The Real Inflation Rate and What to Do About It

Dennis Miller polled his readers some weeks ago to find out what they think the real inflation rate is. They also shared their real life examples demonstrating that it’s much higher than the rate reported by the government. 

A little over a month ago we did a quick poll on what our readers thought the real rate of inflation was. The idea for polling our readers came from the disconnect between the official government rate of around 1% and what some had told me they were experiencing first hand.

Thank you to everyone who participated, particularly those who shared frustrating examples of the ever-increasing cost of living. There were close to 100 pages of reader comments, and I read them all... every single word.

This week's column is primarily written by you, our loyal readers. You will recognize the reader comments as they are indented. Here is one example to get us started:

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Judge refuses to overturn uranium mining ban

 

PHOENIX — Conservation groups celebrated a federal judge’s ruling that denied a motion to overturn the Obama administration’s ban on uranium mining on 1 million acres of public land near the Grand Canyon.

The decision by U.S. District Judge David Campbell in Phoenix rejected arguments from uranium mining interests that the federal government couldn’t

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Marin Katusa: Fortune Favors the Bold Energy Investor

Tough markets have the average investor crying uncle, but now is not the time to lament losses—it's time to bargain shop, suggests Marin Katusa, senior editor of Casey's Energy Dividends. China is snatching up energy prospects around the world in anticipation of ever-tightening oil markets. Meanwhile, there is already money to be made in international markets where consumers are paying double the price for U.S. natural gas. In his interview with The Energy Report, Katusa says bold investors who target the right companies could "get a Rolex for the price of a Timex."

The Energy Report: Marin, in your recent 2013 Energy Forecast, you wrote that the earth is running out of accessible supplies of oil, uranium, coal, metals and virtually every other resource—with the emphasis on "accessible." What does the loss of accessible energy resources mean for the margins of companies pulling the oil, gas and uranium out of the ground?

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Is The United States The Next Cyprus?

Today one of the wealthiest people in the financial world warned King World News that investors have to worry about the Cyprus called the United States.  Here is what Rick Rule, who is business partners with billionaire Eric Sprott and the CEO of Sprott USA, had to say about what investors should expect going forward:

 

Eric King:  “Rick, in the aftermath of this, and obviously it’s still ongoing, but your thoughts on this Cyprus catastrophe and what it means going forward, because people are frightened here.”

Rule: “Well,

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Trapped Longs in the Gold Market

The following article is an excerpt from one of our past updates “Gold Beaks Down, Tests $1600”, sent to our subscribers February 18^th 2013, when gold was $1611 (now $1580) and the HUI miners index was 379 (now 349). We believe that this information is very relevant in the current market situation, as well as for future situations, and have therefore decided to publish this piece for the perusal of the general public.

Trapped Longs

Longer term subscribers will recall us writing about “trapped longs” on a number of occasions before.  We would like to explain the concept again for the benefit of new subscribers and to demonstrate how this applies today gold market, particular to the mining stocks. The concept of “trapped longs” simply applies to market positioning where the market is long, wants to sell, but can’t (or won’t). Of course you can get trapped shorts as well and the same dynamics apply.

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In Japan, two years after Fukushima nuclear accident, work resumes on new plant

 

OMA, Japan — At the remote northwestern tip of a snowy peninsula, beyond a small road of fishing shacks and empty one-story homes, 600 construction workers and engineers are building a brand-new nuclear plant for a country still recovering from the most severe atomic accident since Chernobyl.

The main reactor building is already at its full height,

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Turmoil in the Metals Markets, SK OptionTrader Banks 212.50% Win

The gold bull market may be over, gold stocks are significantly underperforming, but SK Options Trading has just made 212.50% in 17 days. The benefit of being an SK OptionTrader subscriber is access to the information that so far this year has generated a return of 17.27% on our model portfolio, and trades that have made up to 212.50%. All of this performance has been through a period of turmoil and uncertainty in the metals markets.

While silver fell more than 6% from February 1^st to the 15^th, Hecla actually rose around 0.5%; with many of their major mining ventures in silver and the consistently poor performance of gold mining stocks in recent years, we believed that the share price was due for a major fall. This led us to signal our subscribers to buy HL Sep 21 '13 $4 puts at $0.16.

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SK Options Trading Makes Another 7.85% For Subscribers

Those who are regular readers will be aware that we have long been of the opinion that gold stocks are a poor way to access the gold market, as shown by their underperformance year after year over the last 5 years. This underperformance being the case, we decided to take a position that would simply be short the mining part of gold mining stocks.

To execute a trade that would be short the mining part of the gold mining sector, and not gold itself, we signalled to our subscribers to “sell GDJX shares and buy an equal dollar amount of GLD shares at $141.32”. This pair trade meant that we were long gold, but short the junior gold mining stocks; the resultant was that the position was effectively a short on the mining part of these junior stocks.

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The Coming Crash in the Bond Market

It is my contention that the 70-year debt supercycle has come to an end.

To put the current financial situation in perspective, here's a long-term history of the debt-to-GDP ratio, which reached a record high at the beginning of the current crisis. It was a dramatic change in 2009, unlike anything since the aftermath of the Great Depression.

The highest the debt-to-GDP ratio had previously been for the United States was 301% at the bottom of the depression in 1933 when GDP collapsed and debt was high. The level became unsustainable in 2009, despite low interest rates. Weak borrowers were signing up to finance houses that they thought would increase in price forever. The point of the chart is that this downturn is different from all the recessions since World War II.

Total market debt includes

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212% Profit in Only 17 Days For SK OptionTrader Subscribers

This week SK Options Trading is proud to announce its biggest winner yet, as we close a trade with over a 212% profit in under 3 weeks! This beat out our previous record of 197.14% in August 2011.

We believed that Hecla Mining had yet to catch up to the price falls in precious metals in early February, and that it would be particularly vulnerable to a drop in silver prices based on rigorous analysis of their mining projects.

To take advantage of the impending fall, we signalled to our subscribers to “buy HL Sep 21 '13 $4 puts at $0.16 with 5% of our capital allocated”; a trade that we believed offered the best risk-reward dynamics.

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