Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

The Dual Paradigms Of Today's Stagflation and Deflation Macro Economic Conditions 

Economics / Stagflation Mar 17, 2008 - 06:07 PM GMT

By: Captain_Hook

Economics Best Financial Markets Analysis ArticleMany are now categorizing current macro economic conditions as being an instance of stagflation . And while current circumstances definitely appear to be so, in my opinion one needs to go past the definition of stagflation to capture the essence of macro conditions at present, because this is not your father's economy. In the last inflation cycle witnessed in the 70's, wages were growing and people had savings, and we still had the disinflation period this sponsored up until millenniums turn to live through.


Now, since Westerners have no savings and real wage growth has reversed, an aging population is more likely to begin exporting deflation to the east instead of the other way around, which will play havoc with global trade. F. William Engdahl takes a stab at explaining this through the looking glass of the credit crisis, attached here . But perhaps these inevitabilities are still better explained by the work of Schumaker in terms of regionalizing currencies as a matter of natural process, penned all those years ago.

The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Wednesday, February 27 th , 2008.

Putting this all together then, the duality of present circumstances are this. Right now equities are being inflated to support the bubble economy(s) and corporate elitists, which is one world that exists in reality, and what we call the ‘Elitist Paradigm'. At the same time however, most people are not benefiting from this inflation – and in fact need relief from the collapsing housing / credit bubble via lower interest rates.

So, in what we will call the ‘Real World Paradigm', which is a dual world running along side that of the elitists, right now lower rates are needed for US mortgage resets going through, which can only be accomplished by a deflation scare. Thus, with the Fed meeting coming up on March 18 th , expect a great deal of hawkish talk out of central bankers after the month end jam job in equities in keeping all the charts looking good and elitists happy. The idea is to get stocks falling temporarily in order for contracting rates in the bond market to justifying another rate cut by the Fed at the mid-March meeting. (Looks like we're getting this for a legitimate reason, but the result should be the same.)

After that – with most of the mortgage resets for the first half of the year complete, master planners will want to drive equities back up to support the bubble economy(s) again, so expect a ‘jam job' running into summer as short sellers who take the news too seriously have their heads handed to them. And while it's uncertain just how high stocks will recover given the post bubble like structures in the charts at present ( Google , China , etc.), I do know this, you don't want to be short anything much past March 18 th .

What's more, if our value identification work (reserved for subscribers) with respect to precious metals stocks has merit, you will likely want to be very long precious metals shares for the first time in a long time, where once investors sense an inflationary wind at their backs, risk takers / momentum should come back to the sector. Here we are already witnessing rumblings in this regard, with a possible bottom behind us in Rubicon Minerals Corp ., and its related ratios. You can be sure we will be watching which way the wind blows as March progresses.

Along these lines, once past the Martin Armstrong Pi Cycle low projected for in and around March 21st , a very strong bias for equities to rise will exist afterwards; which again, should give short sellers a difficult time right into the beginnings of the first quarter of next year. Of course the initial surge into this summer is anticipated to be the strongest impulse, where after the Beijing Olympics are past, interest rates are seen rising in the States, so make hay when the sun shines as they say. Further to this, and in expanding on the above, such a condition set should also give precious metals shares a tail wind if current trends continue to follow through, where in this regard it appears the higher degree testing process with respect to the Silver / Gold Ratio denoted in Figure 4 on the monthly chart attached here may be complete today with a breakout. (See Figure 1)

Figure 1

Of course this could always be a false signal as well, a sign that with silver blowing off right now, a more substantial correction in equities / commodities is in store moving into summer. And there is evidence this is a possibility in the knowledge silver is breaking higher now because the price fixing bullion banks that are very short and under duress in other areas are finally screaming uncle; which is not the message inflation bulls wish to see.

Why? Once all the shorts are squeezed out the party would be over. Of course these characters are very short silver , so based on this knowledge relative strength in silver could be seen for some time, again, emitting the message continued inflation should be expected. Combine this with the anticipated Martin Armstrong Pi Cycle turn in the business cycle from down to up in the third week of March, like I alluded to above, the better part of valor would at a minimum have a wise man rid of his short positions at this time in cash. And of course those who choose to go with it – they should be long precious metals and their related equities right into the sweet shot projected for this summer / fall.

In further support of this thinking, I offer the following two historical gold charts that are both suggestive of further gains moving forward this year. We'll use gold here because we don't want to scare you with a real silver chart, where it's scary thinking about where silver prices could be going. The first chart here is a long-term plot of real gold that dates back to all time highs, which naturally displays then that gold should be over $1,000 higher right now just to match prior (understated) price increases, as measured by the Consumer Price Index (CPI). (See Figure 2)

Figure 2

Source: The Chart Store

And then there's gold's trading pattern from 1978, which is another year ending in ‘8', with the observation on a decennial basis the pattern this decade is looking remarkably like that of the 70's. This of course means present circumstances are only the beginnings of the blow-off, never mind the end, like precious metal share investors would have you believe with their under-performance. (See Figure 3)

Figure 3
s

Source: The Chart Store

Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. However, if the above is an indication of the type of analysis you are looking for, we invite you to visit our newly improved web site and discover more about how our service can help you in not only this regard, but on higher level aid you in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts ,   to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented ‘key' information concerning the markets we cover.

On top of this, and in relation to identifying value based opportunities in the energy, base metals, and precious metals sectors, all of which should benefit handsomely as increasing numbers of investors recognize their present investments are not keeping pace with actual inflation, we are currently covering 68 stocks (and growing) within our portfolios . This is yet another good reason to drop by and check us out.

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters.

Good investing in 2008 all.

By Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2008 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Captain Hook Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules