Latest US CPI Inflation Data

The U.S. Bureau of Labor Statistics (BLS) reported their latest consumer price index (CPI) inflation data this past Thursday. According to the BLS, U.S. consumer prices for the month of February 2011 were up 2.11% on a year-over-year basis compared with February 2010. February’s year-over-year increase of 2.11% was up 29% from January’s year-over-year increase of 1.63% and is now above the Federal Reserve’s informal inflation target of 1.5% to 2%.Even the manipulated BLS numbers are showing that price inflation is beginning to spiral out of control, yet the mainstream media is doing everything possible to downplay inflation. Despite the BLS’s reported rate of price inflation rising above the Fed’s target, the media is ignoring this and referring to “core CPI”, which excludes food and energy (the two very things Americans need the most to live and survive). The media is focusing on the core CPI number, which was up 1.09% from a year ago compared to a year-over-year increase of 0.95% in January (even the growth of this meaningless number is rapidly rising), and saying that inflation remains below the Fed’s target. On a month-to-month basis, the CPI rose 0.5% in February. This was based off of a 2.2% monthly increase in unadjusted gasoline prices. The U.S. government’s own Department of Energy (DOE) reported gasoline prices up 3.7% last month.I believe that real year-over-year price inflation in the U.S. is now approximately 6% on a conservative basis. In November of 2010, the CPI was only up 1.1% on a year-over-year basis. At 2.11% in the month of February, the CPI’s year-over-year growth has risen by 92% over a period of just three months. In percentage terms, it is shocking just how fast CPI increases are rapidly accelerating. Yet, not one person in the mainstream media is pointing out this 92%!

And the Dominoes keep falling...

Just like how nobody in the mainstream media was calling for the collapse of Egypt's government a few months ago, almost nobody in the media believes a collapse of the U.S. dollar could possibly take place anytime soon. The Federal Reserve can deny all it wants that the U.S. is experiencing inflation, but with the cost to print a single U.S. dollar paper note rising by 50% since 2008, massive inflation is here right under Federal Reserve Chairman Ben Bernanke's nose. Every day that goes by, China is quietly implementing more and more steps that expand the yuan's use in cross border trade, in order to position the yuan as the world's next reserve currency.

 

Few Americans are preparing for hyperinflation. If the dollar collapsed today, 90% of Americans won't have the means to put food on the table or put fuel in their cars. During the upcoming hyperinflationary crisis, food stamps will no longer have any value at all and all U.S. entitlement programs (Welfare) will come to a complete halt. Americans will take to the streets like the world has never seen before.

 

The biggest question I have is, "will the U.S. government resort to firing at its own citizens, if major riots take place across America"  As the price of oil rose by a few dollars per barrel in Saudi Arabia, police in Saudi shot and wounded three protesters. This shows just how nervous the world's financial markets have become in recent weeks. The fact that the Dow Jones has declined significantly in recent days means that QE3 (Quantitative Easing), which means printing more money to "ease" the economy, might happen any day.

 

The other big question I have is if in the unlikely event there is no QE3, who will fill in for the artificial buying demand currently coming from the Federal Reserve. After all, with no QE3, the Federal Reserve will go from buying 70% of treasury bonds to being a seller of U.S. treasuries. I am100% sure that foreign central banks aren't itching to jump back in to fill the hole. While in the past, the private companies may have picked up the slack, I believe individual investors won't jump into government bonds, especially with bond king Bill Gross reducing the government bond holdings in his Pimco Total Return Fund down to zero. The bottom line is, no QE3 means interest rates will fly sky high and destroy the phony so-called "economic recovery".

 

From April to August of 2010, the last time the Federal Reserve allowed its balance sheet to shrink, the Dow Jones fell by over 1,000 points. If Bernanke doesn't soon begin to leak out the strong likelihood of QE3, we could see the stock market decline by 1,000 points or more, which will force Bernanke into launching QE3. If we see a major sell off in stocks, Precious metals such as gold and silver will rise along with the Dow Jones falling. I project the Dow Jones gold ratio to decline to 6.5 in 2011. This means even if the Dow Jones fell to below 11,000, Gold is likely to rise to around $1,600 to $1,700 per ounce this year, with silver soaring to around $42 to $44 per ounce. 

 

Invest in something of worth!

Hyperinflation is right around the corner

China reported 4.9% price inflation for the month of February. With China now mimicking the U.S. Bureau of Labor Statistics and taking steps to artificially manipulate their consumer price index (CPI) numbers as low as possible, it is likely that real price inflation in China is now closer to 10%. China this week reported a $7.3 billion trade deficit for the month of February, its largest trade deficit in seven years. The Federal Reserve's QE2 along with China's destructive monetary policies, which artificially devalue the yuan, have led to a massive rise in China's raw material costs this year. I believe that in the upcoming months, Chinese manufacturers will raise the prices of their products that get exported to the U.S., to counteract rising commodity prices. Most products Americans use have been manufactured in China, this means Americans will soon see massive price inflation in just about all consumer goods they use. I project that by the end of 2011, we will begin to see the U.S. CPI increase by 4.9% yearly with real U.S. price inflation rising north of 10%.

 

The mainstream media is proclaiming that China's trade deficit will silence calls for the Chinese to allow their currency to strengthen against the U.S. dollar. The fact is, China's government has for long been making the major mistake of printing too many yuan in order to artificially prop up the U.S. dollar. Their fear was, if the U.S. dollar was allowed to decline too rapidly, prices of Chinese goods would rise in terms of U.S. dollars and Americans would no longer afford to import them.

PKL stock gains 40% in 43 Minutes

I posted earlier today that the PKL stock was a hot buy. The price of the stock rose to $1.16 in under 43 minutes (40% gain) before closing out the day at $1.11 (34% gain). PKL is a hot stock that everyone needs to jump on. Gold is a great investment in America today. Gold is worth $1,434 per ounce and continuing to rise!

Invest in Gold!

I found a great gold investment that was recommend to me! The company is both undervalued and under looked.

PC Gold Inc. (TSX: PKL)
Currently: $0.83

http://www.pcgold.ca/en/ 

PKL has 66 million shares outstanding and a solid balance sheet with $13.3 million in cash, NO DEBT, and a book value of $0.81. PKL is trading for below its recent private placement price of $0.90 and below its IPO price of $1!PKL's market cap at $0.83 is only $54.8 million. If you subtract their cash of $13.3 million, the Pickle Crow property is currently being valued at only $41.5 million when it previously produced 1.47 million ounces of gold!

China announced March 2, 2011 that they will allow trades to settle in the yuan instead of U.S dollar. China plans to allow all exporters and importers to settle cross border transactions in their own currency by the end of 2011. This is the beginning of the end for the dollar.