Profit Opportunity Knocks, But Beware The Stock Market Rally
Stock-Markets / Investing 2009 Sep 11, 2009 - 01:18 PM GMTBy: DeepCaster_LLC
- Will China Break The Cartel’s Grip on the Gold Price? -
“Opportunity knocks” in today’s Treacherous Markets, as it were; but not necessarily on the long side.
Consider Gold.
Among Investors at all attuned to Central Bank and Government Intervention in a variety of Markets, Cartel* Takedowns of Gold and Silver prices (and prices in other markets) are common knowledge.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2008 Letter containing a summary overview of Intervention entitled “A Strategy for Profiting from the Cartel’s Dark Interventions & Evolving Techniques” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the “Latest Letter” Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”
Indeed, even the Dean of the newsletter writers for several decades, Richard Russell has recently been quite publically complaining about Cartel Takedown of the Gold price.
“The battle is obvious -- it's the primary forces of overproduction and deflation vs. the Fed's obsession ("whatever it takes") to fight deflation and to produce asset inflation.
The one signal for rising inflation that the world understands is rising gold. The central banks do not want to see the gold signal, which tells the world that inflation is in command.
What the Fed really wants is asset inflation in housing. Housing is collateral for almost everything in the nation, and the Fed and Treasury are frantic to get housing prices heading higher.
Yesterday most assets got the message. Oil was higher, the base metals were higher, the stock market was higher, but gold (pressured by forces we know not from where) failed to close at the highly significant number of $1,000 an ounce or better. Incredibly, after being as high as $1,009 during yesterday's session, gold closed at $999.80 -- just 20 cents below $1,000.
Coincidence? Mistake? Random chance?
Hardly. To me it was obvious that the Fed did not want to see the following headline in the newspapers: "Gold closes above $1,000."
Whatever it takes, it seems, will be utilized to hold the only constitutional money down.”
By Richard Russell
Dow Theory Letters
http://ww2.dowtheoryletters.com/
Wednesday, September 9, 2009
Fed will do anything to keep gold down
The Gata Dispatch
But will China’s recent actions break The Cartel’s Vise-grip on Precious Metals Prices?
Considering this question can enhance Profit Prospects and help insulate against losses.
Consider
“CERNOBBIO, Italy -- The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.
Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing."
"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como. "If they keep printing money to buy bonds, it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.
China's reserves are more than $2 trillion, the world's largest.
"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.
The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.” (emphasis added)
By Ambrose Evans-Pritchard
The Telegraph, London
Sunday, September 6, 2009
China Alarmed by U.S. Money Printing
China's fear of dollar printing seen putting floor under gold
This “admission” that China is buying Gold (and presumably Silver) on dips is the first indication that Deepcaster and Hard Assets Partisans have heard in some time that Cartel Takedowns of Precious Metals prices may be diminished or even ended due to Chinese buying “on dips”.
But there is another consideration. The private for-profit Fed’s policy of printing money to buy U.S. Treasury debt does surely threatens the U.S. Dollar in the medium and long term.
Even so, to the extent that the U.S. Dollar demise leads to higher interest rates, the value of U.S. Treasury securities and Agency debt owned by China, diminishes.
And China owns over $1 trillion Dollars in U.S. Treasury and Agency Securities so China must be careful not to impair the value of those assets. Thus a key question is: to what extent is China a captive of The Fed-led Cartel’s Interventional Regime and how will this affect Precious Metals prices? Deepcaster responds to this question in his latest Forecast in the Alerts Cache at www.deepcaster.com.
Yet, at the very least China is not entirely a Cartel captive. It recently indicated:
-- A.) Chinese state-owned companies could refuse to honor certain “losing” dark OTC commodities derivatives contracts. Rumor has it that it has already intentionally defaulted on some of these contracts, but Goldman Sachs, JP Morgan Chase and others who might know, are not telling.
-- B.) Hong Kong built a "state owned" gold vault, and announced that they will be taking physical delivery of their London Gold by December, 2009.
-- C.) Their central bank has increased gold holdings from 400 tonnes to over 1000 tonnes.
-- D.) They might stop exporting all "rare earth" metals. China produces 95% of the world's supply of rare earth metals, which are used in all sorts of high tech products, especially in electronics.
-- E.) They wanted their people to buy silver, because it's cheap.
The key point is that The Cartel’s Interventional Regime is under increasing pressure with consequent increased risk of financial system failure. This is probably explains the underlying cause of the intensifying systemic liquidity crisis of which John Williams, proprietor of shadowstats.com is seeing increasing signs.
“First, growth in broad money supply has continued to falter… Beyond being a negative for the economy, in the ongoing systemic solvency crisis, slowing broad money growth often has signaled rising systemic stress, foreshadowing intensification in the crisis that in turn has led to Federal Reserve or Treasury response…
Second, the seasonally-adjusted St. Louis Fed’s adjusted monetary base surged by 5.5% in the two weeks ended August 26th, versus the prior two-week period…
Third, President Obama has nominated Ben Bernanke for a second term as Federal Reserve Chairman. As to the merits or demerits of the nomination, the depository system has survived the crisis, so far, without a full banking system collapse or great deflation. The Fed has held the system together, while debasing the U.S. dollar and fighting to forestall a financial collapse triggered primarily by the malfeasance of Alan Greenspan’s actions (otherwise continued by Mr. Bernanke). Given the not-so-politically-popular Fed chairman and earlier expressions of Administration plans to replace him, however, something else may be at work. If a renewed/intensified systemic solvency crisis were brewing, having the question of the Fed chairmanship succession so resolved would be a plus not only for the financial markets, but also for the incumbent Fed Chairman in his ability to navigate the renewed crisis. It is this last consideration that makes the most sense to me as to what was behind Bernanke’s nomination.”
JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS
ALERT - September 2, 2009
Something Brewing in Systemic Solvency Crisis?
No Substance to "Economic Recovery"
U.S. Taxpayer-Subsidized Deflation
Worse-Than-Expected Labor Statistics?
Shadowstats.com calculates statistics the old-fashioned way they were calculated before the political gimmicking began to distort key Statistical Realities to hide Unpleasant Facts (e.g. the dramatic reduction in $U.S. Dollar purchasing power) from Investors world-wide.
Indeed, it is essential for Investors today to get the Real Numbers versus the gimmicked Official Statistics.
Consider, for example, the Official Statistics versus the Real Statistics courtesy of Shadowstats
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported August 14, 2009
-3% 5.5% (annualized August Rate)
U.S. Unemployment reported September 4, 2009
9.5% 21.1%
U.S. GDP Annual Growth/Decline reported August 27, 2009
-3.9% -5.9%
And lest one thinks hiding the aforementioned Realities from Investor/Citizens is not cause enough for alarm, consider what the Market is telling us, via the so-called “Traders Rule”.
The “Traders Rule”, loosely stated, is as follows
“If the yields on the 1, 3, and 6 Month Treasuries dive toward zero (as they have recently!) there is a fear among the very largest investors that there is a huge risk to the markets via some adverse, financial economic or other developments. In other words, traders expect a Climacteric.
The “Trader’s Conclusion”:
Given that these yields have dived toward zero recently (i.e. since March 2009) the belief that the Equities market Rally is sustainable, is a delusion.
Those wishing to see Deepcaster’s Forecast for impending Climacterics in the Markets and, especially for the likely timing of those Climacterics should read Deepcaster’s recent Alerts including Forecasts at www.deepcaster.com and click on ‘Alerts Cache’.
And even the U.S. Government admits to Grim Economic Realities. On September 9, 2009, it admitted “millions” more home foreclosures were coming.
Moreover, as if the challenges presented by the Cartel’s Interventional Regime, Grim Economic Realities, and Geopolitical pressures were not enough, the absence of a Fair and “level” playing field for investors increasingly threatens profits and protection.
Consider the following news item and accompanying commentary regarding Goldman Sachs Trading results
“Bloomberg Aug 5 2009:
Goldman Sachs Group Inc. made more than $100 million in trading revenue on a record 46 separate days during the second quarter, or 71 percent of the time, breaking the previous high of 34 days in the prior three months. Trading losses occurred on two days during April, May and June, down from eight in the first quarter, the New York-based bank said today in a filing with the U.S. Securities and Exchange Commission. The company made at least $50 million on 58 of the 65 trading days in the period, or 89 percent of the time.
Comment by G.B.
(It is impossible for a trader to perform this well. You can’t win every hand in a card game. Even a great player would win just over half of the time. They have a stacked deck.)
Now another from April 2008:
In the three months through Feb. 29, Goldman lost money on 17 days, compared with eight days at Morgan Stanley and seven at Lehman Brothers, the filings show. Goldman’s trading department also had more big wins, raking in $100 million or more on 28 occasions, compared with 20 days at Morgan Stanley. Lehman reported it made more than $90 million on 13 days.
Comment by G.B.
These same bankers that needed bailout money to stay intact have a money printing press trading stocks. They had placed so much money in derivatives (highly, highly speculative investments) that not even the stock trading money printing press could pay the bills. The printing press couldn’t run fast enough.
One conspirator says, and appears likely, that the Federal Reserve is intervening in the markets. One of the ways to do that is to buy stock futures, and for them to then to tell the Wall Street houses, which is the other side of this trade, to buy stocks to cover their short position in futures. A rigged market, printing money for the insiders. This is illegal, immoral, and unethical. Wall street makes big salaries, big bonuses, and yet takes taxpayer money to boot.
For capitalism to be evident on Wall Street, trading volume would have to return to near 1980 trading volume (down over 90%). This would wipe out the whole industry and probably bankrupt the country. We may need this to happen to end the banker takeover of the United States and the World. If we allow them to carry on printing money for themselves and slowly bankrupting the peoples, we will be slaves to the money printers.
August 24, 2009”
International Forecaster 9/2/09
In spite of all this there are steps an investor can take to help profit and protect.
The Strategy – Guidelines to Enhance Profits and Protect Wealth
- Get the Real Data. As many Investors suspect, Crucial Official Government and Agency Economic and Financial Data are of questionable validity. The Data set forth above from shadowstats.com is a good starting point.
Educate yourself about the realities of the marketplace using Alternative Data Sources such as Deepcaster, Gold Anti-Trust Committee (www.gata.org), and shadowstats.com. Gathering and staying attuned to authentic information regarding the marketplace can save one much financial grief as well as positioning one for profit.
- Take Account of both Overt and Covert Cartel Intervention. Many of these same investors who suspect Official Statistics also rightly suspect that the private-for-profit U.S. Federal Reserve and/or Central Banks and their Favored Financial institutions overtly and covertly manipulate Major Markets. But they might not be aware that covert Market Interventions and Data Manipulation are likely far more pervasive than generally believed, as detailed in Deepcaster’s articles mentioned above.
As well, such investors may not have thought systematically about how one copes with and profits from such Intervention and Data Manipulation.
Consider one example of Cartel Intervention: the Traditional and Legitimate Safe Haven from inflation, deflation, and risk, is Gold. Yet, Gold has, during the recent periods of extreme financial market turmoil beginning early in 2008, been taken down in price from its highs of over $1000/oz down to around the mid-$700 level (e.g. 2008), when it should have skyrocketed.
In early March, 2008 Gold was over $1000/oz. when the Bear Stearns Crisis revealed the fragility of the Financial System. Gold should surely have skyrocketed then. Instead, it was brutally taken down. Were its price not still manipulated, Deepcaster’s view is that its price would be over $3,000.00 per ounce today.
Deepcaster and others, including the Gold AntiTrust Action Committee, have offered considerable evidence that the Cartel* of Central Bankers and Favored Financial Institutions are the culprits behind these dramatic and devastating Takedowns. See Deepcaster’s Alert of 12/25/07 “A Strategy for Profiting from Cartel Intervention in Gold, Silver, Crude Oil and Other Tangible Assets Markets” in the Alerts Cache at www.deepcaster.com.
But there is a Profitable Refuge from Market Intervention and Data Manipulation. That Profitable Refuge lies in the Strategy described in the aforementioned Alert, certain characteristics of which we outline here:
- Recognize that the “Buy and Hold” strategy rarely succeeds anymore. The Eminence Grise of Newsletter writers, Harry Schultz perhaps put it the best when he stated that “buy and hold no longer works anymore, even with Gold.” Recent Market Developments should suffice to demonstrate this principle!
- Track the Covert Interventionals as well as the Technicals and Fundamentals and Overt Interventionals. Tracking the Footprints, as it were, of the Covert Interventions (e.g. the Repo and TSLF Pools) daily can often, but not always, give one excellent clues about The Cartel’s next likely Interventional Move - - such clues are essential to preserving wealth and making profits. Deepcaster’s tracking of the Interventionals, for example, allowed him to recommend five short positions going into September, 2008, (i.e. before the Market Crash) all of which he has subsequently recommended be profitably liquidated.
- Perhaps most important, be prepared to go both long and short Major Market Sectors - - long near the bottoms of Interim Takedowns and short near Sector Tops. The Interventionals are essential to helping identify these tops and bottoms. In Deepcaster’s view, it will be increasingly difficult to achieve a net profit for one’s portfolio if one is unwilling and/or unable to “go short” as well as “long”.
The Blossoming of the 200% 300% (and other) leveraged ‘short’ and ‘long’ ETF’s described above provide a superb opportunity to go short and long with ease, but not, as we explain above, without risk.
- Be aware of the overall Geopolitical Landscape in order to gain an adequate understanding of how that Landscape might affect the present and future direction of the Markets. It is essential that one understand the motivations of the major players in the market and the resources at their disposal.
For example, a Major Motivation of the U.S. Federal Reserve and other key Central Banks is the protection and enhancement of the legitimacy of their Treasury Securities and Fiat Currencies as Measures and Stores of Value. Therefore, one can understand that one of their Major Goals will be to attempt de-legitimize Gold, Silver and the Strategic Commodities, including especially Crude Oil, as Stores and Measures of Value. With this in mind, the periodic takedowns of Gold and Silver and, since July, 2008, of Crude Oil, become understandable. Moreover, such an insight applied daily to the market can result in a tremendous edge in understanding market performance, present and future.
Moreover, regarding the assets at The Cartel’s disposal, if one tracks the Repurchase Agreement and TSLF Pools regularly, as Deepcaster does, and is aware of the other Interventional tools that The Cartel has at its disposal, then one gains a considerable edge.
Conclusion:
The Rampant Monetary Inflation reflected in M3 in recent years and in the various bailouts and loans is measured in the trillions of Dollars. And this tremendously increased liquidity is available to temporarily inflate the paper value of the Equities and other Markets, when money managers first think the markets have a chance for a sustained (for a few months only) Rally, and, when The Cartel Interventional Regime “agrees” with them.
Thus, given that the financial system and key heavyweight investors are awash with printed and borrowed money, certain Key Sectors have already rallied considerably from March, 2009 lows. And certain of these should continue to rally for a while until the long-term negative Economic and Financial Fundamentals drag them down again. Of course, this will not happen in one fell swoop, it will happen in Spurts, the forecast timing of which we set forth in our Latest Letter and Alerts available at www.deepcaster.com.
Caveat and Conclusion: Unless and until demonstrated otherwise, the recent Rally is nonetheless a ‘Bear Market Rally’. Such Bear Market Rallies are treacherous and often rapidly reverse themselves, turning gains into losses. Thus, it is especially important to monitor the Interventionals, as well as the Fundamentals and Technicals, very closely!
Best Regards,
By DEEPCASTER LLC
www.deepcaster.com
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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