Financial Markets Warning!, Exit Strategy Profitable for Limited Time Only!?
Stock-Markets / Financial Crash Feb 19, 2010 - 02:37 PM GMTBy: DeepCaster_LLC
CONUNDRUM: As The ___?___ Economy goes so goes the International Economy (Fill in the blank)
Markets Warning!
The Musical Chairs Party Game is nearly over for key Bullish Markets. Many players will be left without a Chair to face the Bears.
Indeed, one of the savvyist Big Players is already half-way out the door! Last week we noted that China ordered its currency reserve Manager to exit from risky U.S. dollar assets, and retain only debt guaranteed by the U.S. Government.
Significantly, China, one of the Great Engines of International Economic and Equities and Commodities Markets strength in the past decade, has begun to show considerable weakness and tightening on several fronts.
- It has twice increased bank reserve requirements in recent months
- Its exports are down 25%
- (Not Good for an export-based economy)
- Its Commercial transportation is declining double digits
- Demand for Chinese goods was driven largely by borrowed money. But borrowing worldwide is declining
- Chinese Energy consumption is declining
- But China was until very recently still overlending, and, arguably, still is
- China’s recent apparent growth is virtually all stimulus driven
- Perhaps worse, quite like Official Statistics in the U.S., Chinese GDP (and other economics) numbers are likely lies, according to Vitaliy Katsenelson, Portfolio Mgr. Of Investment Management Associates
All of the above spell “China Bubble”.
Yes, China has over $2 Trillion of foreign reserves, BUT it has Trillions in government backed loans which are liabilities.
And China has begun to leave the Markets’ Party, with negative consequences coming soon. (Deepcaster has just recommended a short China Play available in the ‘Alerts Cache’ at www.deepcaster.com.)
So what are those likely consequences? Likely a decreased demand for commodities including energy. And likely a takedown in the Equities Markets worldwide.
The yet-unresolved Greek sovereign Debt Crisis and Italian Sovereign Debt Crisis (Italy has five times as much debt as Greece) and the U.S. Multi-Trillion National Debt and $70 Trillion plus downstream unfunded liabilities (which cannot be repaid without destroying the U.S. Dollar) virtually guarantee dark days ahead for the Equities Markets and Economy.
And China has reportedly begun to sell chunks of the $1 trillion plus it owns in U.S. Treasury and Agency Securities.
So we offer some Strategic Guidelines designed to enhance profit and protect wealth before the Music Stops.
- Establish hedges and short positions not merely for protection but also for profit. Be just as willing to “go short” as to go long. Even the highest quality securities tend to get taken down in a down market.
- Make judicious use of Exchange Traded Funds, including leveraged short and long funds. Know both their risks and their potential. Deepcaster has already recommended several short ETFs to take advantage of this prospective Markets takedown. (See Deepcaster’s latest Alerts and Letters at www.deepcaster.com.) Such short positions can be very profitable. (All five of the short positions which Deepcaster recommended before the Fall, 2008 Crash were subsequently liquidated profitably.)
- Get the Real Numbers
Consider the following Real Numbers from Shadowstats.com which calculates the Real Numbers for the U.S.A. the way they were calculated in the 1980’s and 1990’s before Official Data Manipulation began in earnest.
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported February 19, 2010
2.63% 9.76% (annualized February Rate)
U.S. Unemployment reported February 5, 2010
9.7% 21.2%
U.S. GDP Annual Growth/Decline reported January 29, 2010
0.10% -4.62%
As these Real Numbers show, the policies of the private for-profit Fed are resulting in a ‘Stealth Tax’ on, and Massive Wealth transfer from, Americans and Investors around the world to Mega-financial Entities. See “Surmounting the Cartels' 'End Game' Juggernaut” (9/25/2009) and “Opportunities & Threats in Derivatives Shocker” (5/29/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
- Buy the Ultimate Safe Haven Measures and Stores of Value – Gold and Silver. BUT try to buy near interim lows of Cartel*-generated Takedowns.
It is essential to be aware of the risks of the ongoing Cartel* Takedowns.
For those readers newly introduced to topic, there is clear and convincing evidence that a Fed-led Cartel* of key Central Bankers and Favored Financial Institutions regularly overtly and covertly manipulate Precious Metals, (and Equities and Strategic Commodities) prices much to the detriment of Investors/Citizens around the world.
The Cartel’s motivation for these Interventions is clear. Were Gold and Silver to become increasingly widely acknowledged as the legitimate Ultimate Stores and Measures of Value, that would further delegitimize the Cartel’s Fiat Currencies and Treasury Securities. In that event The Cartel would lose Power and Profit. (Deepcaster has designed a Strategy to Profit from Gold and Silver despite Cartel Intervention. See “Defeating The Cartel…with Profit” (03/28/2008) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.)
*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, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts And December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the “Alerts” and “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.”
- 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 (e.g. in 2008) from its highs of over $1000/oz down to around the mid-$700 level 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.
Unfortunately, The Cartel is still potent, and capable of taking down the Precious Metals Markets at will. The $50 dollar Gold price Takedown days at the beginning of December, 2009 and February, 2010 testify to that.
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! Indeed The Dow was at about its current level of 10,000ish, a decade ago. And, adjusted for inflation Dow stockholders have actually lost over 30% of the Purchasing Power of The Dow’s dollar-value.
- 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 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.
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.
WARNING: Market Takedowns are often more Rapid and Violent than Bullish moves. If you intend to get positioned, we suggest you do it soon, because you may well have a “Limited Time Only.”
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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