“The United States is quickly approaching a fiscal Armageddon and the players in Washington — specifically Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke — don’t understand what is happening or know what do about it, world renowned investor and author Jim Rogers tells Newsmax.TV...
…any halt in the decline of stocks was just a “temporary bottom.”
He said that while America was not at the brink of a fiscal Armageddon right now, the nation is likely to default on its obligations in the future.
“This decade absolutely, probably sooner than this decade… these guys are really, really out of it, they don’t understand what's happening and we’re all paying the price and it’s going to get worse.”
Rogers said that despite what economists say, the country has not left the recession and a depression could happen…
He placed the blame for the country’s economic ills not on Congress or the White House, but on the Federal Reserve.
“The Federal Reserve is the main culprit because they kept bailing people out instead of letting the market clear and instead of letting people go bankrupt and start over,” he said. “If I had to blame one group I would blame the Federal Reserve under (Alan) Greenspan and (Ben) Bernanke.””
“Jim Rogers: Bernanke, Geithner Leading Us Into Fiscal Armageddon”
Henry J. Reske and Kathleen Walter, moneynews.com, 8/9/11
As disruptive as the worsening Eurozone sovereign debt crises and the S&P downgrade of U.S. debt are*, they do serve one useful public function – they usher into public consciousness the new economic and financial reality – the new abnormal we call it.
“The U.S. government deserves the downgrade Standard and Poor's slapped on its ratings, because the country has run up so many debts it will never get out of the hole, say famed commodities investor Jim Rogers…
The agency is being too nice, as Washington probably doesn't even deserve the AA+ rating…
"It seems to me it's physically, humanly impossible for the U.S. to ever pay off its debt," he says. "They can roll it over and continue to play the charade, but the U.S. is bankrupt."
Investors should go long on gold and commodities, which will perform well while equities and currency markets digest the extent of the fallout the downgrade will have.
"You should nearly always buy into panic just like you should sell hysteria," Rogers says.
"I own gold, I'm worried about gold, it's going so up so much, I'm not going to sell it but it looks like it's setting itself up for a nice correction. I hope so. Then I can buy more."”
“Rogers: "Bankrupt" U.S. Will Never Pay Back Its Bills”
Forrest Jones, moneynews.com, 8/8/11
As every serious investor and financial analyst (at least all those who are not still completely asleep at the switch) now recognize, a new financial and economic reality is dawning, one with some characteristics which have not been seen since The Great Depression.
One of the key characteristics of that new abnormal is one which we have been emphasizing for years: “buy & hold rarely works anymore”… the exception being the few instances we discussed in our recent letters and alerts.
The following is a summary of key characteristics of that new abnormal, and guidelines for profiting and protecting wealth.
1.) As the recent equities markets selloffs demonstrate, fear, and consequent risk aversion is the new order of the day
2.) While gold, especially, and silver are “go to” safe haven assets (because they are real money) with great profit potential,
3.) Gold will typically outperform relative to silver during times of heightened risk aversion, but,
4.) Both gold and silver prices are still vulnerable to Cartel* generated price takedowns, as the early May, 2011 and early August, 2011 takedowns demonstrate, though less so than in previous years, and
*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.
5.) These takedowns should be welcome in one respect at least because they provide buying opportunities. Our forecasts in our latest letter and alerts indicate timing and targets.
6.) Another key characteristic of the new abnormal is debt saturation, both for sovereign nations and many individuals. See our recent article: “Last Tango Opportunities & Traps - Overview (8/5/11)” in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Debt saturation has serious consequences. For example,
7.) This leads to a slowing economy, especially in one in which recent economic growth has been artificially created by debt. No more debt = no more growth
8.) Sustainable growth is founded on investment of savings, not on increased borrowing by debt saturated sovereigns or businesses.
9.) But the Fed’s response (via e.g. its recent zero interest rate policy) is to encourage even more unpayable debt. Coupled with more money printing, this leads to hyperstagflation. That is, the Fed-led Cartel’s response to the crises is, predictably to “print” more money to, inter alia, buy toxic unpayable debt. But money printing in excess of GDP growth leads to hyperinflation (on the threshold of which we now already stand, with e.g. U.S. CPI at 11.13% per Shadowstats.com**).
10.) Realize that The Fed’s commitment (through 2013) to very low (negative Real) interest rates, is a de facto commitment to easy money – a form of QE 3.
11.) And while this will tend to keep mortgage interest rates low…
12.) It will also surely cause skyrocketing commodities-especially food and energy – prices in the middle and long run (just as QE 1 and 2 have already done) because the purchasing power of the U.S. dollar will continue to be degraded
**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 July 15, 2011
3.56% / 11.13 % (annualized June, 2011 Rate)
U.S. Unemployment reported August 5, 2011
9.1% / 22.7%
U.S. GDP Annual Growth/Decline reported August 1, 2011
1.62% / -2.83%
U.S. M3 reported August 6, 2011 (Month of July, Y.O.Y.)
No Official Report / 2.56%
These aforementioned observations suggest the following guidelines for preparation for the ongoing and coming crises.
1.) When possible and protective, go local or national. The mega-banks and many state and community banks are interconnected to all of the rest of our detriments. (Consider how many U.S. banks are directly or indirectly exposed to Greek and Portuguese or now French! bank debt.)
It is worth the research effort to identify banks and other businesses with less-than-average, or relatively little “Globalist” exposure. It is wise to study the variety of publically available measures of bank, and business, strength.
Think “Bank of North Dakota” as the model, as described in detail by Ellen Brown.
2.) Buy protective hedges, via e.g. double or triple leveraged, ETFs (see our Portfolios) and liquidate equities-in-general at the right time -- a forecast for which we issued in a recent alert.
3.) Buy high yield securities whose total return (gain plus yield) is likely to exceed real inflation – 11.15% per Shadowstats.com**, such as the high yield portfolio we recommend.
4.) Buy gold and silver, but at propitious time and in a form likely to best weather Cartel* takedown attempts.
“Silver was mauled without mercy as it met with the fate of copper. This is to be expected during times of risk aversion. For all the silver bulls out there, please understand this basic principle - Silver will not outperform gold during a period of risk aversion. Period - Comex silver stocks do not matter. All that matters is that risk trades get yanked off and silver gets hit harder than gold because even though it has an historic role as a safe haven metal, it cannot shed its industrial metal role completely during such times. The Gold/Silver ratio will therefore move in the favor of gold during periods of risk aversion when fear trades are the rule. When the risk trades go back on and traders feel very comfortable taking risk, then silver will outperform gold to the upside.” (emphasis added)
“Extreme Volatility in Gold as market digests rumors and risk aversion trades”
Dan Norcini, traderdannorcini.blogspot.com, 8/4/11
Note: recent profits taken in our gold and silver portfolios demonstrate the power of this method*** (see note below).
Regarding gold and silver purchases
a) Understand that a Cartel* of central bankers and their mega-bank allies have for years been suppressing precious metal prices.
b) Understand that it is now harder for The Cartel to successfully suppress prices, because there is an increasingly severe supply shortage of physical gold and silver, especially of silver, because ever more investors are becoming aware that certain mega-banks do not have the physical gold and silver they claim and thus these wise investors are taking physical possession, and delivery.
c) Nonetheless, The Cartel’s price suppression regime is still potent as the early May 2011 and early August, 2011 precious metal price takedowns show, once again.
d) Realize that these price suppression interventions form patterns and reveal tendencies, aka interventionals, which are useful in forecasting the next intervention. They facilitated Deepcaster’s earlier correct forecast that precious metal prices would be taken down as they were in early May (And that is why Deepcaster recommended taking profits on silver twice earlier this year and just this Monday, August 8)
e) Develop a strategy for buying near interim lows during takedowns (see below) and taking profits (at least partial profits near interim highs)
f) If one chooses to liquidate a portion of one’s paper gold and silver, do so before a takedown begins in earnest
g) Use takedowns as an opportunity to convert paper silver and gold into physical silver and gold. Not only do you get to buy these precious metals “on the cheap” but you also give the mega-bank market riggers fits, because they have a greatly diminished supply of these physical precious metals, but unlimited quantities of “paper gold and silver”. Deepcaster has recommended a particular physical form of these metals which is resistant to takedowns.
5.) Buy food producers and distributors****
More than energy or even precious metals, food and potable water must be at the top of consumer shopping lists everywhere around the world. With demand increasing from the 80 million plus annual world population increase, and increased resources of a growing middle class, especially in BRIC countries, to buy more and better food, food producers are in the catbird seat. The problem is exacerbated by the facts that most of the world’s best arable land is already under cultivation, and that modern agriculture is very fossil fuel (i.e. portable fuel) energy intensive.
In sum, there are opportunities now to develop a profitable and protective portfolio to weather ongoing and impending crises. Ongoing and impending crises plus government/Cartel intervention in many markets, provide these excellent opportunities.
Best regards,
Deepcaster
August 11, 2011
***Note 1: Deepcaster addresses the questions of Profit and Protection in light of Fiat Currency Purchasing Power Destruction in his recent article – “Essentials for Wealth Acquisition Acceleration” and provides Guidelines.
Using such Guidelines allowed Deepcaster to make buy and sell recommendations resulting in remarkable profits recently if acquired and liquidated when we recommended, approximately:
25% Profit on Gold Stock on August 8, 2011 after just 201 days (i.e. about 45% annualized!)
38% Profit on Silver on July 18, 2011 after just 201 days (i.e. about 68% annualized!)
150% Profit on Gold Stock Calls on July 13, 2011 after just 56 days (i.e. about 975% annualized!)
40% Profit on leveraged Short Treasuries ETF Puts on April 15, 2011 after just 3 days (i.e. about 4800% annualized!)
30% Profit on Silver on April 6, 2011 after just 98 days (i.e. about 111% annualized!)
To read our recent article -- “Essentials for Wealth Acquisition Acceleration”, go to www.deepcaster.com and click on the ‘Articles by Deepcaster’ Cache.
Past Profitable Performance is no assurance of future Profitable Performance.
**** Note 2: For example, earlier this year we recommended two such food producers and one water producer and management company, all of which we believe to be deeply undervalued (one trading at under $6/share, one under $2/share and one under $1/share).
One is China’s largest producer and seller of fresh fruits and vegetables. It also grows rice and breeds and sells livestock and has over 20,000 employees.
It had a P/E ratio under 4 when we recommended and profits have grown over 20%/yr.
As we write it is trading at around 43 cents per share U.S., near its 52 week low.
Given that P/E Ratio, profit growth and share price, you can see why we have called “food” a “sleeper” subsector.
