No Financial Armageddon... Yet! Gaining From Time
Stock-Markets / Financial Crash Oct 16, 2009 - 01:52 PM GMTBy: DeepCaster_LLC
The Litany of Negatives which, some days, seems to overwhelm honest observers of the Economy and Markets, should be counterbalanced by consideration of certain Positive Realities.
While these Positive Realities will likely not endure for more than a few months, or a very few years, their existence now can be used to enhance gains and protect against future adversities.
In order to appreciate these Positives and the consequent opportunities for gains and protection, we must first consider Key Negatives.
A Primary Negative is the Divorce from Reality (encouraged by the Mainstream Media and Fed “Communications Policy”) reflected in the celebration this week over the Dow’s touching 10,000.
In fact the Dow was at 10,000 just over 10 years ago, so someone holding it for ten years would have NO Gain! Indeed, they would have a substantial loss because the purchasing power of the dollars that that 10,000 level represents is much less than 10 years ago.
(That is why ‘Buy and Hold’ rarely works anymore. Deepcaster’s Strategy of “Sowing and Reaping Repeatedly” is The Strategy with Profit Potential -- see “Defeating the Cartel... With Profit” (03/28/2008 (part 1) and 06/19/2009 (part 2)) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.)
To aid us in reciting a Litany of Negatives we are grateful to the amusing and often insightful Jim Willie
“The story hit like a thief in the night…The end of the exclusive sale of MidEast oil in USDollars, the rise of Russian and Chinese influence in the Persian Gulf, the rise in importance for the Intl Monetary Fund basket of currencies, the final clarion call for the free ride by Americans on the Dollar Credit Card, and hidden implications that the Saudis must shop for a new security lord in the region with broad military might…The US will soon no longer be permitted to sell its indulgences…
…Be sure to see almost zero follow-up for this story in the crumbling US press networks, widely compromised, distrusted, and mocked after years of lapdog behavior to twist story after story in line with syndicate marketing plans designed to maximize their profits, minimize public wealth, and further the march to a police state…
…A new important alliance has formed, which cuts out the United States and Great Britain. The drift that comes is directed toward the Third World. The great majority cannot comprehend or envision such change…
…The conclusion is the death of the USDollar is written in stone, and a USTreasury default lies down the road…
…Two structural pillars have kept the USDollar in its primal position. Banking systems across the world are built around the USTreasury Bond reserves storage and management. Purchase & Sale of petroleum is conducted in US$ terms for almost all transactions globally…
…There are reasons why the US Naval Fleet is not sitting inside the Strait of Hormuz like ducks. Two of them are named Sunburn and Onyx, the advanced Russian missiles…
Russia is the quiet new player…Russia will emerge in three key respects. 1) Russia will be the military protector to both sides in the Persian Gulf, both Arab and Iranian. 2) Russia will be the major commodity super market supplier to Europe, both energy and metals. 3) Russia will surprisingly present new financial systems to shock the West, in the form of barter systems, in the form of reliable non-US/UK commodity contract systems…
…Domestic producers and banks are being squeezed, as the production supply capacity will shrink, economists all the while oblivious…The big story from the USDollar impact will be rising higher costs throughout the US lands, where incomes will continue to fall…
…The departure and dismantle of the Petro-Dollar standard will usher in a more dangerous phase of that trade war, one to include a battle of the crude oil in the Middle East region…US isolation in its own hemisphere. See the missing $50 billion from the Iraqi Reconstruction Fund that nobody is even searching for. See the Chinese deals to capture new Athabasca oil sand output from Western Canada. See the upcoming halt of Venezuelan oil shipped to the US. See the new Chinese protectors of the Panama Canal. See the depletion of Mexican oil deposits and rapid deterioration into a failed state. By the way, another motive for the Iraq War liberation was to disconnect (illegally of course) China from its oil product concessions…
…The big wrinkle for the IMF currency basket is that it will include a gold component…
The byline of the past year could be written as the ‘End of US Lackeys’ quite accurately. The Japanese have a new #1 trade partner in China…
…The USFed will thereby fund the demise of the USDollar with free money, as Saudis, Russians, and Chinese manage the global abandonment project…”
Death of Petro-Dollar, Told Ya So Jim Willie, CB., October 8, 2009
In light of this list the Wall Street Journal headline of October 15, 2009 – “Dow at 10,000 as Crisis Ebbs” – seems truly preposterous.
This list is mainly right, and right on, but it obscures or omits certain positive Realities.
Consider:
China: Yes China does desire to accumulate (and is accumulating) Gold and to liberate itself from the albatross of Western Paper – primarily one Trillion plus in U.S. Dollars in the form of U.S. Treasury and Agency Securities.
But China must be very careful about implementing this Desire for Gold Accumulation and must do it over the long term.
Were China to publically buy sufficient Gold to substantially drive up the price, that would tend to both weaken the U.S. Dollar and the value of China’s U.S. Treasury Securities, which would drive up interest rates.
That would tend to send the international economy into an even Greater Depression, and would substantially Reduce the value (i.e. purchasing power) of the $1 Trillion plus U.S. Treasury and agency Securities which it owns.
And so far as the so-called Chinese “put” on Gold at $990/oz is concerned, would it not advantage the Chinese to buy Gold at $850/oz., or lower, after the next Cartel* Takedown (assuming it is successful – Deepcaster’s forecast in this regard is contained in his latest Alert posted at www.deepcaster.com in the ‘Alert Cache’.)
*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.”
In sum, China has a considerable Stake in the Continuation of the current Financial System for quite a while longer. They thus can push for change only gradually.
And Consider:
Russia and Brazil: Both are, while recently relatively prosperous, nonetheless primarily commodity countries. Thus they too must be careful not to act in a way to worsen the Current Depression. Commodities sales to the U.S. and Europe would suffer even more.
The Arab States: The foregoing comments regarding Russia and Brazil apply to the Arab (mainly Oil producing) States as well. Moreover, though they may well have a long-term interest in having oil priced in a market basket of Major Currencies plus Gold (as The Independent article by Robert Fisk suggested they and Key BRIC countries were already secretly planning to do), their short-term interest is in maintaining healthy U.S. and Western European Markets for their products.
Indeed, already we are seeing certain central banks come to the short-term aid of the U.S. Dollar.
Moreover, the massive sugary injections of money and credit liquidity by Western Governments in the past year militates in favor of higher nominal asset prices, including (as manifest since early March, 2009) increasing equities prices. But for how long?
To be sure, unfortunately, the very negative effects of the private-for-profit Federal Reserves’ disastrous Monetary and Fiscal policies are largely hidden by the official gimmicking of Statistics. Shadowstats.com (which calculates the numbers the old-fashioned way they were calculated before the political gimmicking began in earnest in the 1980’s and 1990’s) reports the Real versus Official numbers as follows:
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported October 15, 2009 -1.3% 6.1% (annualized September Rate)
U.S. Unemployment reported October 2, 2009 9.8% 21.4%
U.S. GDP Annual Growth/Decline reported September 30, 2009 -3.9% -6%
Indeed, the Headlines from Shadow Government Statistics’ October 15, 2009 Commentary #257 provide a considerable dose of Reality Therapy:
September Annual Inflation -1.3% (CPI-U), 6.1% (SGS)
CPI-U Inflation Spike Due by Year-End
No Recovery: September Real Retail Sales Continued Bottom-Bouncing At Low-Level Plateau
10 Years of Retail Sales Growth Gone
The bottom line is that the major countries and economies of the world are crossed-pressured. To a large extent the near-term fate of the U.S. Dollar and U.S. Debt is the Fate of all Major Countries. A sinking Titanic sinks all aboard.
What does become clear for Investors from the foregoing summary analysis is that Timing and wise Sector Selection (and Sowing and Reaping rather than Buying and Holding) are the keys for profit and protection.
The Cartel Intervenors can intervene. The BRIC countries can push toward economic independence from the U.S. Dollar.
But if the Interventions are too severe, or the pushes toward Economic Independence too extreme, disaster for all could come sooner rather than later.
The Economic and Markets’ Pendulum swings, and swings back, and forth.
Thus Timing and Sector Selection are the Keys.
(For Deepcaster’s latest Forecasts regarding Timing and the Key Sectors of Precious Metals, Equities, Crude Oil, U.S. Dollar and U.S. Treasury Securities go to www.deepcaster.com and click on ‘Alerts Cache’.)
Generally, one can gain and protect, in whatever time we may have left (see Deepcaster’s Latest Alert in the ‘Alerts Cache’ at www.deepcaster.com), by adhering to the following Strategy, which can aid in making educated decisions regarding timing and Sector Selection.
Strategy for Identifying Opportunities for Profit and Protection
- Get the Real Data. As many Investors suspect, Crucial Official Government and Agency Economic and Financial Data are of highly 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 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, been taken down in price from its highs of over $1000/oz down to around the mid-$700 level (e.g. in 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 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 Interventionals (e.g. the Repo and TSLF Pools) daily can often, but not always, give one excellent clues about the nature and timing of 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. Deepcaster’s recent article “Cartel Angst Equals Investor Advantage” (9/18/2009 can be found in the ‘Articles by Deepcaster’ at www.deepcaster.com) lays out a specific strategy for use in investing and trading in the heavily manipulated Gold and Silver Market.
- 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% and 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 in recent articles, without risk.
- Be aware of and Active in 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.
- Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets and/or Retirement Accounts only to have those assets effectively de-valued by Cartel Takedowns, U.S. Dollar Devaluation and other Cartel actions. This is extremely injurious to many average citizens in many countries who are saving for the rainy day or retirement and have their retirement and/or reserves effectively taken from them. In order to help prevent this and similar outrages, we recommend taking three steps:
- Become involved in the movement to Audit and then abolish the private-for-profit U.S. Federal Reserve as Deepcaster, former Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. The ‘Audit The Fed’ Bill is H.R. 1207 (and has over 250 co-sponsors) and S604 in the Senate; and The 'Abolish The Fed' Bill is H.R. 2755. www.carryingcapacity.org is a nonprofit organization which actively supports these bills.
- Join the Gold AntiTrust Action Committee, which works to eliminate the manipulation of the Gold and Silver markets (www.gata.org). GATA is a nonprofit organization, which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities.
- Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game” in “Coping with Power Moves in the Cartel's 'End Game' “ (04/24/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Clearly The Cartel is sacrificing the U.S. Dollar to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever. See Deepcaster’s July 2008 Letter in the ‘Latest Letter’ Archives at www.deepcaster.com
Conclusion: If this aforementioned strategy are employed effectively, it can result both in wealth protection, and in considerable profit along the way.
Additional insights and details regarding Deepcaster’s Strategy for investing in Gold and Silver are laid out in Deepcaster’s article “Defeating the Cartel...With Profit” (03/28/2008 (part 1) and 06/19/2009 (part 2)) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
Protection and profit require Proactivity and attention to the Interventionals, Fundamentals and Technicals, not “Buy and Hold.” We reiterate, “Buying and Holding” for the long term rarely succeeds anymore as current market conditions attest.
Indeed, the Key Point of the foregoing Strategy for Protection and Profit is careful attention not only to the Fundamentals and Technicals but also to the Interventionals. These Overt and Covert Cartel-generated Interventions have the power to move markets as those who study the matter can attest. Thus, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover engaging in the Actions suggested above can help prevent The Cartel’s obtaining Superpower status, and aid in achieving wealth protection and profits as well.
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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