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The Delusions of the Bulls, Central Banks, and CPI

Phoenix Capital Research's picture



Having moved to the sidelines due to the uncertainty of the US Presidential election and the Fiscal Cliff negotiations (as well as the holidays), investors are beginning to creep back in the marketplace.


And they’re in for a surprise.


First and foremost, the commitment of traders report indicates that investors are more bullish now than at any point since 2007. This is truly extraordinary given the sheer magnitude of the issues the global economy is facing. The only clear reason for being that bullish at this point is belief that the Central Banks will continue to flood the system with liquidity pushing stocks to new all time highs.


The problem with this belief is that the Central Banks have reached the limits of their policies. The ECB promised unlimited bond buying under the conditions of a country formally requesting a bailout.


No country in Europe wants to do this because it would mean A) opening their books to EU officials (along with the realization that said books are cooked B) any formal EU bailout requires austerity measures which Greece has proven are a disaster for politicians.


On the other side of the pond, the US Fed publicly announced QE 3 and QE 4, giving the bulls the belief that the markets are primed to soar to new highs. However, privately, the Fed balance sheet is virtually unchanged year over year. And the latest Fed minutes reveal that dissent is growing at the Fed regarding the efficacy of QE. This, combined with discussions of spending cuts in the US, has kicked Gold and Silver down in the last few months.


So, we have rampant bullishness in the markets at the same time that Central Banks are finding political and professional limitations to their monetary tools. Moreover, globally the economy is contracting again. It never really recovered all that much, but when Central Banks pump $10 trillion into the system that money has to go somewhere.


Indeed, inflationary pressures are on the rise globally. We can see this with wage protests and civil unrest in the emerging market space, higher costs and lower profit margins at multi-national corporations, and consumers paying higher prices or equal prices for less product at the supermarket.


How many times have you opened a new canister of coffee, a box of cereal, or some other item of produce to see that it’s only 75% full? That’s not chance. Inflation doesn’t just explode into a system… it creeps in at first. And corporations are already implementing strategies (small packages, higher prices, etc.) to deal with it.


One of the key items to remember as investors is that the market doesn’t always reflect reality. Oftentimes it reflects belief. And belief can prove to be delusion. Which is why investors today are super-bullish on stocks (which will suffer from inflation) and less enthusiastic about Gold and Silver (which inflation benefits far more).


As medical costs, food, energy, and other staples show, the inflation genie is already out of the bottle. And it will only be getting worse going forward. What Gold and Silver do in the short-term can have nothing to do with what’s coming down the pike in the intermediate and long-term.


With that in mind, the global markets have handed everyone a tremendous opportunity to begin positioning their portfolios now while things are still relatively calm. We’ve just had about two months of the world essentially being put on “hold” due to the US Presidential election, the elections in China, and the holidays.


That period is now ending and the issues that had already begun to unfold in 2012, namely, inflation worldwide, a debt crisis in Europe, and ongoing economic pain in much of the developed world, are already beginning to rear their heads again.


Smart investors are taking advantage of the lull in action to position themselves accordingly. On that note, if you’ve yet to prepare for Europe’s BIG collapse…we’ve recently published a report showing investors how to prepare for this. It’s called What Europe’s Collapse Means For You and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.


This report is 100% FREE. You can pick up a copy today at:


Best Regards,

Graham Summers


PS. We also offer a FREE Special Report detailing the threat of inflation as well as two investments that will explode higher as it seeps throughout the financial system. You can pick up a copy of this report at:







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Mon, 01/07/2013 - 22:21 | Link to Comment dumpster
dumpster's picture

Delusions of the phoenix

crash and burn

Mon, 01/07/2013 - 18:37 | Link to Comment willwork4food
willwork4food's picture

How about GUN & BEER SALES GOING THROUGH THE ROOF!!!,0,1916739.story


Mon, 01/07/2013 - 16:17 | Link to Comment XtraBullish
XtraBullish's picture wll show YOU how to profit from the next worldwide collapse in EVERYTHING! (Shows you how to steal cars and abuse Foodstamps)

Mon, 01/07/2013 - 17:30 | Link to Comment Irelevant
Irelevant's picture


Graham is boring with this. Graham change the fucking subject! Speak about shit you actually know.

Mon, 01/07/2013 - 16:42 | Link to Comment pine_marten
pine_marten's picture

LOL Xtra!!!

Mon, 01/07/2013 - 16:03 | Link to Comment devo
devo's picture

I agree, this is a lull and buying opportunity.

PS. With regard to products, it's called "Slack fill", and people are starting to notice and complain, which means price hikes are next. This is one type of hidden inflation.

Mon, 01/07/2013 - 15:53 | Link to Comment The Trade Group
The Trade Group's picture

Graham, I thought Europe was going to fall apart last summer? How long will you continue to post this BS....

Tue, 01/08/2013 - 01:01 | Link to Comment Element
Element's picture

If we could lump it all together and fling it into orbit we'd have a second moon. It might even effervesce its own atmosphere and support a dreary sort of space mildew.

(I'm trying not to think about what that could potentially evolve into ...)

Mon, 01/07/2013 - 22:48 | Link to Comment Treeplanter
Treeplanter's picture

April May and no more QE.  Bad trades.

Mon, 01/07/2013 - 16:52 | Link to Comment silverserfer
silverserfer's picture

Until Graham understands what shadow banking and circle jerking are. Typical with deflationist conservatives they think that money is finite and debt HAS to be repaid.

Mon, 01/07/2013 - 14:29 | Link to Comment SAT 800
SAT 800's picture

The position I mentioned here a couple of days ago; short the ES Mar.'13 contract on the CME is good $600 this morning; off to good start. I think the stock market going to get a reality check in the next month or so.

Mon, 01/07/2013 - 14:19 | Link to Comment Fuh Querada
Fuh Querada's picture

How many times have you opened a 100% FREE report from Phenix Crapitall Research, a box of cereal, or some other item of produce to see that it contains 200% bullshit? That’s not chance, either.

Tue, 01/08/2013 - 00:44 | Link to Comment Element
Element's picture

Actually never, not even looked. :)

Mon, 01/07/2013 - 14:06 | Link to Comment digitlman
digitlman's picture


Mon, 01/07/2013 - 19:42 | Link to Comment Tanz der Lemminge
Tanz der Lemminge's picture

Wrong forum

Do NOT follow this link or you will be banned from the site!