in the package. The company
recoups the costs of the rise in commodities and hopes consumers don't notice
that they're getting less of the product for the same price.
http://www.dailyfinance.com/2011/04/04/u-s-co...od-prices-rise/
However, perhaps the most scandalous policy employed by companies looking
to engage in stealth price hikes is to swap out higher quality
ingredients for lower quality/ lower cost alternatives. One bigname
coffee maker was caught doing this just a few years ago.
Reuters is reporting that many of America's major brands have been
quietly tweaking their coffee blends. While most coffee
companies consider their blends trade secrets, and are loath to disclose
exactly what goes into them, both circumstantial and direct evidence suggests
they're now substituting lower-grade Robusta beans for some of their pricier
Arabica, and degrading the quality of our coffee…
At least one coffee roaster has admitted it. In November, Massimo
Zanetti USA, which roasts for both Chock full o'Nuts and Hills Bros.,
publicly confirmed upping its Robusta usage by 25% this year.
Why the switcheroo? Prepare to not be shocked. The answer is: price.
Last year, a shortage of Arabica caused prices of the premium bean
to spike as high as $3 a pound -- $2 more than what a pound of Robusta would
cost. This compares to a five-year historical trend of Arabica costing
closer to 70 cents more than Robusta. In recent weeks, the trend has
reversed, with Arabica prices falling to just a 62-cent premium over Robusta.
http://www.dailyfinance.com/2012/06/19/not...olshare_twitter
In simple terms, inflation is already around us, though it’s not yet
showing up in LITERAL price hikes. Instead, we’re all paying MORE for LESS.
And it’s only a matter of time before the situation really gets out
of control.
As you likely know, nothing protects from inflation like Gold. Many
analysts believe that the precious metal is DEAD due to its having fallen
from a record high of $1900 per ounce to roughly $1200 per ounce today (a 36%
drop).
However, this price movement, while dramatic, is quite inline with how
commodities trade. Gold has already posted one drop of 28% (in 2008) during
its bull market, before more than doubling in price. This latest drop is not
much larger.
Moreover, a 36% drop in prices is nothing in comparison to what happened
during that last great bull market in Gold back in the 1970s. At that time,
Gold staged a collapse of nearly 50%. But after this collapse, it began its
next leg up, exploding 750% higher from August ’76 to January 1980.
With that in mind, I believe the next leg up in Gold could very well be
the BIG one.
If you’re looking for a back door play on Gold that will offer you even
more upside than the precious metal, swing target="_blank" by http://phoenixcapitalmarketing.com/spec...al-reports.html.
There you can pick up a FREE copy of our Special Investment Report, The
Gold Mountain: how to buy Gold at $273 per ounce!
Best Regards
Graham Summers
