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  • US Dollar Collapse: Inside Job: S&P Downgrades US Long Term Debt to AA+, Outlook Negative ILC.v TNR.v, CZX.v, RM.v, NGQ.to, GRC.to, ASM.v, VTR.to, GBN.v, LMR.v, LIT, TSLA, LI.v, SGC.v, AMM.to, SQM, FMC, F, GM, NSANY, BYDDY, HEV, AONE, AVL.to 0 comments
    Aug 18, 2011 7:25 PM | about stocks: GLD, NEM, RGLD, ABX, FCX, MCP, REE, SQM, FMC, LIT, BHP, VALE, RIO, TCK, KGC, AUY, BVN, SSRI, SLW, SLV
      
     
      Everybody knew about the US Mess before, somebody knew about coming Downgrade for sure last week during the Sell Off and now we all have been told officially. Insider Job by S&P has finished US Dollar Reserve status officially now. China calls for austerity and adult supervision of the US Dollar. Nobody will buy the bluff about "strong dollar policy" anymore - austerity during Election Cycle is not the way to be reelected. Nothing has changed since we have put our Catalyst piece in place fundamentally - we only have to share with you our amusement with Washington politicians' desire to destroy your own country for the political gain.
      We all have two choices now - try deflation with the strong dollar, riots on the street and total collapse within few shot years or we will see the coordinated QE3.0 unlished to keep the insolvent financial system running. We have seen the beginning already: Oil release from SPR, SNB and BOJ interventions to prop up the dollar and Run to Treasuries last week. Mother Bear in Treasuries will be continued. After initial panic the dollar will go down - now it will be important to manage its gradual debasement. This is the only way to inflate out Debt, increase Tax revenues without real growth in real Inflation adjusted GDP and make export of US goods and services viable again. We will not be surprised to see the general markets up by the end of the year...in nominal terms. If you would like to know the real picture just check the value of DOW divided by price of Gold. Do not do it with your house price - you will be really depressed.
      Once the panic settles we will see flight to the Real assets, China will not be able to diversify all 1.2 Trillion holdings in US Treasuries, but the gradual transition will be in place - new world currency will be the Hard one based on Gold, Silver, Copper and access to strategic commodities like Oil, Lithium and REE. We are expecting that first the gold Majors will properly reflect the Gold valuation in their market caps and after that liquidity will go downstream into the Gold and Silver Juniors. Copper juniors will be at the mercy of the M&A consolidation game again and Lithium will show its truly strategic status with every uptick in the Oil price again. 
      James Dines can be right on the money again with his calls this time. And we will be honest with you - we just do not know what to do if political circus will bring US to the abrupt end without the proper glory of the Rome Empire in its final days.
      Do we all have the chance to make it through? We do not know, but still betting on the voice of Reason and that the last war could be really the Last One. Alternative is to mind its own business, close tax loopholes, but give the Tax breaks to the new strategic industries, get out of Oil dependence and transform the country with Energy Transition to renewables and electrification of transportation. Money will be printed anyway, the question is whether it will go to the bail outs for bankers again - please do not mistaken it with banks and your deposits - or in the new manufacturing infrastructure to rebuild the economy.



     
     
      "We can tell you already that this correction in the Gold market will be very different - for the first time we have Central banks buying gold. You have noticed that we are not writing so much on Gold and Silver these days - now it is in the mainstream and you can find a lot of information on these subjects. We will always follow the major turning points. There is No at this time - all fundamentals are firmly in place for the Bull to be in place in Gold and Silver markets.
      We are riding these Bulls for ten years now and it will be important to note here, that even if we have another ten years in place it will be different from the very beginning. One thing is to buy Gold below 300 dollars and Silver below 5 dollars and another one is to step in now. We will personally demand more potential upside for the risk undertaken - junior miners will provide it. In this new stage you have to have multiple in place to increase your odds to succeed: underlining commodity multiplied by growing Resources in the development stage - any special company-based catalyst will be always in plus.
      If we are talking about James Dines and his views on the markets these days, we have to mention his conviction about the Rare Earths generational opportunity. Many plays in REE have already enjoyed almost parabolic rise within last 12 months, but there are still some just coming on stage.
     
     
     
      We will share today with you the last very important observation before forwarding you to the recent James Dines interview. Our Catalyst and everything what is driving Gold and Silver all these years are driving the New - still under the radar screens of most investors - Generational Bull Mega Trend. This Mega Trend is Energy Transition of our World to the post carbon society. You are more than welcome to explore it here on this blog.
      All these games with QE and debasing the US Dollar will lead to the inevitable - Inflation, it is the only way to run on par with the Debt in order to keep the insolvent financial system running. During this exercise the fundamental shift will have to occur - transition to the new Energy Diet for our society. Oil will be pushed out of reach for the most economies due to the Peak Oil multiplied by Inflation which will push prices of all Real Assets, including commodities higher. 
     If rising Gold could be still portrayed to the crowd as the fancy of the cocktail discussions and headache for the FED and their buddies among the millionaires - who is preoccupied with Wealth Preservation - the rising Gas prices are hitting to the core of our society. It is all about mere survival for the millions. It is the Institutional Risk which can break the canvas of all social structure within months of Hyperinflation.
     
     
     
      It is inevitable - the move out of Oil - we can chose now and try to make it more or less manageable and smooth and we have technology to do it. Electric Cars provide this opportunity. Price of Oil, properly accounted for all wars to keep it running and all military expense to protect the ocean supply lines is already much higher than the 100 dollars per barrel. This move will happen anyway, whether particular companies and their hired politicians want it or no - the question is when and at what price. The longer we all wait the higher the total cost of this transition will be.
      For us it is the same situation as with Gold and Silver ten years ago - the forces of supply and demand and real economics will be driving this Bull, which can not be controlled even by Almighty FED. According to the admission of Mr Bernanke: "FED can not print Oil."
      Listen to the James Dines and study your post carbon future with strategic commodities at the base of the Next Industrial Revolution: Rare Earths and Lithium. 
     
     
     
      It is not only about money this time - the question is how are we all going to survive? Even the best politicians can not make it without us this time - we do not have luxury of time left. Do your part: start asking questions, spread the word, buy Electric Car or support the transition in your community.
      In the investment world new fortunes will be made on this trend and if you will discount the recent OTC Lithium Hype in the U.S. there are solid companies and serious players coming into the sector. Study the fundamentals, research the ideas, make your DD and have a great journey! 
      If you need any further conviction, just have a look at the M&A picture and Who is Who in Lithium development business now:
     
     
     
     
     
     
     
     
     

        
     
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    Themes: US Dollar, Treasuries, Gold, Silver, Lithium, Oil, Rare Earths Stocks: GLD, NEM, RGLD, ABX, FCX, MCP, REE, SQM, FMC, LIT, BHP, VALE, RIO, TCK, KGC, AUY, BVN, SSRI, SLW, SLV
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