With the introduction of monetary stimulus by many central banks around the world, a common question asked is: what’s a unique investment opportunity in a market sector that is not immediately obvious to the average investor?

If the global stimulus really begins to work, it should result in higher demand for commodities. If this occurs, an interesting market sector that might be an above-average long-term investment opportunity is the shipping industry.

Information just released shows that Greek shipping firms have recently ordered the most iron ore carriers since 2008. Greek shippers own a large number of vessels internationally. (Source: Sheridan, R., “Greeks Bet Ship Rout Ending With Most Orders Since 2008: Freight,” Bloomberg, April 30, 2013.)

While the average earnings per day for a Capesize ship (a type of cargo ship used to transport raw commodities) is only $4,900—a massive drop from the peak in 2008 of $229,000—many analysts are expecting this current level to be a bottom and are expecting earnings to increase to $17,500 per day next year.

Clearly, the Greek shipping market sector sees an investment opportunity over the next few years. From the time of ordering to delivery, the process of obtaining a carrier takes approximately two years. However, because of the economic slowdown, the costs of construction and secondhand sale prices have dropped precipitously.

As an example, a new ship that used to cost approximately $100 million to build in 2008, now costs only $47.0 million. Prices are even lower on the secondhand market sector for large ships, and some shipping firms see this time as an investment opportunity and are using the low prices to their advantage.

Diana Shipping Inc. (NYSE/DSX) paid only $27.0 million for a secondhand vessel, a substantial amount of savings from the approximately $58.0-million price tag for a new vessel of this kind. (Source: “Review on Maritime Transport,” United Nations Conference on Trade and Development web site, last accessed May 1, 2013.)

The stock chart for Diana Shipping is featured below:

Chart courtesy of www.StockCharts.com

Investors also believe that there might be an investment opportunity in the shipping market sector, looking out over the next three to five years, because prices have recently begun to move up from multiyear lows.

Diana Shipping has broken a long-standing downtrend resistance line, since investors believe the bottom might be in for the shipping market sector. While the firm might be getting a great deal in acquiring new and used ships, we are not seeing growth in revenues, as data rates still remain quite low.

However, much like a large vessel at sea, it takes a long time for the shipping market sector to turn. But when it does begin to turn, prices will begin to move up. It appears that Diana Shipping is preparing for the turn in the rates it can charge by expanding its fleet, anticipating a rebound in commodities over the next few years.

If you believe that monetary stimulus will re-ignite the commodity cycle once again, then it should be easy to also believe that the rate shippers charge for transport will move up as well. One can certainly use the shipping market sector to create an investment opportunity that is leveraged off the continuation of the commodity super cycle, as these stocks can certainly move a significant amount.

If you look at the move in Diana Shipping from the lows in 2006 until the peak in 2007, this was a huge percentage return. I do not think that Diana will hit that peak level anytime soon, as there are still a massive amount of shipping vessels and a slow global economy, which will prevent a massive rise in the prices charged by the shipping market sector over the short term.

However, one certainly can’t ignore the technical situation that other investors are putting their money where their beliefs are, seeing a substantial investment opportunity in the shipping market sector and buying a significant number of shares. If they are right that shipping rates have bottomed, this could be a great long-term investment.

GET THE BEST INVESTMENTS ADVICE FOR : 2013 US Financial Crisis

Comment (0)

George Soros knows a thing or two about making money from big bets. In 1992, Soros made a $10.00 short wager on the British pound and walked away with a billion dollars in profits.

Soros is now convinced Germany needs to rethink its strategy toward the sustainability of the eurozone and, in a draconian manner, believes the country should leave the euro.

Of course, should this happen, the 17-country eurozone would collapse, triggering a massive economic Armageddon and financial crisis in Europe that would ultimately generate chaos for the global economy.

What Others Are Reading : Next Financial Crisis

Now, I doubt Germany or France—the two pillars integral to the eurozone—will exit the euro, but the reality is that the situation in the economic zone remains in a financial crisis with little hope of revival.

The problem is that the eurozone is firmly in a financial crisis and recession, trying to find its way out.

Greece, Portugal, Spain, and Italy are a drag on the ability of the eurozone to get out of its financial crisis. The unemployment rate in Greece and Spain is over 25% and worsening.

Italy just formed a new government, but there’s tons of work left for that debt-ridden country before it can exit its own financial crisis that has been building for years.

With all of this bad news, it’s not surprising to see people in the eurozone feeling the despair. According to the European Commission, economic morale in the eurozone remains weak after declining in March and April. (Source: Emmot, R., “Economic mood in euro zone sours again in April,” Reuters, April 29, 2013.)

And it appears that the solution will again be to continue the pumping of liquidity into the eurozone to avoid a worsening of the financial crisis; the European Central Bank is expected to cut interest rates tomorrow.

In my view, it’s the same strategy that is being used across the globe and here in the U.S.: just print money and hope the economy will recover and avert a worse financial crisis.

This has been the case for years, and while it has helped in the U.S., the eurozone is a special situation due to the reality that there are 17 independent countries with their own governments. Mistakes have been made along the way that have resulted in a weak eurozone.

The problem is that the easy monetary policy is successful in keeping the eurozone from collapsing now, but remove the support and, as I said, the region will collapse into a financial abyss.

This dependency on easy money will pose problems down the road when interest rates begin to ratchet higher and there are massive debt loads to pay off.

Moreover, a weak eurozone will continue to impact the global economy and the U.S. economy.

U.S. exports to the European Union declined to $20.06 billion in February, down from $25.11 billion in March 2012, according to the United States Census Bureau.

So, while stocks continue to move higher toward record territory, you really need to pause and think about whether the advance is sustainable, given the significant financial crisis that persists across the Atlantic.

Comment (0)

One of the common questions I get asked is: where are the long-term opportunities for growth? We all know that the American economy is growing extremely slowly, yet most people don’t realize how international many of the S&P 500 companies really are.

As an example, while we all think of Kentucky Fried Chicken (KFC) and Pizza Hut as American restaurants, the parent company, YUM! Brands, Inc. (NYSE/YUM), has a growth plan that is not based domestically and is instead focused on the Chinese economy.

Because S&P 500 companies are increasingly focusing on growth potential around the world, the one economy that has seen consistent increases in gross domestic product (GDP) has been the Chinese economy.

However, recent data are showing signs that the Chinese economy might be slowing down. According to the National Bureau of Statistics, industrial profits in March increased by 5.3% year-over-year, but it marks a drop from the 17.2% increase in industrial profits recorded during January and February. (Source: Orlik, T., et al., “Chinese Industrial Profit Growth Slows,” Wall Street Journal, April 28, 2013.)

Earlier this year, we received information that the Chinese economy did post a lower-than-expected GDP increase of 7.7%, down from 7.9% during the fourth quarter of 2012. The leadership in China is trying to engineer a slower Chinese economy to prevent bubbles.

So, what does this mean for S&P 500 companies?

Many S&P 500 stocks are looking toward the Chinese economy as the next great growth generator. YUM! Brands opened almost 2,000 restaurants in 2012, of which 889 were based in China. (Source: “YUM! Staying the Course: China and a Whole Lot More, 2012 YUM! Brands Annual Customer Mania Report,” YUM! Brands, Inc. web site, last accessed April 30, 2013.)

With 4,260 KFC restaurants in over 850 cities within the Chinese economy, as well as 826 Pizza Hut restaurants, YUM! Brands is extremely linked with that nation, among other emerging markets such as India.

The company plans to continue expanding in the emerging markets because the opportunities are huge. For many S&P 500 companies, the Chinese economy offers the potential for growth. However, if the Chinese economy were to continue slowing, this could mean negative ramifications for many S&P 500 stocks.

To compare the difference, there are 58 YUM! Brands restaurants per million people in America as of 2012, while there are only two YUM! Brands restaurants per million people within the top-10 emerging markets.

Take a look at the chart, which compares the S&P 500 Index as well as the Dow Jones Shanghai Index:

Chart courtesy of www.StockCharts.com

This chart shows how closely correlated both indexes were until 2012, at which point the S&P 500 continued to move higher, while the Shanghai Index failed to move up.

If the Chinese economy continues to slow, we could see an impact for many S&P 500 companies through disappointing revenues and earnings results. While the Chinese economy offers great potential for the long term, the current price of the S&P 500 appears to be pricing in guidance much higher than what can be realized.

I believe that this divergence won’t continue for much longer. Either the Shanghai Index will begin moving upward or the S&P 500 will begin moving downward—closing this gap in performance.

It will be interesting to see if China’s leaders can manage a slight pullback in the Chinese economy without causing massive international damage to global firms. I am doubtful, especially considering the lofty levels the S&P 500 is currently at. Additionally, the Federal Reserve continues with its easy monetary policy, which is helping add wind to the sail of the S&P 500.

Even though the stocks you own within the S&P 500 might be American, don’t discount the important role the Chinese economy plays for the companies in your portfolio.

Click here to visit : S&P 500 Companies: Short-Term Problems, Long-Term Opportunities?

Comment (0)

You can tell a lot about the pulse of the economy by examining the retail sales and restaurant sector. When people are working and making money, they tend to be more confident and want to spend, especially non-discretionary spending.

In the fast-food restaurant sector, the “Best of Breed” is McDonalds Corporation (NYSE/MCD).

What Others Are Reading : Financial Crisis 2013

 The company has numerous rivals and the sector is extremely competitive, but there is no real and valid threat on the horizon for McDonalds that could affect it.

Characterized by its familiar “golden arches,” which are sometimes visible from miles away, the company is a true American icon, just like General Motors Company (NYSE/GM).

Yet McDonalds is also a decent indicator on how the United States and global economy are faring.

The current level and valuation of stocks suggest everything is going well and on target with the global economy.

But, sorry to break it to you: the path to sustained economic renewal is still filled with potholes.

As I’ve previously written in these pages, the global economy and performance of the stock markets have been built by the easy money injected into the global monetary system by the world’s central banks, including our friends at the Federal Reserve.

So when I begin to see slowing at some of the key multinational companies, I wonder about the condition of the global economy.

McDonalds is a decent barometer on the global economy and, based on what I’m seeing, I sense there’s some stalling in the global economy.

In the first-quarter earnings season, McDonalds reported a marginal one-percent rise in its consolidated revenues due to the slowing in Europe and other parts of the world.

The company’s U.S. comparable sales fell 1.2%, while the global comparable sales fell one percent. In Europe, comparable sales fell 1.1%.

The big disappointment was for the Asia/Pacific, Middle East, and Africa regions, where the comparable sales fell 3.3%. McDonalds blamed the weakness on Japan and China.

In my view, the stalling in China makes sense, given the Chinese economy is slowing and people may be less inclined to go out to restaurants.

In Japan, it’s likely more of the same, as the Japanese economy is undergoing a massive stimulus program to try to get the country going and out of its decades-long coma.

My view is that the results from McDonalds indicate caution to investors and could signal a red flag that the global economy might be set for a period of stalling.

You should be aware of this, and perhaps look at an exit strategy by taking some money off the table, while keeping an eye on McDonalds.

Click here to visit :  What McDonalds Has to Say About the Global Economy

Comment (0)

One of the most confusing topics of late is the low level of the inflation rate even though monetary stimulus has been quite aggressive worldwide. The most recent data point came from Japan, in which consumer prices dropped by 0.5% in March versus the same time in 2012.

The Bank of Japan is just now beginning a new monetary stimulus plan in the hopes of moving the inflation rate back into positive territory, with the target at two percent. However, some analysts question the possibility of reaching the target inflation rate over the next couple years, even with this monetary stimulus plan. (Source: Fujioka, T., et al., “Bank of Japan Sees Inflation Nearing Target in 2015: Economy,” Bloomberg, April 26, 2013.)

What Others Are Reading : Financial Crisis 2013

 This aggressive monetary stimulus package has driven the yen weaker, benefiting export-oriented companies; however, while the general inflation rate is low, prices for imports such as energy will continue to rise as the currency declines. Additionally, the monetary stimulus program to drive up the inflation rate will have an impact on property prices and will raise rent levels.

However, monetary stimulus is not enough to gain traction and increase the inflation rate. Japan needs structural reforms to its business sector to encourage expansion and growth. Psychologically, the average Japanese citizen has been used to price declines for many years—this mentality will be hard to change. As an example, the latest report showed that TV prices fell by 19% from last year. (Source: Ibid.)

In America, we’ve had monetary stimulus for quite a while, yet the inflation rate is still quite low, below the targeted level. In March, the consumer price index dropped by 0.2% versus a year ago for all items, seasonally adjusted—unadjusted, consumer prices increased by 1.5% in March versus a year ago. (Source: U.S. Bureau of Labor Statistics, April 16, 2013.)

The reason we don’t see a higher inflation rate even with a large level of monetary stimulus is because the velocity of money is at historically low levels. In fact, the velocity of money has been declining, pulling down gross domestic product (GDP) growth and the inflation rate.

However, at some point, the velocity of money will hit a bottom and, at that point, monetary stimulus will have an impact on the inflation rate. Even though the bank is printing money now, it won’t have an immediate effect, as it takes time for people’s mindsets to change; once something is ingrained, it is extremely difficult to shift.

Looking backward is easy, and it’s clear that monetary stimulus has had a limited effect on the inflation rate for many countries around the world, especially Japan, which has suffered from outright deflation.

The real question: will central banks begin reducing monetary stimulus before the inflation rate gets too high? Historically, central banks have been notoriously late in reducing monetary stimulus. This is what led to the housing bubble in America during the last decade.

The longer such an aggressive monetary stimulus is pushed, the greater the danger for both a higher inflation rate and bubbles occurring in certain segments of the economy and financial markets.

This is the reason why I believe we’re seeing physical gold continue to be accumulated by the public. The average citizen appears to have lost faith in the central banks’ ability to manage the inflation rate over the long term.

It will be interesting to see what happens in a year or two, if central banks will be willing to reduce the monetary stimulus that they’re applying. If the monetary stimulus isn’t reduced, we might be setting up for a much higher inflation rate later this decade than many people expect.

Read More : Global Central Bank Money Printing to Cause Long-Term Damage

Comment (0)

Apparently, someone forgot to tell the market that Microsoft Corporation (NASDAQ/MSFT) was a dead investment and not worth buying.

Following a lackluster launch of its “Surface” tablet and “Windows 8” operating system, Microsoft quietly moved to a new 52-week high of $32.84 last Thursday.

In its fiscal third quarter, Microsoft reported revenues of $20.49 billion, now on target for fiscal 2013 revenues of $79.16 billion, based on the Thomson Financial estimates.

My stock analysis indicates that the current uptick in the stock price is being triggered by optimism toward the company’s focus on touch-screen computing and mobile devices, along with greater demand for Microsoft’s “Xbox” gaming platform.

Revenues in the company’s entertainment and devices division surged 56% year-over-year to $2.53 billion. The company is set to launch its next-generation Xbox, with its “Xbox LIVE” currently having over 46 million subscribers worldwide, according to Microsoft.

The upward move in the share price and its sustainability will be dependent on whether this former darling of Wall Street can recapture some of its former glory, based on my stock analysis.

One thing is for sure: my stock analysis suggests that Microsoft is no longer the intriguing, can’t-miss stock that it used to be.

Microsoft is not Google Inc. (NASDAQ/GOOG).

My stock analysis suggests that for Microsoft to steadily move higher, the company will need to generate higher revenue growth than the current 7.4% and 7.9% that is estimated for fiscal 2013 and fiscal 2014, according to Thomson Financial.

Microsoft trades at a lower valuation than Google, but this is due to Google’s much higher estimated revenue growth rate of 43.0% and 15.1% for 2013 and 2014, respectively.

My contention is that Microsoft is still worth a glance, but it’s not on my radar.

Of course, if the company can grow its smartphone and tablet business, I will be more interested. But Microsoft is not there yet, and only time will tell if this company can ever deliver.

The only sure thing is that Microsoft, like many other companies, is struggling with the sliding demand of personal computers (PCs) due to tablets accelerating in popularity, based on my stock analysis.

If Microsoft fails to adapt to the industry shift, there will be little hope for this company. My stock analysis: it will not be easy for Microsoft to adapt.

The company will need to convert smartphone buyers into users of Windows-powered devices, moving users away from rival platforms including Apple Inc.’s (NASDAQ/AAPL) “iOS,” BlackBerry’s (NASDAQ/BBRY) “BB10,” and Google’s “Android,” based on my stock analysis.

Something has to be done. The market appears to be encouraged, based on Microsoft’s recent price move, but this optimism may not last if Microsoft fails to deliver the goods to investors and Wall Street.

Comment (0)

As is quite evident from the past couple months, investing in gold can be rather volatile. Clearly, the huge sell-off in the price of gold bullion over the past couple of weeks has shocked some people; an interesting result has been the reaction from the retail public, as many are now buying gold bullion in record amounts.

What Others Are Reading  : 2013 US Financial Crisis

Last week, the United States Mint actually ran out of the smallest American Eagle gold coin, and sales to India were 20% higher than the previous record, according to Standard Chartered PLC. Clearly, physical demand remains strong for gold bullion. (Source: Roy, D., et al., “Gold Rout for Central Banks Buying Most Since 1964: Commodities,” Bloomberg, April 25, 2013.)

Here is a key question for those who are considering investing in gold: what are your goals? Is a person investing in gold to diversify his or her assets or to trade and generate profits?

Having gold bullion as part of one’s portfolio can make sense as long as it’s understood that volatility will continue to be present. Since larger investors have added gold bullion as another asset to trade, determining the price of gold bullion has become increasingly difficult.

A chart for gold bullion is featured below:

Chart courtesy of www.StockCharts.com

The recent drop in gold bullion erased an estimated $560 billion in the value of central banks’ holdings, and it was one of the largest drops in 30 years. The huge spike in volume and the massive move indicate several large stops were triggered, causing the holders to liquidate their positions.

The question now: is the selling in gold bullion completed? Since no one can ever know the holdings and intentions of every investor, we can only discern from the large increase in volume that gold bullion might have possibly developed the floor at approximately $1,350 an ounce. However, there is no certainty that there will be enough buying demand to overcome the selling pressure. We would need to see gold bullion move back up to the previous support level, which will now be the resistance level, and how the market for gold bullion reacts.

The Relative Strength Index (RSI) spiked to extremely oversold levels, as noted by the circled areas in the above chart. These circles show several other points in the past where gold bullion became oversold or overbought. However, just because a market is showing an RSI in oversold or overbought territory, this does not mean that the market has to reverse. The market in gold bullion was oversold in February, but, as we all know, it continued lower.

Investing in gold over the past couple months has been difficult for many people. There are still large investors who are holding massive positions in gold bullion, such as hedge fund manager John Paulson with reported holdings at the end of 2012 equivalent to 65.7 tons. If investors in Paulson’s fund decide to redeem their cash, this could drive gold bullion even lower, because he would be forced to sell on the open market.

If you were investing in gold as an insurance policy, then much like your car or life insurance, you would not be continually checking it every day. Gold bullion is excellent as a trading vehicle because it provides plenty of volatility, but one must be flexible in being able to go both long and short with gold at a moment’s notice.

The key question: are you investing in gold as an insurance policy or as an active trader/investor looking to generate profits? Knowing the answer to this question will dramatically alter your trading strategy for gold bullion after the latest sell-off.

 Click here to visit : Has Gold Bullion Hit Rock Bottom?

Comment (0)

One of the biggest dangers when it comes to long-term investing is trying to determine the potential hazards on the horizon. Currently, market sentiment has become extremely positive in the market, driven by strong corporations with lean organizations and plenty of cash.

However, to be successful at long-term investing, we must look past current market sentiment conditions and determine what potential pitfalls could arise. Pension funds within corporations are becoming a serious threat in their potential to dampen market sentiment in the long run.

The deficit for American pension funds—the difference between the amount owed to retired workers and the level of funds in the pension—increased at the end of 2012 to $295 billion, up 17% from year-end 2011, according to Towers Watson. (Source: Badawy, M., “Corporate pension funding down in 2012 on falling interest rates,” Reuters, April 23, 2013.)

While assets within the pension plans have increased, as the stock market has moved higher, interest rates have declined to such a level that it still leaves a huge funding gap. Market sentiment for the current state of corporations might be accurate, but long-term investing is all about what will happen down the road. At some point, these obligations do have to be paid one way or another.

According to Towers Watson, American corporations contributed $45.0 billion in 2012 to their pension plans, the largest amount during the past five years. Since the turmoil in the market in 2008 and 2009, many pension plans have shifted away from equities and toward fixed income. According to Towers Watson, since 2009, the equity portion of the average pension plan has declined by 10%, while bonds have increased by eight percent.

Unfortunately, long-term investing decisions made by pension plan administrators can be problematic. Many administrators are reactive, not proactive.

When the stock market was tanking—and market sentiment along with it—it would’ve been the perfect time to add to the equity portion of a portfolio. Now, with market sentiment at such high levels and interest rates at such low levels, making a shift might be a mistake.

Unfortunately, many pension plans continue to pile into the bond market, which is yielding extremely low levels. This will mean that many pension plans will continue to be underfunded, as the current yield is too low to pay entitlements to retired workers.

It could become worse if market sentiment in the stock market begins to erode. If that were to occur, many corporations would have massive shortfalls in their pension liabilities, and they would have to eventually increase their contribution. Naturally, this would be a negative for shareholders and a warning sign for those interested in long-term investing looking out over a decade or more.

While it’s great to see market sentiment at such strong levels, underneath the surface, there are still potential problems when making long-term investing decisions. The potential shortfall in pension liabilities might be much larger than current investors believe, and it would be wise to look deeper into the companies in which you are investing.

Comment (1)

Consumers appear to be holding back on buying non-essential goods, and this could impact the economic recovery.

What Others Are Reading : Financial Crisis 2013

The durable goods orders contracted a dismal 5.7% in March, according to the United States Census Bureau, representing the largest decline in seven months—a far cry from the 4.3% rise in February and well below the Briefing.com estimate calling for a four percent decline.

Taking out the volatile transportation portion, durable goods fell 1.4%, versus the Briefing.com estimate of -0.1%, equaling the second straight month of declines.

The durable goods readings have largely been inconsistent, as reflected in the chart below, and suggest the economic recovery may be at risk.

When consumers are more confident, they tend to spend more on major purchases in the retail sector, such as homes, vehicles, furniture, appliances, and travel. This will impact the economic recovery, gross domestic product (GDP) growth, and the ability of companies to expand their businesses.

But whether it’s the added taxes or the fragile confidence from the lack of strong jobs growth, the decline in the demand for goods that are deemed non-essential should be a red flag that not everything is proceeding along smoothly, which could affect the economic recovery.

The fact remains that jobs creation is fragile and not expected to ratchet higher until 2014 and 2015, due to the slow economic recovery.

The recent 88,000 jobs created in March was weak, so it will be interesting to see what happens with the April non-farm payrolls reading due next Friday.

Retail sales have also been off and on. In March, retail sales excluding autos fell 0.4%, below the Briefing.com estimate for a gain of 0.3% and down from one percent in February.

The Thomson Reuters Same Store Sales Index (comprising 17 U.S. chains) increased 1.5% in March, below the 1.8% estimate and the weakest reading since September 2009.

There are clearly signs of potential stalling in the economic recovery driven by lower consumer spending.

Consumer confidence in March was weak at 59.7, according to the Conference Board, and was well below the Briefing.com estimate of 65.0 and the 68.0 in February. Moreover, the readings are nowhere near what I would view as confident. In fact, the readings were over 90 in December 2007, which was prior to when the financial crisis and recession took hold.

My concern is that without strong jobs creation, there will continue to be issues with confidence and the rate of the economic recovery—as evidenced in the decline in durable goods.

If you are expecting the economic recovery to pick up anytime soon, I suggest you reconsider.

Comment (0)

A key point is that the Fed/Treasury Actions of 2008, 2009, 2010, 2011, 2012 and 2013 are not long-term fixes. One reason they are not long-term fixes is that they “fix” a liquidity problem in a way that allows insolvent or nearly insolvent financial institutions to have liquidity that would allow certain normal but often deleterious operations (i.e. the continuation of even more lending based on borrowed liquidity) to continue temporarily.  Deepcaster has previously demonstrated the perils inherent in an economy increasingly relying on “borrowed liquidity” (i.e. debt) as a result of Fed policies rather than the traditional “earned liquidity” (i.e. savings) – see Deepcaster’s January, 2008 Letter and former Deutsche Bank Chief, Kurt Richebacher’s (RIP) writings.

Thus, the “borrowed liquidity cure” is worse than the disease. At about 100% of GDP, the USA’s debt cannot ever reasonably be repaid nor the debt of other countries (e.g., Japan where debt is 220% of GDP, and several Eurozone countries where debt exceeds 100% of GDP).  Thus, what The Fed and ECB have given us is a flawed Financial Band-Aid, and only a Taxpayer guaranteed Band-Aid for the Mega-Bankers (and profit for The Fed and its Shareholders which make more money as borrowing increases) at that. The FASB is complicit in this Deception because it continues to allow Mark to Myth rather than requiring Mark to Market accounting for Toxic Assets.

A Systemic Solution

Allowing the International Economy to be based on a Fiat Reserve Currency managed by a Private For-Profit Central Bank, The Fed, is unsustainable.  No Fiat Currency Regime in history has ever survived indefinitely. Many have ended in Disaster.

So The Systemic Solution is apparent.  We outline it in our December 2012 Update. Suffice it to say that one Element of The Solution involves taking Legendary investor Jim Rogers’ Advice recently neatly expressed as The Solution to the problem of The Fed:  “The Fed should be abolished and Chairman Bernanke should resign.”  (March, 2008, CNBC) 

An excellent idea.  Indeed, The Fed is a private for-profit group of International Banks, whose main motivation is in providing profits for, and protecting the interests of, The International Bankers Cartel and favored institutions and parasites, not in serving the needs of U.S. citizens (or most citizens of other countries for that matter). Rep. Ron Paul and the nonprofit group Carrying Capacity Network (www.carryingcapacity.org) are among those advocating Auditing and Abolishing The Fed. And the Ongoing Agony of Eurozone Citizens, could, in the long run, be halted by returning to National Currencies backed by Gold and Silver.

The Cartel End Game

Thus assuming The Cartel leaders know what they are doing what is their ‘End Game’? For details regarding The Cartel ‘End Game’ see “Investor Advantage: Revisiting the Cartel's 'End Game'” (3/6/09) and “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It (09/23/10)” in the ‘Articles by Deepcaster’ cache at deepcaster.com.

A Strategy for Investors & Traders

Fortunately, the following considerations and guidelines help enable Investors to Profit and Protect in spite of Cartel Intervention, and particularly regarding Interventions in the Precious Metals Markets.

1. Although The Cartel is still Potent, it is significantly less potent than it was even a few months ago due primarily to:

a)    The years-long efforts of the leaders and members of GATA and other organizations and writers in exposing Precious Metals Price Suppression 

b)   The stunning Allegations that Major Gold Repositories do not have nearly as much Physical Gold (or Silver for that matter) they say they do. See the allegations regarding a major Gold ETF and the London Bullion Market Association in Deepcaster’s April 9, 2010 article (“Climacteric for The Cartel; Opportunity for Investors [04/09/10]” in the ‘Articles by Deepcaster’ Cache at deepcaster.com) and Deepcaster’s April, 2013 Articles and Alerts.

c)    Increasing shortages of Physical Gold and especially Silver.

These reports are doubtless leading Major Gold and Silver Investors to demand Delivery and possession of Physical Gold – a wise decision. But The Cartel is still the Biggest Player in many markets and, if the timing and market context are propitious, the Biggest Player makes Market Price temporarily (witness the 2/29/12 and 12/13/12 and April, 2013 Takedowns). In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and that is a tremendous advantage; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.

1. Thus we recommend that Investors follow their lead with a significant portion of the funds allocated to Precious Metals purchases committed to purchasing, and taking Personal Delivery of (no Bank Vaults, please), Physical Gold and Silver.

Indeed, because Physical held in one’s personal possession is so precious, some forms of it trade at as much as a 20% premium to the spot price of “paper” Gold.

But not all forms of Physical are Equal, as it were. Some forms are much more liquid than others, and some are much more susceptible to counterfeiting, as e.g. by Tungsten-lacing. 

Deepcaster has recommended Purchase of One Form of Physical Gold (and Silver), that is quite liquid, not easily susceptible to counterfeiting, and commands a considerable premium over the spot price of Paper Gold (and Paper Silver). See also Deepcaster’s Alert for the week ending March 9, 2012 and his December, 2010 Letter “Gold with Income; in the ‘Alerts & Letters Cache’ at www.deepcaster.com. (See Notes 1 and 2.)

1. Do not give Short Shrift to Gold and Silver Miners and other Tangible Assets in sustained and relatively inelastic demand. 

But purchasing shares of these should be done with particular care, because, being “paper” (or, usually, electronic entries on some remote server) Miners shares are especially vulnerable to periodic Cartel attacks and Price Takedowns.

Thus, they are most profitably accumulated near Interim Lows resulting from Cartel Interventions.

In order to estimate these Interim Lows one needs not only to consider Fundamentals and Technicals, but also Interventionals.

Note: A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan while at the same time insulating oneself to some degree from future Cartel Takedowns.  For an outline of The Strategy (particularly as applied to the Gold and Silver Markets) see December 13, 2012 Article and Regarding Specific Recommendations for Profit and Protection, see Notes 2 and 3. 

Note, importantly, that Central Banks themselves are increasingly buying Physical Gold and Equities now. In November, 2012 the Bank of Korea bought $780 Million (14 tonnes) worth and China has become the World’s largest Producer and Importer. Note Well!

Perhaps A. Migchels’s Forecast and Warning is correct:

"The Petrodollar is based on the Black Gold standard and it is dying, as is the US Empire. But central banks all over the world are buying Gold like there is no tomorrow. Gold is assaulted by the Fed to maintain Dollar credibility, while the Money Power's international central banks and other insiders are very grateful for a 500-1000 dollar per ounce discount to prepare for the transition. The New World Order cannot collapse the financial markets until they collapse Gold, get our firearms, and get everyone into paper. They are trying to get everyone into the stock market, which will then flash crash."

Real Currencies, Anthony Migchels, April 2013

Best regards,

Deepcaster
April 26, 2013

Note 1: *We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.

Note 2: Our earlier Four Wave forecast is playing out thus far, as forecast. But first…

The recent dramatic Gold and Silver and general Commodities Price Takedown demonstrated that the Prospects for certain Key Commodities Price

– launches soon are better than ever (but of course from lower levels) and

– that even higher Price Targets sooner are now in store for these Key Commodities.

Why? The recent Cartel coordinated Precious Metals Takedown appears to have been effected by the selling of 400 tonnes ($20 billion) of paper Gold – representing 15% of all annual mine production. Total contracts traded represented about 3,000 tons. If all that were Physical, it would not be feasible, and probably not possible, to make delivery. Only The Cartel or a Major Catastrophe could have created such an 8 Standard Deviation Event!

So have we hit bottom in the Gold Price? And which Key Commodities have Stellar Price prospects? We answer these questions, comment on Cartel Motivation, and make a Buy Recommendation in our recent Alert “Our 4 Wave Forecast Accurate So Far; Buy Reco; Forecasts: Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Equities, Crude Oil, & Key Commodities”  just posted in ‘Alerts Cache’ at www.deepcaster.com.

And we recently made a Buy Recommendation with great Profit Potential.

Note 3:  All good Forecasts reflect probabilities not promises, guarantees, or certainties. We do not issue Forecasts unless our analyses reflect at least more-likely-than-not probabilities. But occasionally our Forecasts indicate, IMO, a higher, i.e. a much-more-likely-than-not probability for certain Key Sectors we cover. 
And this is one of those weeks in which Key Fundamental, Technical, Interventional, and Political reflect not certainty (and certainly not a guarantee) but rather, a much-more-likely-than-not probability, for one Key Sector we cover. 
To consider these Forecasts, see our Alert “ 17.97% Yield Buy Reco & Remarkable Forecasts: Equities, Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, & Crude Oil,” posted in ‘Alerts Cache’ at www.deepcaster.com. 
And to consider our recent “Blue Chip” Buy Recommendation recently yielding 17.97%, and selling as we write for about $5/share, read that same Alert.

Comment (0)