Phoenix Capital Research

The US economy is literally on the ledge of a cliff.

Today, the Federal Government accounts for 35% of incomes and salaries in the US. That’s over one third of all income in the US coming from the Government’s ability to dole out funds.

What supports this largesse?

Money printing and our ongoing debt-orgy. And today, these are one and the same. The US Federal Reserve and Treasury have enacted policies so insane that the US Federal Reserve is now the single largest holder of US Debt with a balance sheet of  $2.8 trillion.

Let’s give that number some perspective. Germany, the world’s FOURTH largest economy is only $3.3 trillion in size. At $2.8 trillion the Fed’s balance sheet is larger than the economies of France, the UK, and Brazil.

Why is the Fed’s balance sheet so huge? Because US Treasuries are so unattractive to foreign Governments that the Fed has had to pick up the slack and buy our debt (usually within a week or two of it being issued).

Let me rephrase that: the US Fed is now printing money so it can buy US Debt because other investors are no longer interested in buying it.

This is just one of the various schemes Washington is employing to maintain its fiscal insanity. Another is the active raiding of pension funds to buy new US Debt (YES, the Treasury is doing this).

So… the US Government is now paying over 1/3^rd of US incomes… and it’s financing this by having the Fed buy new debt from the Treasury.

Do you think this entire system might end up collapsing in a horrific manner?

And this is just ONE ASPECT of the nightmare that is the US Financial system. I’m not even detailing the $600 TRILLION in derivatives, the clear insolvency of the big banks (you know who I’m talking about), the FDIC running a deficit (are our deposits REALLY insured?), erupting inflation in food and energy prices, (Fed data CLAIMS prices FELL in the last four months) and the hundred other issues all of which will end very, VERY badly.

Regardless of how we look at the US’s current situation, it is clear that 2008 will NOT go down in history as THE Financial Crisis for the US. No, 2008 will be considered the “warm-up.”

The reason for this is simple. 2008 was primarily the collapse of the private banking system in the US. The Fed’s response to this was to transfer the garbage debts that nearly took down the banks ONTO the US’s balance sheet.

Put another way, the Fed allowed the systemic risk to spread from private bank balance sheets ONTO the US’s public balance sheet… which means the next Crisis will involve not only Wall Street and the banks but the US as a whole.

I’m talking about a sovereign debt Crisis. The kind of collapse we’re now seeing in Greece… only for the single largest economy in the world as well as its reserve currency.

So what happens when this Crisis hits and a partial if not complete Government shutdown occurs? What happens when that 35% of incomes and salaries stops being paid? What happens when prisons and other Government paid services run out of money? What happens when the next major banking run reveals that there is no WAY on earth the FDIC can truly insure all the deposits in the US (other than more money printing from the Fed)? What happens when the US defaults on its debts?

THEN and only then will we experience the REAL Crisis of the US Financial system. It is coming. There is no doubt about it. And people are only just starting to wake up to it (nearly half of Americans now believe we’re going to have a Great Depression).

Smart investors and independent thinkers are already taking steps to get ready for this. With just a few key moves and strategies it WILL be possible to not only survive but thrive during the coming disaster.

On that note, I’m currently preparing my subscribers for what is going to be a REAL Crisis. We’re doing this by protecting our families, savings, and portfolios via several  high-impact protection strategies designed to keep these areas of our lives safe during the coming fall-out.

All in all, we’ve taken to prepare for any eventuality whether it be food shortages, hyperinflation, a stock market collapse, a government shutdown… ALL the disastrous outcomes I’ve described above.

So if you’ve yet to take action to prepare yourself and your loved ones for what’s coming… it’s not too late yet… but we’re getting close to it.

To find out more about how to prepare and even thrive during the coming economic fall-out…

Click Here Now

Graham Summers

 

 

With the economic numbers getting worse and worse in the US, it’s clear that the Fed’s policies thus far have ended in abysmal failure. Indeed, I really can’t see how anyone could have argued the US had experienced a recovery to begin with.

• 15 million jobs have been lost since 2007.
• Food stamp usage is up 57% since 2007.
• Over one in five US mortgages is underwater.

Seeing as the Fed’s policies were supposed to help US consumers (we all know their real purpose: Wall Street bonuses), I cannot see how the above numbers indicate success of any kind.

Indeed, the other effects of the Fed’s moves have made an already difficult economic situation far, far worse by pushing the price of food and energy through the roof. Thus most in the US now find themselves facing stagflation in a big way.

However, the Fed is far too myopic in its belief system to possibly consider not printing more money. After all, from the end of QE 1 (April 2010) until the unveiling of QE lite (August 2010), the Fed continued to juice the market every month, particularly during options expiration weeks.

So the Fed will be juicing the system again at some point in the future. It’s all the Fed knows how to do. And it’s all the Fed has done since the Crisis began in 2007. Indeed, the Fed has completely and utterly failed to address ANY of the causes of the Financial Crisis.

Yet, for the Fed the failure to address any of the underlying causes of the Financial Crisis has been a great success story. After all, all it had to do was pump the financial system full of more money (increasing the amount of leverage) and push for the suspension of accounting standards (so the crap debt is still there, but no longer is visible).

So what do we have? A financial system where the underlying problems still exist and the Fed’s simply pumped TRILLIONS into the banks, resulting in commodities soaring, the US Dollar tanking, and investors taking on even more leverage.

Since 2009, I’ve been warning that the Financial Crisis is not over and that the next round will be even worse than the first. THIS is the REAL problem every one should be preparing for… not just a minor correction in stocks or the end of QE 2. Because at some point, the Fed WILL lose control of the system again. And this time it will be COMPLETELY powerless to re-instill confidence (the Fed’s already spent all of its bullets during Round One).

On that note, I’m already preparing subscribers of my Private Wealth Advisory newsletter for what’s coming. While most investors lost money last week, our two deflation trades took off. And we are close to getting “buys” on our other three deflation trades.

So if you’re looking for specific investment ideas (including buy and sell alerts) in this rocky market, few analysts on the planet have my ability to turn a profit during dangerous times.

To whit, I called the 2008 Crash months ahead of time and had my subscribers 100% in cash three weeks before the October-November 2008 nightmare hit. And the Private Wealth Advisory portfolio outperformed the S&P 500 by 15% during the Euro Crisis of May-July 2010.

So if you’re looking for someone to guide you through the coming dangerous times in the markets… you can take out a subscription to Private Wealth Advisory today and immediately begin receiving my hard-hitting analysis of the markets as well as specific investments to buy and sell to insure you stay protected… and turn a profit in the months ahead.

To learn more about Private Wealth Advisory…

Click Here Now!

Good Investing!

Graham Summers

 

 

 

 

As stated in my weekly forecast yesterday, the markets are rapidly adjusting to the fact that QE 3 is not coming anytime too soon.

Indeed, the two primary pro-money pumpers at the Fed (Goldman stooge Bill Dudley and general Wall Street lackey Ben Bernanke) have completely changed their tunes regarding providing additional liquidity to the markets.

Indeed, Dudley who made headlines earlier this year by suggesting iPads were as relevant to inflationary data as food and energy (no joke, he did), is now openly stating that higher commodity prices (inflation) are hurting US households.

Even though I expect a moderate economic recovery to be sustained, the recent disappointing data suggest that downside risks to the outlook have increased. Let me list some of them for you:

• As I mentioned earlier, high oil and commodity prices have further strained many families that already had tight budgets.

This is quite an admission from a man who’s been one of the biggest proponents of “inflation is under control” at the Fed. To give you an idea of the impact of the above statements, Bill King, Chief Market Strategist at Ramsey King Securities notes that stock futures entered a nosedive within minutes of Dudley’s speech last Friday resulting in the market tanking for most of Friday’s session.

This is what happens when the markets are being propped up by nothing but Fed liquidity and the Fed suddenly changes its tune… DOWN we go. However, judging by stocks’ performance so far, traders are still hanging on to hype and hope that the Fed might at least hint of more easing soon.

On that note, the final straw for stock bulls will come June 21-22. If the Fed doesn’t at least HINT of more QE or something like it, then we’re in for a VERY interesting time in the stock market.

Remember, stocks tanked 16% after QE 1 ended in 2010. So far, we’re already down 6% and QE 2 hasn’t even ended yet! If we match last year’s post-QE correction, the S&P 500 will be at 1,144 soon after QE 2 ends. And given the numerous disasters (economic and financial) occurring in the world today, we could easily drop a lot further than that.

On that note, I’m already preparing subscribers of my Private Wealth Advisory newsletter for what’s coming. While most investors lost money last week, our two deflation trades took off. And we are close to getting “buys” on our other three deflation trades.

So if you’re looking for specific investment ideas (including buy and sell alerts) in this rocky market, few analysts on the planet have my ability to turn a profit during dangerous times.

To whit, I called the 2008 Crash months ahead of time and had my subscribers 100% in cash three weeks before the October-November 2008 nightmare hit. And the Private Wealth Advisory portfolio outperformed the S&P 500 by 15% during the Euro Crisis of May-July 2010.

So if you’re looking for someone to guide you through the coming dangerous times in the markets… you can take out a subscription to Private Wealth Advisory today and immediately begin receiving my hard-hitting analysis of the markets as well as specific investments to buy and sell to insure you stay protected… and turn a profit in the months ahead.

To learn more about Private Wealth Advisory…

Click Here Now!

Good Investing!

Graham Summers

 

 

Things are moving quickly now.

Stocks have taken out the critical support lines of 1,294 and 1,275. We’ve also taken out the 50-DMA in a big way and are now closing in on the 200-DMA. If that line doesn’t hold: LOOK OUT BELOW.

I warned investors to shift into more defensive positions last week. The warning was well place: small caps suffered a far worse decline (nearly 4%) compared to the Dow (less than 2%).

Indeed, we’ve now entered a period of “risk off”. Small cap and Tech stocks, which lead to the upside, are falling hardest. Stocks in general are in full-scale correction mode, while Treasuries have begun to rally:

Treasuries and commodities were ahead of stocks here. And given the sharp rally we’ve seen in the former (and correction in the latter), stocks still have some catching up to do.

In the very near-term, we are oversold and could see a bounce early this week. However, every rally should be used to get more defensive as the primary prop for the stock market (QE 2) is ending in the next two weeks.

The one event traders will be hanging on to is the Fed’s FOMC meeting (June 21-22). If the Fed DOESN’T hint at additional liquidity measures, then stocks could enter a free-fall (the next Fed FOMC is August 9 2011).

Indeed, the Fed has gotten itself into an absolute bind. QE 2 bought roughly three months’ worth of improved economic data while simultaneously blowing energy and food prices through the roof. With public outrage soaring the Fed needs things to cool down before it can announce QE3 or anything like it.

The one exception to this would be if the markets enter a full-scale Crisis and stocks close in on 1,000 on the S&P 500. The most likely candidate to trigger this would be the Euro-zone where the “bailout game” might in fact be about to end. This combined with the ECB’s decision not to raise rates could result in the Euro currency getting VERY ugly in no time.

On that note, if we take out 140 on the Euro, that would be a major warning sign that we could be entering another round of systemic risk.

On that note, I’m already preparing subscribers of my Private Wealth Advisory newsletter for what’s coming. While most investors lost money last week, our two deflation trades took off. And we are close to getting “buys” on our other three deflation trades.

So if you’re looking for specific investment ideas (including buy and sell alerts) in this rocky market, few analysts on the planet have my ability to turn a profit during dangerous times.

To whit, I called the 2008 Crash months ahead of time and had my subscribers 100% in cash three weeks before the October-November 2008 nightmare hit. And the Private Wealth Advisory portfolio outperformed the S&P 500 by 15% during the Euro Crisis of May-July 2010.

So if you’re looking for someone to guide you through the coming dangerous times in the markets… you can take out a subscription to Private Wealth Advisory today and immediately begin receiving my hard-hitting analysis of the markets as well as specific investments to buy and sell to insure you stay protected… and turn a profit in the months ahead.

To learn more about Private Wealth Advisory…

Click Here Now!

Good Investing!

Graham Summers

As you know, as far as stocks go, I’m about as bearish as it comes. However, if you’re looking for income, stocks today are far more attractive than sovereign bonds.

Let me post a disclaimer on that statement: stocks are MASSVELY overvalued today and we’re likely going to see a sharp correction if not something worse before the Fed begins another round of money printing.

However, once this correction ends, those looking for income might want to consider looking at high quality blue chip companies, MLPs, and other equity-based investments that offer decent dividends, rather than bonds.

Consider Exxon Mobil (XOM) compared to US Treasuries.

Exxon is best known as an oil giant that produces “obscene” profits. However, its history of producing income for shareholders is beyond stellar: XOM has increased its dividend every year for the last 28 years.

Today, XOM pays 2.2%. That’s more than you’d make lending to the US Government (buying US bonds) for any period of time shorter than 10 years (the 10-year currently pays 2.95% while the 30-year currently pays 4.2%).

XOM also has the following advantages over US bonds:

1)   It produces a good (oil) that people actually need

2)   You can have some clue about the nature of its balance sheet

3)   There are actual investors who want to own it (you don’t need the Fed/ Treasury to perform a giant Ponzi scheme to keep it going)

4)   XOM isn’t run by clueless politicians/ bureaucrats (though they do TRY to control XOM)

Finally, and most importantly, with XOM you’re buying an investment that isn’t clearly bankrupt and destined to default in the near future.

In a world of absolutes, I think XOM’s chart is extremely ugly and we’re likely going to see a correction of some magnitude in the near future. However, investing in a world of loose money is not about finding relative values. And on a relative basis, today companies like XOM are a lot more attractive than US debt.

However, across the board I am wary of the financial markets right now. Indeed, I believe things are about to get REALLY ugly for many asset classes.

It’s clear that the US economy has taken a sharp turn for the worse in the last three months. Considering that we never had a recovery to begin with, I believe we’re heading into a very, VERY rough patch here in the US.

Without adjustments, the US economy LOST (not gained) over 100,000 jobs in April. Nearly 30% of all mortgages in the US have negative equity. Food prices are through the roof. And we’re actively raiding pension funds in order to fund debt issuance.

In plain terms, this is an absolute disaster. And as usual, stocks are the last to “get it.”

Now is the time to be preparing for what’s to come. If you’ve not already taken steps to protect yourself and your loved ones’ finances from what’s coming, I can show you how.

I’ve already got subscribers invested in several key positions that will pay off HUGE returns as the stock carnage escalates.

We’ve also take steps to prepare our families for the upcoming social upheaval that will be occurring shortly.

If you’ve yet to take these steps yourself, it’s not too late… but we’re getting AWFULLY close to it.

To take action now, including specific investment ideas that will profit from the coming collapse in the markets…

Click Here Now!

Good Investing!

Graham Summers

 

No investment goes straight down or straight up. This is especially true when an investment is changing trends from bullish to bearish and breaks below a key support level.

Instead, investments follow what I call the “kiss the line then say goodbye” pattern. That pattern is:

1)   The initial drop

2)   The re-test (kiss)

3)   Good-bye!

In plain terms, this means that once an investment breaks below key support, it usually rallies to re-test that former support line. If it is rejected at that line (indicating support is now resistance) then you are in for a sharper correction.

Which is exactly what’s happening in stocks today:

As you can see, the S&P 500 has taken out critical support at 1,300 or so. It’s now staging a bounce to re-test this line. If it’s rejected here, (meaning former support is now resistance) then we’re going to see a sharp correction to 1,260 or even 1,200 depending on how bad things get.

So pay close attention to that line. If the S&P 500 kisses it and doesn’t break back above… then say GOOD-BYE!

Indeed, I believe things are about to get REALLY ugly.

The US economy has taken a sharp turn for the worse in the last three months. Considering that we never had a recovery to begin with, I believe we’re heading into a very, VERY rough patch here in the US.

Without adjustments, the US economy LOST (not gained) over 100,000 jobs in April. Nearly 30% of all mortgages in the US have negative equity. Food prices are through the roof. And we’re actively raiding pension funds in order to fund debt issuance.

In plain terms, this is an absolute disaster. And as usual, stocks are the last to “get it.”

Now is the time to be preparing for what’s to come. If you’ve not already taken steps to protect yourself and your loved ones’ finances from what’s coming, I can show you how.

I’ve already got subscribers invested in several key positions that will pay off HUGE returns as the stock carnage escalates.

We’ve also take steps to prepare our families for the upcoming social upheaval that will be occurring shortly.

If you’ve yet to take these steps yourself, it’s not too late… but we’re getting AWFULLY close to it.

To take action now, including specific investment ideas that will profit from the coming collapse in the markets…

Click Here Now!

Good Investing!

Graham Summers

Throughout most of 2009-early 2011, any and all bad news regarding the US economy was perceived as positive for stocks due to traders’ belief that a weak economy would mean more money printing from the US Federal Reserve.

That situation now appears to have changed. The last two months have seen big misses on virtually every economic data point: the PMI, ISM, Housing, etc. However, rather than rallying, stocks have dropped nearly 5%, taking out numerous lines of support.

The commodity complex was way ahead of stocks on this one (agricultural commodities and copper topped out back in February), which was the first indication that the “bad news = more money printing= higher stock prices” group-think was in for a rude awakening.

However, despite the fact the Fed is pulling back on its liquidity schemes (at least temporarily), the US Dollar has continued to drop from February onwards. Indeed, aside from a brief dead cat bounce that occurred in May, the greenback has remained within the same downward channel that it’s obeyed since establishing a top back in May 2010.

Thus we see that not only is the Fed no longer promising additional juice in the near future (sending stocks and commodities into corrective mode) but the US Dollar is failing to strengthen indicating that the “flight to quality trade” could potentially no longer be favoring Dollars.

It is, however, favoring Gold.

Gold took a hit along with the commodity complex. However, it has since come back with a vengeance and is now on the verge of challenging its all-time highs.

What this tells us is that Gold is no longer trading as a commodity but as a stand-alone currency: a fact emphasized by Gold no longer trading in inverse correlation to the US Dollar:

To conclude, Gold continues to impress me with its strength. And while it might take a hit if we get another round of full-scale deflation, the bull market in Gold continues to go strong. So I would look to increase exposure to the sector on pullbacks.

However, given the scale of the correction we’ve seen in commodities, as well as the horrendous economic data we’re seeing, I would look to lighten exposure to stocks, particularly more speculative positions, and getting defensive. This means focusing on high quality companies with minimal debt and substantial cash, particularly large-caps, while moving out of the small-cap space (the Russell 2000 right now is downright ugly).

If you’re looking for specific, actionable investment ideas with real-time buy and sell signals, I strongly suggest taking out a subscription to my Private Wealth Advisory newsletter.

In the last six months, I’ve alerted Private Wealth Advisory subscribers to a backdoor timber play on Japan’s restructuring, an unknown Gold miner that could easily double and still be cheap, and three short-term deflation trades, meant to profit from the market’s current weakness.

To find out more about Private Wealth Advisory …

Click Here Now

Good Investing!

Graham Summers

Despite the fact we were told repeatedly that the Greece situation was solved just 12 months ago, the country is once again at the forefront of the ongoing crisis in the Euro-zone.

Having already thrown billions at this problem last year, this time around European officials are actually considering REAL solutions, i.e. Greece leaving the Euro-zone. Of course, as soon as these rumors surfaced, several Greek officials (who never seem to be named) quickly responded to say the rumors are unfounded.

At this point it is clear that the Euro-zone will be restructured in the near future. Whether or not it will change with Greece alone leaving the EU, or if we see multiple players drop out, one thing is clear: the EU in its current form is finished.

How we get to this outcome remains to be seen. But the “Greece issue” serves as a perfect illustration of the central issues plaguing the world financial system today.

Consider that Greece’s entire GDP is less than $330 billion (about the same size as the state of Massachusetts). The country also has a debt to GDP levels of over 100% and deficit of around 12%.

In other words, it’s clear, plain as day that the country is broke. So why does Greece matter so much to the EU?

The answer is quite simple: derivatives and the interconnectedness of the global banking system.

It’s now well documented that Greece should never have been allowed to join the EU. The only way it met the fiscal requirements was by using off balance sheet derivatives (crafted by Goldman Sachs and pals naturally) to hide the true state of its financial health.

However, once Greece entered the EU, its bonds quickly entered the toxic debt game of “hot potato” amongst the EU banks. By the time the European crisis erupted last year, German and French banks were on the hook for $65 billion and $82 billion of Greece’s debt, respectively.

Small wonder then that these more fiscally sound countries pushed to bail Greece out. Failure to do so would mean a banking crisis in either country.

So banks got the EU into this mess in the first place (Wall Street helped hide Greece’s true debt loads to get Greece into the EU) and now banks are making sure that European taxpayers pony up the cash for this dishonesty (German and French banks are leaning on politicians to not allow Greece to collapse).

And so here we are, with austerity measures and higher taxes occurring in Europe because of bankers’ greed and dishonesty. Having realized that their politicians aren’t going to do the right thing, the people are now openly expressing their disgust at the ballot box (Angela Merkel’s party is getting slammed in Germany for supporting the bailouts) and the streets (protests are occurring across Europe).

And it’s just a taste of what’s coming to the US.

Indeed, everything happening in Europe right now (civil unrest, political turmoil, currency crisis) is coming to the US’s shores in the future. We are running similar debt-to-GDP ratios, deficits and our banking system is similarly laden with worthless derivative garbage.

Again, the same upheaval happening in Europe will come to these shores. It’s only a matter of time. Which is why the wise thing to do is prepare in advance of this. This means getting some food, water, and bullion on hand. It also means considering what one would do if the stock market came undone again.

Prepare now. When the REAL Crisis hits, it will be too late.

Good Investing!

Graham Summers

 

 

 

 

 

 

 

 

Last month I warned that we could see another round of deflation before the Fed announces QE 3. At that time I wrote…

Indeed, if stocks were to drop off a cliff, they’d drag commodities down with them. This would take some of the inflationary heat off of consumers, which would allow the Fed to continue its BS “inflation is transitory” mantra and pave the way for QE 3.

Understand, I am absolutely certain we’ll see QE 3 in the future. But the Fed first needs justification for it. And a market collapse would be perfect.

This is exactly what has happened. In fact, it looks as though the Fed is intentionally letting the markets come undone in order to set the stage for more money printing down the road.

The issue now is how far the Fed will let things collapse. When QE 1 ended in April 2010, stocks dived 15% before the Fed stepped in and began hinting at more QE. By today’s numbers this would mean the S&P 500 falling to 1,160 or so.

However, given the extreme degree of danger in the world today (the European banking Crisis, the Middle East, China overheating and Japan’s nuclear disaster) there is plenty of room for surprises to the downside.

Indeed, we’ve already seen the commodity sector and emerging markets (particularly China) take a sizable hit. And Treasuries have begun to rally sharply too. All of these are typical warning signs that real danger is afoot for the stock market.

So could stocks crash?  If we take out support at 1,300-1,310, we have minor support at 1,275 and 1,250, but we could easily go to 1225 relatively quickly.

We’re also getting close to registering my proprietary Crash indicator. This signal registered before the 1987 Crash, Tech Collapse, and 2008 Disaster. It also caught the Euro Crisis of 2010.

And it’s getting close to registering a signal now.

Which is why I’m already preparing subscribers of my Private Wealth Advisory newsletter with five deflation trades designed to profit from a stock market debacle. While the market’s been a sea of red in the last two days, these positions have performed beautifully. One of them even rallied more than 6% yesterday!

And we’re just getting started.

Remember, in order for the Fed to announced QE 3 or some other money printing scheme, they need the financial system to cool down. So they have EVERY incentive to let stocks collapse right now. Fed members have even openly hinted at this possibility in the last week.

So the time to prepare for this is now. You simply cannot afford to be married to one outcome in the markets. Which is why I’ve got Private Wealth Advisory subscribers preparing for deflation in the short-term, with another round of inflation coming later this year after QE 3 is announced.

In other words, we’re covering all the bases… which is the whole purpose of Private Wealth Advisory: to make money in EVERY market.

So if you’re looking for actionable trades to profit from the coming market collapse… as well as future market moves, you NEED to check out Private Wealth Advisory today. Because the way things are going… if you put it off much longer, it might be too late.

To find out more about Private Wealth Advisory and take action to profit from the Fed’s planned market collapse…

Click Here Now!

Good Investing!

Graham Summers

 

 

It’s very strange to see commentators claiming that QE 3 will end and the Fed will no longer supply any juice to the system. After all, we have not had a period in which the Fed wasn’t pumping tens of billions into the markets since 2007.

Indeed, the only time the Fed wasn’t officially pumping its brains out was between the end of QE 1 (April 2010) and the announcement of QE lite (August 2010).

However, despite the formal declaration that QE 1 was over, the Fed DID continue to pump north of $10-20 billion into the markets every month, ALWAYS during options expiration week.

Like I said, there hasn’t been a period when the Fed wasn’t pumping in years. And let’s not forget that the Fed has ALSO been put an additional $600 billion into the markets since November (on top of QE 2).

That’s correct, in the last six months, the Fed has been pumping ANOTHER $100 billion per month into the system behind the scenes.

So at this point, between QE 2 and the Fed’s behind the scenes move, the markets are receiving nearly $200 billion per month in additional liquidity. The idea that the Fed will remove these props, when ALL the Fed’s done for four years is provide liquidity, is ridiculous.

So expect more QE or more liquidity pumps at any rate. The markets are already sensing this which is why commodities have put in a base and are now on the verge of beginning their next leg up:

To reiterate the central points of this piece: the Fed has done nothing but pump the system since 2007. Every time the economy worsened or things got ugly the Fed added the juice. And it’s clear the US economy started to take another dive back in February 2011. So while QE 2 may officially end, the Fed will be pumping money behind the scenes… that is until it announces some new program, likely QE 3 or something just like it that uses a different term (the public is fed up with QE).

Keep your eyes on commodities. They’ll let you know what’s going on at the Fed.

Good Investing!

Graham Summers

PS. I’m using this pullback in the inflation hedge space to add several high quality inflation hedges to my Private Wealth Advisory newsletter portfolio. If you’re looking for exceptional investments that will maintain their purchasing power and outperform even Gold and Silver as inflation continues to expand in the US, you NEED to check out my Private Wealth Advisory newsletter.

To learn more about Private Wealth Advisory…

Click Here Now!!!

As I write this, Germany is rumored to have agreed to a second bailout for Greece. The Euro and stocks are rallying hard on the announcement. Silver and Treasuries are down, while Gold is roughly breakeven.

The big picture here concerns the US Dollar which had already fallen to test its 50-DMA. If the US Dollar breaks below this line and fails to reclaim it then the US Dollar rally is over.

The technical pattern here is a falling wedge pattern. As the below chart shows we hit right up against upper descending trendline. We’re likely to test the lower trendline now which is around 72 or so:

If we do this, it will mean a test of the all-time low originally formed in July 2008. If we take this line out, we’re into uncharted territory.

This situation needs to be watched closely as it could very well herald the next wave of inflation in the US. I’ve stated before I thought this latest US Dollar rally was a dead cat bounce. That’s now looking to be case.

On that note, I’m currently preparing subscribers of my Private Wealth Advisory newsletter for the next round of inflation with five extraordinary inflation hedges that will outperform even Gold and Silver as inflation hits the markets again.

I’m detailing them in a two part Special Report titled: Better Than Gold: The Five Best Inflation Hedges On the Planet.

Part 1, detailing the first two inflation hedges, was published just last Wednesday.

Already one of them is already up 3%. However, this is NOTHING compared to the gains we’re going to be seeing.

Let me explain…

My first inflation hedge is one of the greatest investment secrets on the planet. Over the last 10 years it’s increased its reserves 1,200%. Today it sits on over 12 million ounces of Gold.

However, despite this incredible track record and value, 99.9% of the investment world doesn’t EVEN KNOW THIS COMPANY EXISTS. Indeed, the last time a firm upgraded/ downgraded this company was OVER A YEAR AGO.

Literally NO ONE is talking about this company.

Because of this, the market has no idea about the true value of this company’s assets: today the company’s reserves are valued at only $600 PER OUNCE.

To give you a better idea of how absurd this is, consider that other, better-known companies with comparable reserves have market caps that are more than TWICE as big as this one.

I’m detailing this company and four others of similarly obscene value in two parts of my Better Than Gold: The Five Best Inflation Hedges On the Planet.

Part 1 of this report, which details this company and another one that’s even MORE attractive, is already online and available to download to all Private Wealth Advisory subscribers.

To get in on these investments AND receive the next three from Part 2 of my Better Than Gold: The Five Best Inflation Hedges On the Planet report, all you need to do is take out a “trial” subscription to Private Wealth Advisory.

You’ll then have 30 days to try out my insights and trading ideas. If, at any point during those 20 days, you decide Private Wealth Advisory is not for you, simply drop us a line and we’ll issue a full refund.

The insights and reports you gain during that time are yours to keep even if you choose to cancel.

To get started with your “trial” Private Wealth Advisory subscription…

Click Here Now!!!

Good Investing!

Graham Summers

 

 

I recently discovered that famed financial commentator, Mike “Mish” Shedlock published a piece in which he quoted an article I published and proceeded to tear my views (at least what he claims my views were) to pieces.

The actual article I wrote that Mish refers to is:

http://www.zerohedge.com/article/time-prepare-hyper-inflation-it-explodes

The first line of the piece notes that it’s a continuation of several other pieces I’d written before. Mish doesn’t bother referring to them anywhere. He simply starts off by quoting the following:

The similarities between the US today and Weimar pre-hyperinflation are striking. As in Weimar, US fiscal authorities are not taking any steps to rein in their loose money policies. Similarly, the US Fed, like Germany’s financial elites believes that currency depreciation is a good thing.

Thus we have a rather frightening set-up for hyperinflation in the US: the largest emerging market players are moving away from using the US Dollar at the same time that US monetary authorities are engaging in disastrous policies similar to those employed by the men who brought hyperinflation to Weimar Germany.

I firmly believe the US will see serious (‘70s style inflation) if not hyperinflation within the next 2-3 years. It could come sooner depending on how the Fed’s policies play out.

The purpose of these paragraphs was to say that the financial elite in the US are maintaining similar views to their counterparts in Weimar Germany. I DO NOT say the US is just like Weimar (though I say I believe we will experience similar hyperinflation at some point). I DO say that the financial elites in both countries engaged in similar practices. That’s a key difference.

Mish however, takes my quote to mean that Weimar and the US are identical in every way. He then lists four key differences between the two. His differences are:

1) Germany lost World War I

2) The Treaty of Versailles imposed repayment conditions on Germany that could not be met

3) To enforce the treaty, France occupied parts of Germany

4) Germany printed money so fast people burnt stacks of money for heat

On the surface these do indeed look like major differences (the US didn’t lose WWI, ISN’T forced by the Treaty of Versailles to make debt payments, isn’t being occupied by France, and has yet to print enough money that people burn bills for fuel).

However, these are only differences if one takes everything literally.

The US, like Weimar, is a massively indebted nation. And the US, like Weimar, is being forced to continue to issue debt and repay it (though in the US’s case it’s Wall Street and their lackeys in Washington pushing for this). Like Weimar, the US CANNOT repay its current debt obligations. And we’re also being taken down this road against our will (this time by Congress which ignores the fact most Americans don’t want us to issue more debt, similar to Weimar’s financial elite who continued down their path of loose money policies).

And finally the US Federal Reserve is printing money… like Weimar. Is it the exact same amount? No. Are people burning bills for fuel? No. But did I claim that the US was doing this? NO.

Again, the primary differences Mish lists between Weimar and the US are only differences if you take everything from a literal standpoint. And I wish to reiterate that Mish didn’t correctly get the primary points I was making in the sections he quotes. Of course that didn’t stop him from saying it was all “nonsense.”

Mish then takes issue with my suggestion that a common currency in Asia could potentially be a viable alternative to the US Dollar as the reserve currency of the world.

Mish quotes the following from my article:

Indeed, it was just revealed that ASEAN+3 countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, and South Korea) are researching the prospect of a “common currency” similar to the Euro.

The significance of this development cannot be overstated.

Once again, Mish ignores other parts of the article in which I state that common currencies in general are flawed. He also ignores the fact that I never actually say a common currency from Asia is guaranteed. I DO say the following:

What I mean is that should a common currency be introduced in Asia, it would probably work for about 10-15 years. By then we’re well into the 2020s if not the 2030s at which point it is quite possible China will indeed be in a place to provide a world reserve currency on its own.

I wish to stress that even if Asia doesn’t implement a common currency and the US Dollar remains the world’s reserve currency (I put the odds of this at 20%), we are still facing a debt default in the US which will result in the US Dollar dropping dramatically in value and ushering in serious if not hyper-inflation.

The inclusion of “should” clearly illustrates that I am NOT saying a common currency is guaranteed in Asia but instead could be a potential option IF the respective Governments pursue it. Mish misses that point. But again, it didn’t stop him from calling my piece “nonsense.”

The rest of Mish’s piece consists of the same literal interpretation of everything I say. In the end, while trying to discredit my ideas while presenting himself as vastly more astute than me (to readers who likely didn’t even bother reading my article or the ones preceding it), all he really does is indicate that:

1)   He doesn’t actually bother to understand what an author is saying before attacking his or her views

2)   He has no issue calling others’ work nonsense without bothering to speak with the author or read additional material the author has put out

Regarding the latter point, I actual have spoken to Mish several times on the phone in the last few years. The most recent call was in July 2009. At that time I called to discuss the inflation/ deflation debate with him. Our debate consisted of Mish yelling for 15 minutes straight about how inflation didn’t exist and that anyone who believed it did was an idiot. I had to ask him to stop yelling several times so I could actually say something.

This is why Mish’s piece wasn’t totally a surprise for me. I’d already experienced his “no room for contrary views,” take on economics personally. And it’s not surprising that a man whose notion of a friendly discussion involves screaming over others would publish an article attacking someone else’s ideas without bothering to even figure out what the person is really trying to say.

By the way, the time when Mish told me inflation didn’t exist and that I had to be insane to claim it was a reality was July 2009… when Gold was at $900 per ounce, Oil was at $70 per barrel, Wheat was under $600, and Copper was under $2.50.

However, I’m not going to personally attack Mish’s views or his writing because there are FOUR key differences between us:

1)   I believe that writing a piece attacking someone’s ideas offers little if any value to readers or investors

2)   I don’t actually read him much so I’m not familiar with his views… so even if I wanted to attack him, I wouldn’t feel comfortable doing so

3)   Before attacking the ideas of someone who I’ve actually spoken to over the phone (several times), I would first write him a personal email asking him to clarify his points so I had a better grasp of what he was saying

4)   I don’t consider views that are contrary to my own as “nonsense.”

Obviously none of these hindered Mish.

Graham Summers

This latest pullback in the commodities space has presented long-term bulls and inflationists with a terrific buying opportunity in the inflation hedge are.

Indeed, Silver looks to have put in a base and is now challenging resistance at $37.50. If we can break that level with conviction we’re off the to the races again.

The picture is even better for Gold which not only held its trendline (and the first line of support) but has bow broken out of a triangle pattern to the upside: a move that predicts a re-test of the highs:

However, the pullback in commodities has been EVEN BETTER for other lesser known inflation hedges. Indeed, individual players were absolutely decimated, bringing them to valuations we haven’t seen since 2008.

Consider that during 2008, Gold traded around $900 per ounce. Today it’s at $1,500. And yet, based on reserves and underlying assets, many inflation hedges today are trading at valuations equal to when Gold was only at $900 per ounce.

In other words… BACK UP THE TRUCK!

I’m currently putting together a two part Special Report detailing the FIVE BEST opportunities in the inflation hedge space today. I call it Better Than Gold: The Five Best Inflation Hedges On the Planet… and the companies these reports detail are SCREAMING buys.

For instance…

My first inflation hedge is one of the greatest investment secrets on the planet. Over the last 10 years it’s increased its reserves 1,200%. Today it sits on over 12 million ounces of Gold.

However, despite this incredible track record and value, 99.9% of the investment world doesn’t EVEN KNOW THIS COMPANY EXISTS. Indeed, the last time a firm upgraded/ downgraded this company was OVER A YEAR AGO.

Literally NO ONE is talking about this company.

Because of this, the market has no idea about the true value of this company’s assets: today the company’s reserves are valued at only $600 PER OUNCE.

To give you a better idea of how absurd this is, consider that other, better-known companies with comparable reserves have market caps that are more than TWICE as big as this one.

Like I said… BACK UP THE TRUCK.

I’m detailing this company and four others of similarly obscene value in two parts of my Better Than Gold: The Five Best Inflation Hedges On the Planet.

Part 1 of this report, which details this company and another one that’s even MORE attractive, is already online and available to download to all Private Wealth Advisory subscribers.

To get in on these investments AND receive the next three from part 2 of my Better Than Gold: The Five Best Inflation Hedges On the Planet report, all you need to do is take out a “trial” subscription to Private Wealth Advisory.

You’ll then have 30 days to try out my insights and trading ideas. If, at any point during those 20 days, you decide Private Wealth Advisory is not for you, simply drop us a line and we’ll issue a full refund.

The insights and reports you gain during that time are yours to keep even if you choose to cancel.

To get started with your “trial” Private Wealth Advisory subscription…

Click Here Now!!!

Good Investing!

Graham Summers

 

 

 

While Barack Obama is chugging Guinness and Congress is doing… well not much of anything, we’ve breached the US debt ceiling.

That’s correct, the US now has more debt than is legally permitted. We’d crossed the “more debt than is healthy” as well as the “more debt than is sane” levels long ago. However, it wasn’t until the last few weeks that we cleared the legal debt limit.

You’d think that the world’s largest economy (and home of the world’s reserve currency) exceeding its debt limits would be big time news. But we’ve yet to hear a peep about it from the mainstream financial media.

It’s even stranger that we haven’t heard mention of the fact that the US is in fact RAIDING pension funds to continue to fund its debt.

That’s correct, Tim Geithner, who aside from being a tax dodger has managed to make US Treasuries (formerly the ONLY risk-free investment in the world) so unattractive to foreign investors that he is now using money that was promised to retirees to fund his debt orgy.

Let’s think about this for a moment… US Treasuries are so unattractive that investors no longer want to buy them… so we’re using money promised to those who worked… to buy them.

Simply staggering.

Aside from being morally wrong, Geithner’s moves are the usual “I’ve got no solutions so I’m just going to come up with something on the fly” nonsense we get from the DC crowd. Even Geithner himself has admitted that his latest scheme will only buy the US about three months’ time before we start defaulting on our debt.

That’s not a typo… Geithner has publicly stated that barring any sudden changes in the demand for US Treasuries, the US will DEFAULT in August 2011.

In some ways this doesn’t matter. The US was going to default soon anyway. The US Federal Reserve is the primary buyer of Treasuries now. And it’s simply buying 50+% of all new debt issuance back from Wall Street (usually within a week or two of the debt being issued).

In other words, the entire US debt structure is now a giant Ponzi scheme.

We all know how this ends… with a debt default followed by a US Dollar collapse… which is why smart investors are using this latest pull-back in inflation hedges to load up in anticipation of the coming US Dollar collapse.

On that note, I’m just about to release Parts 2 and 3 of my How to Survive Hyperinflation report in a few hours.

The purpose of these reports is to identify EXTRAORDINARY inflation hedges that will outperform even Gold and Silver as hyperinflation erupts in the US.

And boy WILL THEY.

My first inflation hedge is a Gold producer. However, you wouldn’t think this if you looked at its balance sheet. It has no debt and over $700 MILLLION in cash.

In fact, based on its production, this company is trading at a P/E of less than 10!!! Other companies with comparable Gold production rates trade at more than TWICE this company’s current market cap.

So to say that the odds of a double here are high would be a GROSS UNDERSTATEMENT.

Want to find out what it is and get in on the gains? You can get the name, symbol and how to buy these incredible investment by…

Clicking Here Now!!!

Now about that second inflation hedge…

With Gold at $1,500 per ounce, this company is trading for less than 1/6th of its PROVEN reserves.

However, the potential for a MAJOR surprise to the upside here is high. You see, this company has increased its reserves over 1,000% in the last ten years alone.

This is no mere exploration company either… this company expects to produce 300,000 ounces of Gold this year… up from 200,000 last year.

And yet it’s currently CHEAPER TODAY than it was BEFORE it began production!

The potential for a buyout here is very VERY high. To find out what this company is (name, symbol, and how to buy it) and get on board before this happens…

Click Here Now!!!

The above two investments are two of the best opportunities I’ve seen in my entire investing career… However, I’m not done yet… I’ve got another THREE incredible inflation hedges coming later this week. And they’re just as amazing as the first two.

To pick them up as well as the two I described above, all you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter.

You’ll immediately be given access to Parts 2 and 3 of my How to Survive Hyperinflation report (which are online now).

You’ll also receive Parts 4-6 via email later this week as they’re released.

And you can keep ALL SIX of these reports EVEN if you decide Private Wealth Advisory isn’t for you and request a full refund in the first 30 days.

How’s that for some SERIOUS value?

To get started with your “trial” subscription to Private Wealth Advisory…

Click Here Now!!!

Good Investing!

Graham Summers

Editor In Chief

Gains Pains & Capital

For months now the commodities sector has been leading stocks. Of the commodities agricultural commodities were the market leaders: they began this rally back in June 2010, a month before Gold and two months Oil hit lift off:

With that in mind, the first warning we got of trouble in the markets came from the agri space which began to roll over in February 2011. They fell hard, forming a domed top and are now bouncing off support to retest their descending trendline since the Feb 2011 top:

If we break the descending trendline, we’re likely to re-test the Feb 2011 highs. Alternatively, if we break support, we’re going to $9.50 if not $8.50 in short order.

IF this happens, then expect stocks to take a BIG hit. So far they’re held up relatively well although as we all know by now, stocks are ALWAYS the last to “get it.” So the fact that stocks have held up while commodities (especially the economically sensitive ones like copper and oil) have taken a dive could in fact be a BAD thing as it predicts some serious pain for stocks.

On that note, the primary line to watch here is support at 1,325. If  we take out that line with conviction, stocks are going to 1,300 if not 1,250.

Indeed, the S&P 500 has formed a triangle pattern that predicts a potential breakdown to 1,260 if not lower. So be on the lookout for a potential SERIOUS correction coming shortly.

On that note, I’ve already got subscribers of my Private Wealth Advisory newsletter prepared for this with three quick trades to profit from a market meltdown. Already all three of them are up in the last few weeks and we’re just getting started.

To find out what they are… and get in on the gains….

Click Here Now!!!

Those who think stocks can’t collapse need to consider that the Fed actually WANTS this to happen: they need oil and other commodities to cool so the inflationary pressure drops. The Fed also need some kind of incentive to keep printing money. And a market collapse would serve as the perfect “SEE? We NEED to keep QE going to hold the system together” argument for later this year.

So expect stocks and the market to tank in the coming weeks. After that, QE 3 will be announced. And when that happens, inflation hedges will EXPLODE.

Which is why I’m ALSO preparing Private Wealth Advisory subscribers with a SIX-PART Special Report How to Survive Hyperinflation that details HOW and WHEN hyperinflation will hit the US as well as the names symbols and how to buy FIVE INCREDIBLE inflation hedges that will outperform even Gold and Silver when this happens.

I’m talking about inflation hedges that 99% of the investment world doesn’t know about: companies that own INCREDIBLE assets that the market is currently pricing at RIDICULOUS valuations.

The kind of assets larger firms will buy at a MASSIVE premium.

I’ve unveiling the first of these FIVE incredible inflation hedges tomorrow after the markets closes. After that the other four will be released over the next two weeks.

If you’d like to get in on these investments on the ground-floor the time to buy is NOW before inflation explodes in the US.

To take out a subscription to Private Wealth Advisory and get on board for our three “market collapse” trades as well as the FIVE incredible inflation hedges detailed in the How to Survive Hyperinflation Special Reports…

Click Here Now!!!

Good Investing!

Graham Summers

This is a continuation of an essay I wrote yesterday concerning the Fed’s moves during the financial crisis. As a recap, here are those moves again:

• The Federal Reserve cutting interest rates from 5.25-0.25% (Sept ’07-today)
• The Bear Stearns deal/ Fed taking on $30 billion in junk mortgages (March ’08)
• The Fed opens up various lending windows to investment banks (March ’08)
• The SEC proposes banning short-selling on financial stocks (July ’08)
• Hank Paulson gets a blank check for Fannie/Freddie but promises not to use it (July ’08)
• Hank Paulson uses the blank check with Fannie/ Freddie spending $400 billion in the process (Sept ’08).
• The Fed takes over insurance company AIG (Sept ’08) for $85 billion.
• The Fed doles out $25 billion for the auto makers (Sept ’08)
• The Feds kick off the $700 billion Troubled Assets Relief Program (TARP) with the Government taking stakes in private banks (Oct ’08)
• The Fed offers to buy commercial paper (non-bank debt) from non-financial firms (Oct ’08)
• The Fed offers $540 billion to backstop money market funds (Oct ’08)
• The Feds agree to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
• $40 billion more to AIG (Nov ’08)
• Feds agree to back up $140 billion of Bank of America’s liabilities (Jan ’09)
• Obama’s $787 Billion Stimulus (Jan ’09)
• QE lite (August ’10)
• QE 2 (November ’10)

I’m sure I left something out. But the above make it clear just how Ben Bernanke likes to tackle financial problems: printing money. On that note, we need to keep in mind just WHY the Fed did all of this: propping up the Big Banks and their gaping balance sheets.

The global derivatives market is completely unregulated and frankly no one knows how big it is. However, we DO know that US commercial banks alone have over $230 TRILLION in notional value derivatives on their balance sheets. Of this $230 trillion, 94%+ sits on just four banks’ balance sheets. They are:

The above chart reveals the derivatives exposure (in $ TRILLIONS) of the Fed’s darlings: the four banks that the Fed favored above all others during the 2008 disaster. As I wrote in the April 6 2011:

The Fed not only insured that they didn’t go under during 2008, but in fact allowed these firms to INCREASE their control of the US financial system.

Consider that JP Morgan took over Bear Stears. Bank of America took over CountryWide Financial and Merrill Lynch. Citibank and Bank of America were the only two banks to have their liabilities directly backed by the Fed ($280 billion for Citi and $180 billion for BofA).

Then there’s Goldman Sachs which was made whole from all AIG liabilities, received $13 billion in direct funding from the Fed, and was supported while ALL of its investment bank competitors either went under or were consumed by other entities, granting Goldman a virtual monopoly over the investment banking business (the firms that were merged with larger firms all laid off large portions of their employees and closed down whole segments of their business).

The ENTIRE 2008 episode was the result of the Credit Default Swap (CDS) market imploding (CDS, a type of derivatives, comprised about $50-60 trillion in value). And to claim that the Fed didn’t know why the Financial Crisis happened is a lie.

Indeed, as early as 1998, Ben Bernanke’s predecessor, Alan Greenspan, tol , soon to be chairperson of the Commodity Futures Trading Commission (CFTC), Brooksley Born, that if she pushed for regulation of the derivatives market it would implode the financial system.

Again, the Fed knew for over 10 years (possibly longer) that the derivatives market was a disaster waiting to happen. So believe me when I tell you than Ben Bernanke knew exactly what caused 2008.

Indeed, his actions make it clear just what he was fighting (a derivatives collapse) as 90% of his major moves were meant to prop up the four banks with the largest derivatives exposure.

Now, as stated before, 2008 was caused by the CDS market, which was $50-60 trillion in size. In contrast, the derivative market based on interest rates is $196 TRILLION in size.

In fact, derivatives based on interest rates represent 84% of ALL derivatives in the US.

So with that in mind, it is clear the Fed will be engaging in QE 3 and QE 4 and on and on for as long as it can. The reason? Because if the Fed loses control of the interest rate curve, it could trigger a systemic collapse that is FOUR TIMES as large as that of 2008.

So more money printing is coming. There’s no question of that.

On that note, if you’ve yet to take steps to prepare your portfolio for the coming inflationary disaster, our FREE Special Report, The Inflationary Disaster explains not only why inflation is here now, why the Fed is powerless to stop it, and three investments that absolutely EXPLODE as a result of this.

All in all its 14 pages contain a literal treasure trove of information on how to take steps to prepare AND profit from what’s to come. And it’s all 100% FREE.

To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

Good Investing!

Graham Summers.

PS. We also offer a FREE Special Report specifying exactly how to prepare for the coming collapse in the US stock market (inflation will NOT be positive for stocks for much longer).

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

Again, this is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

The QE 3 debate has been raging ever since the Fed announced QE 2 in November 2010. However, this debate is moot. The reason is because the Fed HAS to perform QE 3 in some form or another.

Indeed, the market has not operated without money pumps around $30 billion each. By June 2008, the Fed had done this 14 times to the tune of $200+ billion. Then came the $700 billion bailout in November 2008.

After this came QE 1 from March 2009-April 2010. This entailed roughly $50-80 billion in money pumps per month hitting the market. Even after QE 1 ended the Fed continued supplying the juice to the tune of $30 billion or so per month (though most commentators completely missed this).

Then we get QE lite, which results in another $50 billion per month, then QE 2 which brings it to $100 billion per month, and finally, at the beginning of 2011, the Fed starts pumping another $100 billion per month behind the scenes.

So, in the last two years, the Fed has gone from making monthly money pumps of $30 billion to monthly money pumps of $200 billion.

THIS is why I am certain QE 3 is coming. The Fed has done nothing but pumped money into the market since July 2007. Even during periods when it had no formal QE program in place it was STILL pumping money into the system.

However, the Fed has got itself in a bind. Having pumped so much money into the system, the Fed has created mini-bubbles in Silver and a few other commodities. Add to this the growing public outrage over the rising cost of living in the US and the Fed is finding itself the center of unwanted attention.

Consequently, Bernanke toned down his money printing talk and hinted at even worrying about inflation in the most recent Fed FOMC announcement. As a result of this, Silver and the other “bubbly” commodities have collapsed in a free-fall.

However, all of this is just idle posturing. Ben Bernanke has done only one thing since taking the helm of the Fed in 2006. And that’s monetary EASING.

During every part of his tenure as Fed Chairman, Bernanke has responded to all issues by loosening his monetary policy. Here’s just a brief recap of the moves he’s made since the Financial Crisis began:

• The Federal Reserve cutting interest rates from 5.25-0.25% (Sept ’07-today)
• The Bear Stearns deal/ Fed taking on $30 billion in junk mortgages (March ’08)
• The Fed opens up various lending windows to investment banks (March ’08)
• The SEC proposes banning short-selling on financial stocks (July ’08)
• Hank Paulson gets a blank check for Fannie/Freddie but promises not to use it (July ’08)
• Hank Paulson uses the blank check with Fannie/ Freddie spending $400 billion in the process (Sept ’08).
• The Fed takes over insurance company AIG (Sept ’08) for $85 billion.
• The Fed doles out $25 billion for the auto makers (Sept ’08)
• The Feds kick off the $700 billion Troubled Assets Relief Program (TARP) with the Government taking stakes in private banks (Oct ’08)
• The Fed offers to buy commercial paper (non-bank debt) from non-financial firms (Oct ’08)
• The Fed offers $540 billion to backstop money market funds (Oct ’08)
• The Feds agree to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
• $40 billion more to AIG (Nov ’08)
• Feds agree to back up $140 billion of Bank of America’s liabilities (Jan ’09)
• Obama’s $787 Billion Stimulus (Jan ’09)
• QE lite (August ’10)
• QE 2 (November ’10)

I’m sure I left something out. But the above make it clear just how Ben Bernanke likes to tackle financial problems: printing money.

So make no mistake…BIG inflation is coming. The Fed knows only one thing: printing money. On that note, if you’ve yet to take steps to prepare your portfolio for the coming inflationary disaster, our FREE Special Report, The Inflationary Holocaust explains not only why inflation is here now, why the Fed is powerless to stop it, and three investments that absolutely EXPLODE as a result of this.

All in all its 14 pages contain a literal treasure trove of information on how to take steps to prepare AND profit from what’s to come. And it’s all 100% FREE.

To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

Good Investing!

Graham Summers.

 

PS. We also offer a FREE Special Report specifying exactly how to prepare for the coming collapse in the US stock market (inflation will NOT be positive for stocks for much longer).

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

Again, this is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

 

 

 

 

 

 

 

 

This is a continuation of a series of essays I wrote concerning the global shift away from the US Dollar as reserve currency. If you missed those essays, a brief recap of the items listed were:

1)   China and Russia dropping the US Dollar for trade

2)   China ramping up trade with Brazil

3)   Saudi Arabia moving to strengthen trade with China and Russia

4)   China, Russia, Brazil, India, and now South Africa are moving to trade more in their own currencies (not the US Dollar)

5)   Singapore (major financial center in Asia) starting to trade yuan

 

All of these items are real and documented. And the pace of the move away from the Dollar as reserve currency is not slowing.

Indeed, it was just revealed that ASEAN+3 countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, and South Korea) are researching the prospect of a “common currency” similar to the Euro.

The significance of this development cannot be overstated. The primary question those who do not believe the US Dollar could lose its reserve currency status ask is: what will be the replacement?

For certain there is no one currency that could fit the bill. The Chinese yuan could not do it as China is not ready and in fact ready to suffer a housing and banking collapse. Russia’s economy is a disaster aside from a few key areas (Moscow, St Petersburg, etc), the Euro in its current form won’t even exist in a few years, and Japan is both an ecological and financial disaster (they’ve just announced a 1 QUADRILLION stimulus plan.

Thus, the idea that any one of these currencies could replace the US Dollar as reserve currency of the world at this time is absurd.

However, a common currency comprised of most Asian countries (the primary creditor nations and manufacturing base of the world) is a completely different story.

Understand, I am aware that common currencies in general are flawed (especially when you’re uniting a bunch of bankrupt aging countries like Europe). However, a common currency comprised of Asian countries would overcome be a much more viable alternative to the US Dollar as reserve currency of the world.

The reason for this is that a common currency in Asia would get past the individual risks of any one Asian nation’s currency (Thailand and Japan in particular are a mess) at least in the beginning.

True, ultimately a common currency there would prove as futile as the Euro. However, it would serve as a “stepping stone” in the process of finding a replacement of the US Dollar as world reserve currency.

What I mean is that should a common currency be introduced in Asia, it would probably work for about 10-15 years. By then we’re well into the 2020s if not the 2030s at which point it is quite possible China will indeed be in a place to provide a world reserve currency on its own.

I wish to stress that even if Asia doesn’t implement a common currency and the US Dollar remains the world’s reserve currency (I put the odds of this at 20%), we are still facing a debt default in the US which will result in the US Dollar dropping dramatically in value and ushering in serious if not hyper-inflation.

Indeed, most commentators fail to understand the real reason Weimar Germany suffered hyperinflation. Niall Ferguson’s book, “The Ascent of Money” explains that it was in fact a political mistake that ushered in hyperinflation:

Yet it would be wrong to see the hyperinflation of 1923 as a simple consequence of the Versailles Treaty. That was how the Germans liked to see it, of course…All of this was to overlook the domestic political roots of the monetary crisis. The Weimar tax system was feeble, not least because the new regime lacked legitimacy among higher income groups who declined to pay the taxes imposed on them.

At the same time, public money was spent recklessly, particularly on generous wage settlements for public sector unions. The combination of insufficient taxation and excessive spending created enormous deficits in 1919 and 1920 (in excess of 10 per cent of net national product), before the victors had even presented their reparations bill… Moreover, those in charge of Weimar economic policy in the early 1920s felt they had little incentive to stabilize German fiscal and monetary policy, even when an opportunity presented itself in the middle of 1920.

A common calculation among Germany’s financial elites was that runaway currency depreciation would force the Allied powers into revision the reparations settlement, since the effect would be to cheapen German exports.

What the Germans overlooked was that the inflation induced boom of 1920-22, at a time when the US and UK economies were in the depths of a post-war recession, caused an even bigger surge in imports, thus negating the economic pressure they had hoped to exert. At the heart of the German hyperinflation was a miscalculation.

The similarities between the US today and Weimar pre-hyperinflation are striking. As in Weimar, US fiscal authorities are not taking any steps to rein in their loose money policies. Similarly, the US Fed, like Germany’s financial elites believes that currency depreciation is a good thing.

Thus we have a rather frightening set-up for hyperinflation in the US: the largest emerging market players are moving away from using the US Dollar at the same time that US monetary authorities are engaging in disastrous policies similar to those employed by the men who brought hyperinflation to Weimar Germany.

I firmly believe the US will see serious (‘70s style inflation) if not hyperinflation within the next 2-3 years. It could come sooner depending on how the Fed’s policies play out.

On that note, if you’ve yet to take steps to prepare your portfolio for the coming inflationary disaster, our FREE Special Report, The Inflationary Holocaust explains not only why inflation is here now, why the Fed is powerless to stop it, and three investments that absolutely EXPLODE as a result of this.

All in all its 14 pages contain a literal treasure trove of information on how to take steps to prepare AND profit from what’s to come. And it’s all 100% FREE.

To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

Good Investing!

Graham Summers.

 

PS. We also offer a FREE Special Report specifying exactly how to prepare for the coming collapse in the US stock market (inflation will NOT be positive for stocks for much longer).

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

Again, this is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

 

 

 

 

 

 

The following is an excerpt from my paid newsletter Private Wealthy Advisory detailing the global shift away from the US Dollar as the world’s reserve currency. It also specifies what the most likely replacement of the US Dollar will be (a basket of Asian currencies). To find out more about Private Wealthy Advisory including my inflation hedges that will outperform even Gold and Silver during the future inflationary disaster Click Here Now.

This is a continuation of a series of essays I wrote concerning the global shift away from the US Dollar as reserve currency. If you missed those essays, a brief recap of the items listed were:

1)   China and Russia dropping the US Dollar for trade

2)   China ramping up trade with Brazil

3)   Saudi Arabia moving to strengthen trade with China and Russia

4)   China, Russia, Brazil, India, and now South Africa are moving to trade more in their own currencies (not the US Dollar)

5)   Singapore (major financial center in Asia) starting to trade yuan

All of these items are real and documented. And the pace of the move away from the Dollar as reserve currency is not slowing.

Indeed, it was just revealed that ASEAN+3 countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, and South Korea) are researching the prospect of a “common currency” similar to the Euro.

The significance of this development cannot be overstated. The primary question those who do not believe the US Dollar could lose its reserve currency status ask is: what will be the replacement?

For certain there is no one currency that could fit the bill. The Chinese yuan could not do it as China is not ready and in fact ready to suffer a housing and banking collapse. Russia’s economy is a disaster aside from a few key areas (Moscow, St Petersburg, etc), the Euro in its current form won’t even exist in a few years, and Japan is both an ecological and financial disaster (they’ve just announced a 1 QUADRILLION stimulus plan.

Thus, the idea that any one of these currencies could replace the US Dollar as reserve currency of the world at this time is absurd.

However, a common currency comprised of most Asian countries (the primary creditor nations and manufacturing base of the world) is a completely different story.

Understand, I am aware that common currencies in general are flawed (especially when you’re uniting a bunch of bankrupt aging countries like Europe). However, a common currency comprised of Asian countries would overcome be a much more viable alternative to the US Dollar as reserve currency of the world.

The reason for this is that a common currency in Asia would get past the individual risks of any one Asian nation’s currency (Thailand and Japan in particular are a mess) at least in the beginning.

True, ultimately a common currency there would prove as futile as the Euro. However, it would serve as a “stepping stone” in the process of finding a replacement of the US Dollar as world reserve currency.

What I mean is that should a common currency be introduced in Asia, it would probably work for about 10-15 years. By then we’re well into the 2020s if not the 2030s at which point it is quite possible China will indeed be in a place to provide a world reserve currency on its own.

I wish to stress that even if Asia doesn’t implement a common currency and the US Dollar remains the world’s reserve currency (I put the odds of this at 20%), we are still facing a debt default in the US which will result in the US Dollar dropping dramatically in value and ushering in serious if not hyper-inflation.

Indeed, most commentators fail to understand the real reason Weimar Germany suffered hyperinflation. Niall Ferguson’s book, “The Ascent of Money” explains that it was in fact a political mistake that ushered in hyperinflation:

Yet it would be wrong to see the hyperinflation of 1923 as a simple consequence of the Versailles Treaty. That was how the Germans liked to see it, of course…All of this was to overlook the domestic political roots of the monetary crisis. The Weimar tax system was feeble, not least because the new regime lacked legitimacy among higher income groups who declined to pay the taxes imposed on them.

At the same time, public money was spent recklessly, particularly on generous wage settlements for public sector unions. The combination of insufficient taxation and excessive spending created enormous deficits in 1919 and 1920 (in excess of 10 per cent of net national product), before the victors had even presented their reparations bill… Moreover, those in charge of Weimar economic policy in the early 1920s felt they had little incentive to stabilize German fiscal and monetary policy, even when an opportunity presented itself in the middle of 1920.

A common calculation among Germany’s financial elites was that runaway currency depreciation would force the Allied powers into revision the reparations settlement, since the effect would be to cheapen German exports.

What the Germans overlooked was that the inflation induced boom of 1920-22, at a time when the US and UK economies were in the depths of a post-war recession, caused an even bigger surge in imports, thus negating the economic pressure they had hoped to exert. At the heart of the German hyperinflation was a miscalculation.

The similarities between the US today and Weimar pre-hyperinflation are striking. As in Weimar, US fiscal authorities are not taking any steps to rein in their loose money policies. Similarly, the US Fed, like Germany’s financial elites believes that currency depreciation is a good thing.

Thus we have a rather frightening set-up for hyperinflation in the US: the largest emerging market players are moving away from using the US Dollar at the same time that US monetary authorities are engaging in disastrous policies similar to those employed by the men who brought hyperinflation to Weimar Germany.

I firmly believe the US will see serious (‘70s style inflation) if not hyperinflation within the next 2-3 years. It could come sooner depending on how the Fed’s policies play out.

On that note, I’m already preparing subscribers of Private Wealthy Advisory for hyperinflation with a SIX PART How to Survive Hyperinflation report detailing exactly how and when hyperinflation will hit the US.

I’m also unveiling FIVE new inflation hedges that will outperform even Gold and Silver in the coming months as inflation rips through the financial system.

I have to be honest, I’m even more bullish on these investments than I was on the first five (which showed us gains of 18%, 20%, 28%, even 42% in just a few months).

Part 1 of How to Survive Hyperinflation which details exactly how and when hyperinflation is already online now. And I’ll be unveiling Parts 2-6 over the next two week including the names, symbols, and how to buy FIVE new inflation hedges ALL of which will outperform Gold and Silver in the coming months.

And… you can even keep these reports if you decide Private Wealthy Advisory isn’t for you and request a full 100% refund during the first 30 days of your subscription.

To take out a trial subscription to Private Wealthy Advisory reserve your copies of How to Survive Hyperinflation Parts 1-6…

Click Here Now!!!

Graham Summers
Editor In Chief
Gains Pains & Capital

 

 

 

 

 

Many commentators are baffled that Ben Bernanke decided NOT to announce QE 3 a month ago.

The reason for this is obvious: the Fed only got about three months’ worth of positive economic movement from QE 2 and it blew gas and commodities through the roof doing it.

Remember, QE 2 was only just announced in November 2010. And anyone watching the US economic data knows that we took a sharp turn for the worse in Feb 2011.

So all told, we spent some $600 billion and only got about three months’ worth of improved economic data (not to mention that this “improved” data was massaged heavily).

So it’s pretty obvious why the Fed hasn’t announced QE 3 yet… it needs things to get terrible in the financial markets again so everyone will be clamoring for it to intervene.

Remember last year? QE ended in March. Then we get the worst May performance in over 40 years with stocks dropping like a brick… which then allowed the Fed to announced QE lite and QE 2.

Just like today.

The Fed is going to let QE 2 end in June. We will very likely see some kind of collapse in stocks start even before then. My personal expectation is the S&P 500 will drop to 1,100 or so at which time it will announced QE 3 with a “SEE? We NEED Qe in order to keep things afloat.”

And that’s when the US Dollar will REALLY collapse and inflation hedges will explode across the board.

The Fed is already setting this up. Their latest FOMC minutes make it clear that they are downplaying the negative news today so that when things get REALLY bad in a few months, they can act surprised and push for a MASSIVE QE program.

So in the near-term deflation is now the biggest risk. It may only be for a month or so, but it’s coming (commodities’ and the US Dollar’s performance over the last two weeks were the warm-up. And then comes the REAL fireworks.

… which is why I’m already preparing subscribers of my Private Wealth Advisory newsletter for this with three investments that will all lock in double digit returns in a matter of days when deflation hits.

Indeed, all three of them are up sharply in the last few weeks alone… and we haven’t even gotten to the REAL deal for the markets yet.

To take action now so you’ll profit from the coming round of deflation while ALSO preparing your portfolio for hyperinflation (which will erupt as soon as the Fed announces QE 3 later this year), all you need to do is take out a trial subscription to my Private Wealth Advisory newsletter.

You’ll immediately be access to my latest issue (published just one hour ago) featuring our three new “deflation trades.”

You’ll also receive my SIX PART How to Survive Hyperinflation report detailing exactly how and when hyperinflation will hit the US Dollar and which FIVE investments will outperform even Gold and Silver when it does.

Heck, you can even keep these reports if you decide Private Wealth Advisory isn’t for you and request a full 100% refund during the first 30 days of your subscription.

To take out a trial subscription to Private Wealth  Advisory, and take action to prepare your portfolio from both deflation (now) and hyperinflation (coming)…

Click Here Now!!!

Graham Summers
Editor In Chief
Gains Pains & Capital