Curried Wealth Building
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April 2, 2011
Issue 141  -  Inflation Dead Ahead
 
 
The above famous pictures of Weimar Germany show two scenes that could never happen in today's world.  At least not like THAT.  You see today the money digital.  Almost ghost like is how I describe it because most of the time one never sees it.  Swipes of cards and signatures, pins entered on electronic boxes, paychecks never seen, these things lead you down a garden path.  Unfortunately, at the end of the garden is a nasty surprise.  When there is NO limit to how much of something that can be produced at zero cost, then eventually too much will be produced.  In the end it leads to only one destination, price inflation.  For a while, it can be hidden:
 
 Food Inflation Kept Hidden in Tinier Bags
 
Published: March 28, 2011

Chips are disappearing from bags, candy from boxes and vegetables from cans.

Nabisco's Fresh Stack package of saltines, top, contains about 15 percent fewer crackers than the old package.

As an expected increase in the cost of raw materials looms for late summer, consumers are beginning to encounter shrinking food packages.

With unemployment still high, companies in recent months have tried to camouflage price increases by selling their products in tiny and tinier packages. So far, the changes are most visible at the grocery store, where shoppers are paying the same amount, but getting less.

For

Lisa Stauber, stretching her budget to feed her nine children in Houston often requires careful monitoring at the store. Recently, when she cooked her usual three boxes of pasta for a big family dinner, she was surprised by a smaller yield, and she began to suspect something was up.

"Whole wheat pasta had gone from 16 ounces to 13.25 ounces," she said. "I bought three boxes and it wasn’t enough — that was a little embarrassing. I bought the same amount I always buy, I just didn’t realize it, because who reads the sizes all the time?"

Ms. Stauber, 33, said she began inspecting her other purchases, aisle by aisle. Many canned vegetables dropped to 13 or 14 ounces from 16; boxes of baby wipes went to 72 from 80; and sugar was stacked in 4-pound, not 5-pound, bags, she said.

Five or so years ago, Ms. Stauber bought 16-ounce cans of corn. Then they were 15.5 ounces, then 14.5 ounces, and the size is still dropping. "The first time I’ve ever seen an 11-ounce can of corn at the store was about three weeks ago, and I was just floored," she said. "It’s sneaky, because they figure people won’t know."

In every economic downturn in the last few decades, companies have reduced the size of some products, disguising price increases and avoiding comparisons on same-size packages, before and after an increase. Each time, the marketing campaigns are coy; this time, the smaller versions are "greener" (packages good for the environment) or more "portable" (little carry bags for the takeout lifestyle) or "healthier" (fewer calories).

Where companies cannot change sizes — as in clothing or appliances — they have warned that prices

will be going up, as the costs of cotton, energy, grain and other raw materials are rising.

"Consumers are generally more sensitive to changes in prices than to changes in quantity," John T. Gourville, a marketing professor at Harvard Business School, said. "And companies try to do it in such a way that you don’t notice, maybe keeping the height and width the same, but changing the depth so the silhouette of the package on the shelf looks the same. Or sometimes they add more air to the chips bag or a scoop in the bottom of the peanut butter jar so it looks the same size."…

This is easy in the beginning (hiding the inflation), but not forever.  People will eventually notice no matter what the main stream press or government reports.  That time is now.  People are noticing.  This, even though the powers that be are continuing to hide the truth in regards to just about everything:
 
 Treasury Sells $29 Billion In Bonds, Bringing Total Settled US Debt To 14.311 Trillion, More Than The Debt Ceiling
 
 
Now bear with us for a second: the most recently disclosed total debt was 14,211,567,662,931.23 as of March 28. This excludes the settlement of all of this week's auctions which amount to $35 + $35 + $29 billion (including today) or $99 billion. Adding the two amounts to $14,310,567,662,931.23. As a reminder the debt ceiling is $14,294,000,000,000.00. In other words, the total US debt just passed the debt limit - break out the Champagne! Granted there is a buffer of $52.2 billion between the total debt and the debt actually subject to the ceiling, meaning that America is not in default, yet. Therefore, the total debt subject to the limit assuming full settlement right now is $14,258,341,662,931. Which means the US is now $35.7 billion away from a bona fide breach of the debt ceiling. Yes, there are some caveats, and it is possible that there will be an accelerated redemption of bills over the next few days, pushing the total debt slightly lower, but readers get the idea. Complicating things, the SFP unwind is complete with just $5 billion in 56 Day Cash Management Bills on the books, and no longer a buffer of debt ceiling extension.

Which brings up the question: with a government shut down looming any minute, shouldn't Congress be tackling the issue of what happens when the US enter technical default some time in the second week of April when the next battery of approximately $67 billion in new bonds are issued, which also happens to be just as tax rebate (and thus outflow) season peaks?

So we are now OVER the debt limit???  But nobody reports it?  Can control of media be this complete?  Yes, it can, and never doubt it.  Also, never doubt the control of precious metals markets.  This is a RIGGED game.  Start playing with that knowledge.  Stop playing with the party line rules.  That's what THEY want you to do.  That will lead to being a member of the crowd.  You don't want to be in the crowd.  Separate yourself and look around.  Note the writing on the wall:
 

European Inflation Unexpectedly Accelerates to Fastest Since October 2008

By Simone Meier - Mar 31, 2011 5:11 AM ET Thu Mar 31 09:11:57 GMT 2011

European inflation unexpectedly accelerated to the fastest in more than two years in March as European Central Bank policy makers prepared to raise rates to keep price pressures from feeding into wage demands.

 
Isn't that interesting?  Inflation is accelerating in Europe.  Hmmmmmm......and not here?  Why are the numbers from the U.S. not accelerating?  They're rigged, that's why.  Europe is much more reserved in their monetary policy than us.  They almost have to be more honest because they are now a union of countries and its harder to get everyone to lie, especially if some of the countries are acting more prudently.  This means we are accelerating as fast or faster than Europe, and you know what, a VERY large company is finally admitting it:
 
 
U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday.

The world's largest retailer is working with suppliers to minimize the effect of cost increases and believes its low-cost business model will position it better than its competitors.

Still, inflation is "going to be serious," Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY's editorial board. "We're seeing cost increases starting to come through at a pretty rapid rate."
 
So who are going to believe?  The Walmart CEO or the federal government?  Yeah, me too.  I firmly believe that inflation is the goal because the alternative is debt default and that must be avoided at all costs. 
 
If inflation is the goal, what better way to promote it than a war: 
 

US Announces ‘Support Role’ as NATO Leads Libyan War

Gunships 'On Standby' and Tomahawk Strikes to End

by Jason Ditz, April 01, 2011
TheObama Administration is insisting today that it is moving toward a ‘support role’ in the Libyan War, not long after NATO assumed formal command of the conflict. The pledge comes as Congressmen are expressing increasing disquiet about the war.

Officials say they are moving warships and warplanes to “standby” mode, and will soon pull the Tomahawk missiles entirely out of the conflict. The standdown will take effect as of Sunday.

 
The idea that we will be "on the side" or on "standby", when we have over 50% of all the military assets in the world is a joke.  Wars create inflation and we need inflation.  Get prepared.  What's the best way to prepare?   Well.....let me think....oh yeah, precious metals.  How are those two commodities doing:
 

Gold, Silver Set New Highs; Silver Gains 22% In Q

  • By Murray Coleman

    The drumbeat goes on.

    Violence in the Middle East and armed uprising in North Africa along with continued sovereign debt concerns in Europe pushed gold futures Thursday to a record close.

    Futures contracts for May delivery increased $15 to $1,439.90 an ounce. That easily topped the March 23 close of $1,438 an ounce. The SPDR Gold Trust (GLD) finished ahead by nearly 0.9%. The ETF headed into today’s session with a 1% return so far this year.

     
    That seems like a pretty good hedge to me.  I'm often asked, gold or silver?  I usually reply that buying both is the best course of action. In the long run, silver will perform better, here's a story explaining why:
     

    Industrial Use Of Silver Forecast To Rise To 665.9 Million Ounces In 2015

    28 March 2011, 12:18 p.m.
    By Kitco News

    -The amount of silver used for industrial purposes is forecast to rise to 665.9 million troy ounces by 2015, which would be a 36% increase from the 487 million used in 2010, according to a report from the Silver Institute released Monday.

    The report, The Future of Silver Industrial Demand, was produced on behalf of the Silver Institute by the precious metals consultancy GFMS Ltd. Industrial use of silver accounts the largest share of annual fabrication demand, the Silver Institute said.

    The "base case" forecast from GFMS is predicated on what the consultancy sees as the most likely outcome for the global economy, the consultancy said.

    "The report demonstrates how buoyant silver industrial demand is, not only because of the lack of substitution, but also because of the wide range of established and growing new uses that make up industrial demand," said Michael DiRienzo, executive director of the Silver Institute. "This report maintains that we expect to see robust gains in industrial silver demand over the next five years, further emphasizing silver’s essential role in industry."

    The report identifies 11 still-new applications for silver, ranging from food packaging to radio identification tags to auto catalysts, which collectively could exceed 40 million ounces of industrial demand by 2015, said the Silver Institute.

    The report also said that stronger silver industrial demand in the U.S. and Asia will be a key factor driving growth through 2015, with healthy developing-country demand especially in markets such as China and India.

    Much of the forecast growth will come from established applications, such as silver’s use in electrical contacts and in the photo-voltaic market, the report said. The "technical proficiency of silver" limits the ability to switch in favor of lower-cost alternatives, making the metal largely price inelastic, the Silver Institute said.

    The report recounted steady growth in industrial demand for silver for two decades now, interrupted only briefly by financial-market weakness in 2001 and 2008. Back in 1990, this demand stood at 273 million ounces, meaning it has already grown by 78% to 2010.

    "Although it is important not to overlook the contribution from ‘new’ industrial uses of silver, it is also apparent that much of the growth in the global total will be driven by stronger demand for a number of established uses…," the report said.

    In particular, the GFMS report cited "electrical contacts," such as in automobiles. This use has risen both due to an increasing number of cars around the world, as well as expanding end uses for contacts, from controlling windshield wipers and seat adjustments to managing navigation systems. The report also cited development of the photo voltaic industry, such as solar energy.

    PV use of the white metal was developed over two decades ago, but until recently, silver offtake remained slight, the report said.

    "The market for PVs then changed dramatically, as growing environmental concerns increasingly focused on generating power from fossil-free sources," said the report. Such silver offtake soared from around 3 million ounces in 2004 to around 50 million ounces in 2010, said the report. "Further robust growth is also forecast for the PV industry, with silver demand in 2015 expected to more than double the already elevated total for 2010," the report from GFMS said.

    -END-

     
    Use going up by 36%?  That seems like a lot for a base metal.  Should be a pretty good hedge against rising prices, huh?  I wonder if that article didn't count any silver that is currently being consumed?
    Yes, it did....

    How and Why The Elite Destroyed 3 Tons of Silver Last Week

    March 31st, 2011 

    By Silver Shield

    I wrote a month ago in an article called Silver Bullet and the Silver Shield, that silver is a vital commodity to our way of life. I stated that silver is a precious metal that is being trashed as an industrial metal. As a result, it is within years of becoming the first metal to become extinct according to the USGS. At some point the shortage is going to become so obvious, that people are going to rush to turn in their depreciating dollars for real silver money. That is just the monetary demand of silver, the industrial and strategic demand is another huge factor we should consider.

    Corporations are going to secure stockpiles of this precious commodity so as not to cause any supply disruptions in their billion dollar a year operation. Take for example the $300+ billion Apple Computer. Apple Computer’s market cap rests upon the increased sales and production of computers. If every one of their $1,500 computers has a 1/10th of an ounce of silver in it, they will spare no expense to secure silver when it becomes hard to get.

    The strategic demand is even more daunting. It has been about a week since the Empire attacked the Galactic Rebels in the desert world of Libya. Reports have already surfaced about the obscene costs of this “Kinetic Military Action.” In less than a week, this war has already cost Americans $600 million dollars. That is about $100 million a day for this “Action.” It is far cry from the estimated daily price tag of the $300 million a day Afghan war or the $700 million a day Iraq war.

    Almost half of the cost ($269 million) has come from the 191 Tomahawk missiles that have been launched into Libya. I think it is extremely interesting to know that each Tomahawk has more than a monster box (500 oz.) of silver inside of each missile. Pure silver has the highest electrical and thermal conductivity of all metals. When there is a $1.5 million dollar missile is being produced to secure more oil for the Empire, the Elite will use only the best materials to ensure the best performing results.

    So far the US has thrown 3 tons of silver at Libya just with the Tomahawk missiles. That silver is gone forever as it is blown to a million pieces. (Never mind the poor bastards at the at the other end of missile’s target.) If we added the 191 Tomahawks from this “Kinetic Military Action” to the 288 from Gulf War 1, the 325 used in Sebia and Iraq in 98, and the 725 launched in Gulf War 2 that is just over 800,000 ounces of silver or 25 tons of silver gone forever.

    That is just from the Tomahawk missile program. What about all of the other weapons programs in the Empire’s trillion dollar a year arsenal? Every smart bomb, tank, helicopter, fighter jet, bomber, naval vessel, and sophisticated electronic computer has a certain amount of silver in it. As the world starts to become a more dangerous place for the Empire, more and more silver will be destroyed forever.

     
    That is amazing, right?  All that silver blown to bits in a place that really has no effect on us.  Opportunity is knocking here, so make sure you answer the door.  Just a little more background into just how difficult it is to extract silver out of the ground:
     
     
    If you watched the video, you now know that getting that stuff out of the ground is frickin hard, and incredibly costly.  That's why the elite absolutely HATE gold or silver backed money.  If you have money that is defined, this type of chart is impossible:  (from contraryinvestor.com)
     
     
     
    Just look at the state of our state and local governments.  They are massively in debt and not improving to any significant extent.  The key here is the mistaken idea that you can continually spend money you don't have and expect no consequences.  That is not possible.  Eventually, things will work out for the worse and the piper will need to be paid.  Default or austerity are the only two roads out.  We'll just have to wait and see...I'll bring the popcorn.  One thing is for sure; inflation is here and increasing, be prepared.  Stock pile some long shelf life food and make sure you have gold and silver.
     
    In that same vein, here's a short audio clip of Peter Schiff explaining how the rising cost of printing paper money is CAUSED by inflation, and is in direct contradiction to the government's reports that there is no inflation, good stuff.
     
     
    The government is struggling with producing money as the cost of materials rises?  That is ironic, huh?  Just another harbinger of the coming inflation.  Get ready because we are just getting started.  Got gold?
     
    Positions
     
    GORO  (closed $26.62, up $.62, average price paid $6)
     
    Another month, another dividend...yawn.  Seriously, this commitment to dividends is going to pay off for this stock in a big way.  I'll go out on a limb here and predict this stock will be well over $100 within two years.  It's a great time to get into this one as the stock continues to base in the mid 20s.
     
    Mexus Gold  (closed $.24, flat, average price paid, $.22) 
     
    There was a little information released on this one on a bulletin board. 
     
    "I recently emailed our IR firm with several questions. Kelly's reply was she would email the company for a reply. Got the reply today so thought I'd share...

    Kelly;

    Still waiting for a response to my March 2, 2011 email with several questions on Mexus Gold US. Appreciate your help.

    The questions as pasted from that email are:

    "1. Were any of the tons of cable pulled during the test run November last year turned over to a salvaging company for revenue? I saw no mention of this in the latest SEC filing.

    Answer - We pulled 60,000 pounds we have it at our shop and our technical team is processing to find the cheapest and most efficient way to separate and process the product and which will provide Mexus with higher margins.

    a. If so, may I know what company accepted the cable and/or how much cable was processed for what amount of revenue received?

    No answer supplied for this one probably because the company has not submitted any salvageable material for payment

    2. Since it appears that the cable pulling test last November was successful and it appears will start up again, weather permitting, this spring...my question is does the company currently have another company lined up to process/accept the cable as salvage?

    Answer - Yes we have a contract with Power 3 Com out of Atlanta.GA

    a. Again, if so, may I know the name of the company and what the anticipated revenues we will receive per foot/ton/or whatever means we deliver our product?

    No answer supplied for this one probably because the company is still looking how to best separate the salvageable material from the casing to get the best price from Power 3 Com

    As you can see my question/concern boils down to even though we appear to have a system that works for retrieving the cable...is the company actually set up to redeem it for money?"

    Answer - Yes that is the purpose of the pulling of the cable Is providing cash flow to our operations.

    And that's my DD for now...I know I'm still picking up shares as I can.

    While bulletin boards are not the most reliable at times, this seems legitimate.  The key thing I focused in on was the 60,000 pounds.  While we monitored the ship last fall, it was fairly obvious on the tracker when they were collecting cable.  Based on that, they didn't collect cable for more than 24 hours.  Assuming 24 hours, let's do some calculations.
     
    If they run 24/7, each day would equate to 30,000 pounds of copper (being super conservative).  Copper is currently $4.23 a pound.  That means  $126,900 a day of copper.  Assuming a processing discount of 30% and Mexus can generate $89,000 a day.  Costs to run the crew and ship are very low so this is nearly all profit.  Per month, after subtracting a 15% down time/offloading, means we get over $2.2 million dollars of profit.  Run for 6 months and that equates to over $13 million in profit this year.  This company is currently valued at $37 million in total.  This one will definitely rise if the cable pulling is successful in any meaningful way.  Still a buyer up to $0.35.
     
    Stocks    (Current status, OUT, sold on March 18)
     
    Physical Gold  (Closed $1,429,  up $2,  average price paid $395)
     
    Physical Silver  (Closed $37.83,  up $.59,  average price paid $5.31)
     
     
    This week's video is a little seen video from the Japanese tsunami that displays with no doubts the mindboggling power of nature.  Nothing but prayers and good wishes for all in Japan.  See you next week.