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Graham Summers Weekly Market Forecast (Deflation is Here Edition)
I’ve been warning that the markets were on the verge of another round of Deflation. By the looks of things, it’s here with the US Dollar breaking out of its massive wedge pattern:
The ultimate target for this pattern is the mid-80s. So consider this latest breakout the first leg up of a much larger move that will affect all other asset classes in a big way.
In order for a move of that caliber to occur in the US Dollar, we’ll need to see a full-scale crisis to hit the markets (the last two US Dollar rallies occurred during the 2008 collapse and the 2010 Euro Crisis). So expect greater downside risk in stocks in the near future.
On that note, the S&P 500 has broken out of its bearish flag formation to the downside. The ultimate target for this pattern is at 1,000: 13% DOWN from here. Considering that we’ve already wiped out a year’s worth of gains in one month, this should be a MAJOR warning that we’re not done yet.
If you have yet to prepare yourself for what’s coming, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
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Good Investing!
Graham Summers
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Foir those of you who were left wondering just how high was the $USD back in 1980s!
http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/charts...
All I need to remember is the price of oil. The problem with the DXY is that it uses other worthless fiat to judge it. Dollar Vs. Oil, or the dollar vs. gold is the better metric. It is best to use real assets when judging the destruction of the fiat ponzi.
There has been massive deflation in the system for decades. It is not a matter of inflation vs deflation, or bull vs. bear; these comparisons are trite. There is so much inflation and deflation in the system that the only moves that are worth noting are if you want to day trade, and is anyone day trading? I hope not. There are better things to do, like hang out with your friends and family.
The system is purging itself, and it is capitulating violently. Deflation, inflation, it does not really matter. What is the price of a house when dollars are not worth anything? The system is trying to find equilibrium using skewed metrics. It will fail.
The dollar is not a real asset. It is not monie. It has less value than puka shells. So this articlle is trying to convince me to invest in paper? Is that it? I would rather invest in Michael Jordan basketball cards and comic books.
I was just posting this morning that it was about time for another Phoenix Capital "Deflation/Depression For Idiots Kit" infomercial.
Well, here it is! Whoopeeee!!!
ZH is getting almost as predictable as the market.
To those who think that deflation is impossible with all the money printing:
You are wrong, Japan is proof, 2008 is proof.
The reason there is deflation is that money is being destroyed by all the debt write downs.
The trillions that have been printed will not create hyper-inflation until the money comes out of the US bonds because that's where it is parked. As long as it stays there it is sterile !
Your thinking is flawed. US bonds are safe yet the have no intrinsic value?
As long as we all keep pretending we are safe! Close your eyes and pretend! Pretend!!!
Who junked me? Damn these trolls! Can't see 'em, but I can smell 'em!
the dollar did the same last fall which brought about more QE and sank your 3X shorts. old story, new spam
Graham,
Please stick your deflationary bullshit up your inflating asshole already. No economy with a government-issued purely fiat currency has EVER experienced deflation, but ALL of them have experienced currency depreciation and/or eventual currency collapse in the face of the same levels of exponentially rising, unsustainable governmental debt that almost all Western nations have taken on today. Go get a room with Douchinger already --- you both are complete asshats.
But his advice is free, Akak! It's free! Free! Free! Free! Free!
And we got exactly what we paid for!
Wow, touchy, are we? I suggest you sit back and watch as the dollar runs up pretty much as Graham says it will. It makes sense, no?, that with Europe falling apart and them passing laws against buying gold, that people are gonna run with their money, somewhere. This is probably why we don't need no QE3 at the moment, and why we're going to have a period of deflation, within the total context of an overall hyperinflationary collapse. Nothing goes straight down, or straight up.
What is happening is very complex, and there will be many movements in the other direction, while maintaining the overal race to the bottom.
I am touchy, because I am sick to death of hearing about the nonexistent "threat of deflation", a propaganda line and smokescreen purposely spread by the powers-that-be to confuse the masses and deflect attention away from the one REAL threat to investors and savers, that of the collapse of the entire rotten financial and monetary status-quo paradigm, and the certainty of future fiat currency devaluation and/or collapse yet to come.
There are two ways to inflate a fiat currency:
1.) Banknotes
2.) Bank Credit
Over the past several decades, the U.S. has been inflating mostly through credit expansion, not banknote printing.
Banknote inflations usually end in runaway inflation (e.g. Continental America, Weimar Germany, 2000-2009 Zimbabwe).
Credit inflations usually resolve through defaults, debt implosion, and deflation (e.g. 1929 USA, 1989 Japan).
Many commodities peaked 3 or 4 years ago. Many more peaked earlier this year. Only a small handful have gone to new highs in the past few weeks.
Meanwhile, although M2 has shot up, the broader M3 peaked in 2009.
The Dow went from 12,800 to below 11k and the DXY was at 77 this morning. That is a 10% difference in the trades. So when investors were running away from equity, they did not run to the dollar. The dollar is no longer a safe haven.
Look, the dollar has no intrinsic value. NONE. It is an IOU and nothing else. Gold is soaking up the liquidity, and soon silver will make a run as well. Gold peaked production in 2000, platinum in 2009, oil did last year, and soon silver will. If demand stays strong, which it will considering Keynesian policy dictates bloating the fiat ponzi, then the price of these assets will rise. Since they trade inversely to the dollar.....get it? Get it?
No world economy has every had 300+ Trillion dollars in collapsing <strongcredit</strong>... when the actualy fake money (credit) disapears the kind of fake but still tangible peices of paper (fiat dollars) its backed by increases in value due to less overall fake fake money being made available...
I lubs me some deflation. Particularly because I know it pisses off the debtor class and Bernank. Gold gets cheaper too. Lots to like.
In deflation money becomes worth more in terms of goods and services, many here, me included take the view that gold is money and therefore gold will not get cheaper but goods and services will continue to become cheaper in terms of gold, also the Fed does not like deflation so I would expect them to print more dollars especially as an 80 on the DXY will hurt US exports a lot, and that will push gold higher, so I expect more margin hikes until they don't work any more.
First
Let me be the first to say I acutually like this guy. He's been pretty spot on of late.
So, howcome I am first, for the first time ever, and then some other guy who actually posted 5 minutes later gets moved to the top. Corruption, conspiracy? What?
I think you sat down in the wrong place, the kids table is over there.
[points to yahoo boards]