Investor Profit from Several Coming CrisesStock-Markets / Financial Markets 2013 May 04, 2013 - 10:38 AM GMT
(The Fed is) “creating massive fraud…in the short term it’s great for assets…at some point there’s a levitational problem.” Nouriel Roubini,CNN Money, April 29, 2013
Like it or not, several crises are impending in the next few months. And it is highly likely certain of these are unavoidable.
Fortunately, it is possible to prepare to avoid significant damage from most of these and indeed to profit, as we indicate here.
Unfortunately, if one fails to prepare for certain of these very soon, it will be too late, even impossible, to prepare later.
Crisis #1: for $US denominated asset holders: The $US is losing its status as the world’s reserve currency.
Why? Primarily because it is losing its purchasing power because The private for-profit Fed is printing money far in excess of any increase in production of goods and services (i.e., via Q.E. to Infinity). Consequently, key nations such as Australia and France have already struck deals to bypass the $US by agreeing that their currencies can be directly convertible into Chinese Yuan. And the recent BRIICSS nations summit laid the groundwork for a non U.S. dollar-centric international financial system.
The Fed’s increasing monetary inflation creates price inflation because its wildly excessive money printing is already diminishing the purchasing power of the $US. Thus it is not surprising that real price inflation in the U.S. is already 9.12% per shadowstats.com.
Bernanke has committed to continuing to print $85 billion per month (i.e., $1 trillion per year). Much of this money is going into The Fed’s mega-bank shareholders/owners balance sheets and not into the real economy, so it is highly unlikely the $US Dollar-centric western world will see a dramatic economic recovery.
Investor Response #1: With deliberate speed, diminish overexposure to $US denominated assets and focus on purchasing real money (i.e., physical gold and silver), quality miners (see Deepcaster’s rRecommendations (e.g., re. Notes 1, 2, 3 below), and interests in food-productive agricultural assets and select productive inflation-resistant real estate properties.
Crisis #2: Bank Deposits, some brokerage accounts, and 401(K)s, and IRAs are no longer safe stores of wealth.
Regarding bank deposits, most are already generating a negative real return, once real inflation is factored in. Interest paid on such deposits, e.g., in CDs, is already miniscule thanks to the Fed’s ZIRP.
And the principal amount of deposits is no longer “safe” as the Cyprus template proved. Large Euro depositors in Cyprus banks were deemed creditors of the bank and had up to 60% of their “deposits” seized without compensation, and probably with the blessing of the U.S. controlled IMF, and ECB.
This is a template for the future treatment of bank “deposits.”
Similarly, the treatment of investor funds in MF global brokerage accounts is likely a template for treatment of certain brokerage account funds. Be selective about where you put your money.
Investor Response #2: Our advice is similar to but not identical to investment legend, Jim Sinclair’s “Get out of the System”, at least with a portion of your assets you cannot afford to lose. See recent Alerts regarding specific recommendations.
Crisis #3: Markets in Paper Gold and Silver (e.g., LBMA and Comex) are increasingly discredited.
The Cartel (Note 4) takedown of gold (by over $200) and silver in mid-April have discredited those markets.
Why? Because, while that massive price takedown did achieve a substantial diminishment of pro-precious metals small investors sentiment, that massive takedown also generated a huge spike up in demand for purchase and delivery of physical metal such that in retail locations (e.g., coin stores) around the world physical gold and silver are simply unavailable in some locations. And where these are available, some premiums have nearly doubled.
Voice of China Radio reports that over the past two weeks, Chinese housewives purchased 300 tons of Gold ($US 16 billion).
Investor Response #3: If and as possible, buy physical in a certain form (see Deepcaster’s Letters and Alerts for preferred forms) on any dip and take delivery. And stocks in quality miners are now available at bargain prices.
Crisis #4: Equities Markets are increasingly artificially elevated.
Given the lousy fundamentals in most developed Western nations and several other nations (which we have documented ad nauseam in our recent publications), it is reasonable to ask why major equities markets have been elevating this year.
Half of the answer obvious to most is the massive injections of QE by The Fed, Bank of Japan, ECB and others.
But even more recently there is an even more alarming cause: central banks have also been increasingly buying equities in record amounts according to a central banking publication /RBS Survey. (April, 2013)
Not only does this create considerable moral hazard, but also greatly exacerbates the risk of hyperinflation and/or a crash. (This risk is exacerbated by the fact that NYSE margin debt is at record highs.) Of course the official numbers (in the U.S., China, and elsewhere) attempt to hide the impending hyperinflation. But the fact, e.g., that the U.S. is threshold hyperinflationary already at 9.12% per shadowstats.com is revealing.
This increased central bank equities buying, like the mid-April paper gold and silver price takedown, evidence an increasing desperation by the central banks in keeping the equities market boosted and gold and silver prices suppressed. The day of reckoning is approaching ever closer for these markets. The artificial boosting cannot last forever.
Investor Response #4: Be prepared for the impending equities takedown. Leveraged short ETFs put on at the right time can not only protect against loss but also generate significant profit.
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