Year-End Investment Profit Parachute Strategy
Stock-Markets / Investing 2009 Nov 21, 2009 - 03:49 AM GMTBy: DeepCaster_LLC
“The end of an empire always comes when the currency is destroyed.”Congressman, Dr. Ron Paul, November 9, 2007
““That probably has to be a basket," Strauss-Kahn said of the eventual replacement for the dollar. "In a globalized world there is no domestic solution," he told a forum…
The imperative of greater global currency stability means the world can no longer rely, as it has done since the end of the gold standard, on a currency issued by a single country, the head of the IMF said on Tuesday…
Dominique Strauss-Kahn, the managing director of the International Monetary Fund, restated his view that a new global currency might evolve out of the Special Drawing Right, the Fund's in-house unit of account…” (emphasis added)
IMF Chief Says End Dollar Dominance Newsmax.com, 11/17/09
“…Boockvar says anger about a depreciating dollar is aimed at the wrong direction. "Blame the Fed, don't blame the Chinese," he said. "The Fed is the one that's artificially depressing the dollar"…
…Peter Boockvar, equity strategist at Miller Tabak…”
Obama, Geithner and Bernanke: America's Top Bond Salesmen Pitch No. 1 Client Tech Ticker, November 19, 2009
The IMF (with the U.S. Federal Reserve) is facilitating the Demise of the U.S. Dollar for their own purposes of Profit and Power, by speaking of the U.S. Dollar’s demise as if it were a Fait Accompli.
But in the short run Investors can profit from this IMF/Fed-led Cartel* attack on the U.S. Dollar and on Precious Metals by employing a Profit Parachute Strategy as described below.
But the U.S. Dollar’s Demise is not a certainty. The Dollar could (and should) be stabilized by linking it to precious metals, via Precious Metals – linked U.S. Notes.
That is, the U.S. Dollar could be better supported if it were divorced from that Creature of the private for-profit Fed, the Federal Reserve Note, as President John F. Kennedy tried to do when he ordered the U.S. Treasury to print U.S. Notes, just before he was assassinated.
To provide the background for describing the Profit Parachute, it is essential to consider an Overview of the State of the Economy and key Markets Today.
The Equities and Commodities Markets are increasingly Fundamentally and Technically Vulnerable. Indeed, the Primary Cause of the post-March 6, 2009 Equities Rally has been Cartel* Policies, including Intervention, as we demonstrated in last week's Letter.
*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.”
The Main Question has been and is “When will the Cartel catalyze or allow an Equities Market Fall? The Interventionals give us clues about when their next Moves might be.
In anticipation of an Equities Takedown, Deepcaster has identified and recommended a short position in a “Doomed Sector” in its December Letter in the “Latest Letter” cache at www.deepcaster.com.
The Fed-led Cartel has created a nearly impossible situation for the markets and the economy via their bubble-creating policies (pro-loose credit and extreme monetary inflation) of the last two decades.
This has created a near “No Exit” situation leaving only two alternatives in the long run: “The Cartel End Game” OR “Abolish The Fed”. How so?
The private for-profit Fed’s policy of near-zero interest rates has created an increasingly intolerable situation for retirees and others ultimately reliant on Treasury Bond income – there isn’t any such substantial T-Bond income anymore.
Indeed, yields on the three-month T-Bills maturing early in 2010 recently “went negative” according to a Bloomberg report.
Couple that with the ongoing destruction of the Purchasing Power of the U.S. Dollar (also catalyzed by The private for-profit Fed as a ‘Stealth Tax’ on all who earn or hold dollar-denominated assets) and the near-zero rates, these policies facilitate a ‘Carry Trade’ in U.S. Dollars (which is de facto U.S. Taxpayer financed) all to the benefit of speculators, and The Cartel.
On the other hand if The Fed raises rates, it further curtails credit and that would impel the economy toward a deflationary Depression.
If The Fed does not raise rates though, increasingly, the only Buyers for Trillions in U.S. Debt will be the Fed itself. That is, it will increasingly monetize the debt (which it has been doing covertly for years). This guarantees an ever-lower dollar and a consequent ever-greater ‘Stealth Tax’ on U.S. Dollar-denominated Asset Holders.
Worse yet, given the foregoing, the Fed must continue to hold, and continue to buy more, increasingly toxic CDO’s, including MBO’s in increasing amounts. That there will be ever more TOXIC CDO’s including MBO’s is virtually guaranteed by the 21.1% U.S. unemployment rate (shadowstats.com**) and consequent increasing Mortgage default rates, and foreclosures catalyzed by increased ARM rate resets, in 2010 and 2011.
Shadowstats.com calculates Statistics the old-fashioned way they were being calculated before the political gimmicking began in earnest in the 1980’s and 1990’s.
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported November 18, 2009 -0.18% 7.13% (annualized November Rate)
U.S. Unemployment reported November 6, 2009 10.2% 22.1%
U.S. GDP Annual Growth/Decline reported October 29, 2009 -2.33% -5.71%
The Reality is that the private for-profit Fed’s monetary and interest rate policies are again creating a bubble in Risk Assets, including especially Equities.
Consider Today’s Bubble in the Risk Assets Sector known as The Equities Markets.
This November, 2009 the Price/Earnings Ratio of the entire U.S. Stock Market is about 29.
That is, at current prices you could double your asset value in 29 years, -- a long, long time – but you could certainly not double your Purchasing Power, given the ongoing U.S. Dollar Devaluation.
But the Hundred Year Average Equities P/E Ratio is about 16.
Moreover, the Average Dividend Yield today is Under 2%.
Considering compounding, it would take you about 35 years to double your money per the Bankers Rule of 72s. NOT a stunning return.
And given that the Dow is bouncing around 10,000 – just where it was a decade ago – a ‘Buy and Hold’ Strategy is an exercise in futility.
In sum, recently we laid out Key Fundamental and Technical Factors which indicate that Equities Markets are likely topping. Among the Technicals are:
- Ascending Bearish Wedges
- Bearish Divergences between
- Prices and volume
- Prices and breadth
- Prices and momentum
- A Fibonacci Retracement
- An imminent MACD Signal
Clearly, based on today’s equities prices and earnings, Equities today (at Dow approximately 10,000) are stunningly overvalued.
We must conclude that, Coupled with today’s dismal Fundamentals, the Equities Markets are a Disaster Waiting to Happen.
Now consider how the foregoing Macro-overview can be used to provide a “Profit Parachute” in various Sectors, including, especially, Precious Metals.
The Strategy – Guidelines for Creating a Profit Parachute
- Get Authentic 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 source for getting Authentic Data. 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 key 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. [See one Interventional Tool – the multi-Trillion Dollar Derivatives Position at the Central Bankers Bank’s website, www.bis.org, path: Statistics>Derivatives>Table 19.] 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 and the multi-Trillion Dollar Derivatives positions reported at www.bis.org) 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. 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 is and will continue to 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 200 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 is employed effectively, it can result both in an increasing Core Position in Gold and Silver, and in considerable profit along the way.
Additional insights and details regarding this Strategy, which are essential to profiting from The Cartel’s Policies, are laid out in Deepcaster’s article of 3/06/09 entitled “Investor Advantage: Revisiting The Cartel’s ‘End Game’ ” 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 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.
A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan (as Deepcaster is) while at the same time insulating oneself somewhat from future Takedowns. The following points provide an outline of The Strategy (particularly as applied to the Gold and Silver Markets) and is designed to help avoid Portfolio unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
- Recognize that The Cartel is still Potent, as difficult as that may be psychologically for Deepcaster and other Hard Asset Partisans to acknowledge. The Cartel is still the Biggest Player in many markets and, if the timing and market context are propitious, the Biggest Player makes Market Price. In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and manipulating public opinion via its “Communications Policy” and those are tremendous advantages; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.
- Accumulate Hard Assets near the Interim Bottoms of Cartel- engineered Takedowns.
- In order to know when one is likely near the bottom of a Cartel-generated takedown, it is essential to take account of the Interventionals as well as the Technicals and Fundamentals. Paying attention to the Interventionals facilitated Deepcaster recommending five short equities positions as of early September (just before the Fall 2008 Crash) all of which we subsequent recommended be liquidated profitably.
- For example, regarding Gold & Silver, near such Interim Bottoms, accumulate a combination of the Physical Commodity (Deepcaster prefers “low premium to melt” bullion coins) and well-managed Juniors with large reserves. (Deepcaster provides a list of such Junior Candidates in our December 20, 2007 Alert “A Strategy for Profiting from Cartel Intervention” available in the Alerts Cache at www.deepcaster.com.) The “Physical” and “Juniors” are for holding for the long-term as a Core Position.
- Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term call options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
- However, there will be a time when The Cartel price capping is ineffective and Gold & Silver make record moves upward. The benefit of this Strategy is that one will likely be long in one’s speculative positions when this happens.
- Near the next Interim Top, liquidate the long options and majors. Again, in order to know when we are close to the next Interim Top, it is essential to monitor the Interventionals, as well as Fundamentals and Technicals.
- Near that Top, sell short or buy puts on Majors. We re-emphasize the Majors as preferred vehicles for trading positions because such positions are more liquid and tend to be quite responsive to Cartel moves.
- Near the next Interim Bottom, cover your shorts and liquidate your puts and go long again to begin the process all over again. We emphasize that it is essential to consider the Interventionals as well as the Fundamentals and Technicals in order to determine the approximate Interim Tops and Bottoms.
Employing such a “Profit Parachute” Strategy can aid one in protecting assets and profiting, in spite of Cartel Intervention.
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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