In Anticipation for Hyperinflation

Had some private messaging with peter_vii on investorvillage.com on the topic of hyperinflation.  I’ve learn much from him. He’s in Canada and has been working in anticipation of hyperinflation since 2001.   In hyperinflation the cash basically evaporate and loses its purchasing power, so the goal is to convert cash into something tangible.  Stocks/paper assets will inflate initially but will eventually collapse as soon as the US Dollar stops its orderly devaluation and starts to dive.  Peter is fortunate that his wife is on the same page and he has been able to execute his plans to protect themselves in case hyperinflation does hit.  His advice:

  1. Pay off all debts – loans, mortgages, etc.  (Not an issue here.)
  2. Have some physical gold and silver. (This goes without saying.)
  3. Buy farm land using available cash, along with farming equipments.
  4. Buy real estate that can generate rent.
  5. Day trade only, avoid holding overnight positions.
  6. If one has to hold paper assets, limit them to energy ETF’s. (May be some agriculture and precious metals ETF’s, too?)

It’s not easy to get the ball rolling for sure given the current frothy state.  And farm land – that one has a lot of inertia to be dealt!

Today the market sold off after yesterday’s retracement to the gap resistance, but finished strong and recovered 50%.  I traded around my core positions in SPY and UPRO and ended the day with more shares at lower costs.  I feel comfortable with the current exposure, and can deal with either the up market or down market next week, as long as it’s nothing drastic.   The short/intermediate term bullish trend has not been broken, even though the $104 crude oil due to the instability in the Middle East may start to overshadow, which could be a black swan to the SI, the presidential cycle, and the QE2 premise for further bull run.

Caught a break today in CPST, which happen to fit the context of hyperinflation where energy generation plays a major role.  After taking profit too early exiting at 1.33 (from 1.15), I managed to accumulate a few shares during the last few days consolidation (see daily chart below).  Late today it broke out with huge volume, and immediately filled the thin zone just below 1.67.  But as usual, my low confidence translate to tiny positions – 400 shares to be exact.  Oh well, need more guts.

And here’s the weekly.  The next target would be 1.90 and then 2.20.  There is a rumor that a large customer might be interested in CPST’s microturbine, either a miner or automaker.

Here’s a inspiring response to a blog on CPST on thebuyerwire.com :

bobbysanchezwasright says:

Here is a truth that most people can”t get their arms around. This is a paradigm shift in the distributed generation industry and it is occurring right before our eyes.

This document is @ 3 years old. The diffusion curve and projections described in the analysis is proving true. Watching an industrial/energy paradigm shift in real time and having the opportunity to invest in the company that owns 85% of the world market is a beautiful thing!

Add the impending automobile deals and Capstone will move not cents but dollars in one day. It will be a beautiful thing.

From the United States Department of Energy’s Ernest Orlando Lawrence
Berkley National Laboratory:

“[I]nvestments in microturbines are expected to grow rapidly from 2010 and exceed the capacity of reciprocating engines by 2017.”

“Reciprocating engines are expected to experience marginal improvements in performance during the forecast horizon. However, these improvements
combined with a stronger technology outreach
program and increased word-of-mouth from the
successful implementation of microturbines leads to a higher installed [microturbine]capacity in the Program case than in the Baseline case (see Figure 7).

Microturbines represent a promising technology with expected cost reductions and performance improvements over time. In the Program case, investments in microturbines are expected to grow rapidly from 2010 and exceed the capacity of reciprocating engines by 2017. Notice the difference in the diffusion curves for reciprocating engines and microturbines in the Program case. Reciprocating
engine capacity grows fast initially, but as
microturbines become more competitive, they take
a larger share of the market. However, there is still a market growth for both, reflected by different buildings suitability to each technology. See Figure 7: Cumulative installed capacity by technology.”

http://eetd.lbl.gov/ea/emp/reports/60590

This is capitalist democracy at work. Even the little guy can make serious money on CPST if they can overcome their fear of believing that they could be right. A market paradox of sorts.

I hope I get to accumulate more CPST in the days to come.

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