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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Profit Opportunities and Threats from The Debt Bomb Exploding

Commodities / Gold and Silver 2010 Nov 12, 2010 - 03:10 AM GMT

By: DeepCaster_LLC

Commodities

Best Financial Markets Analysis ArticleHere is the glaring hole in the United States Federal Reserve's approach to what it calls stimulus, and what history will one day categorize as fraud: You can't use your own debt to purchase more debt when you can't repay the original debt. The crime is compounded when you know you're never going to repay the debt. It amounts to treason to intentionally destroy the integrity of the nation's money."


"Buying $600 Billion in Debt with Debt."

James West, lemetropolecafe.com, 11/5/10

Cui Tiankai, a deputy foreign minister and one of China’s lead negotiators at the G20, said on Friday that the US plan for limiting current account surpluses and deficits to 4 per cent of gross domestic product harked back “to the days of planned economies”.

We believe a discussion about a current account target misses the whole point,” he added, in the first official comment by a senior Chinese official on the subject. “If you look at the global economy, there are many issues that merit more attention – for example, the question of quantitative easing.”

China’s opposition to the proposal, which had made some progress at a G20 finance ministers’ meeting last month, came amid a continuing rumble of protest from around the world at the US Federal Reserve’s plan to pump an extra $600bn into financial markets.

Officials from China, Germany and South Africa on Friday added their voices to a chorus of complaint that the Fed’s return to so-called quantitative easing would create instability and worsen imbalances by triggering surges of capital into other currencies…

With all due respect, US policy is clueless,” Wolfgang Schäuble, German finance minister, told reporters. “It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.””

“China tees up G20 showdown with US”

Alan Beattie in Washington, Geoff Dyer in Beijing, Chris Giles in London, The Financial Times, 11/5/10

$10.2 trillion: The amount of money advanced-nation governments will need to borrow in 2011…

Next year, fifteen major developed-country governments, including the U.S., Japan, the U.K., Spain and Greece, will have to raise some $10.2 trillion to repay maturing bonds and finance their budget deficits, according to estimates from the International Monetary Fund. That’s up 7% from this year, and equals 27% of their combined annual economic output.

Aside from Japan, which has a huge debt hangover from decades of anemic growth, the U.S. is the most extreme case. Next year, the U.S. government will have to find $4.2 trillion.”

“Number of the Week: $10.2 Trillion in Global Borrowing”

Mark Whitehouse, The Wall Street Journal, 11/6/10

Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today

The development of a monetary system to succeed Bretton Woods II launched in 1971, will take time. But we need to begin.”

Robert Zoellick, World Bank President & a former US Treasury Official, 11/8/10

It is becoming ever more widely understood, correctly in our view, that the National Debt of the USA (and that of certain other Major Nations as well) can never be repaid without further dramatic Debasement of the Purchasing Power of the U.S. Dollar (and those other Fiat Currencies).

And it is further Dollar Debasement we are almost Surely going to get with Q.E. 2 $75 Billion Increments now in the Pipeline and Q.E. 3, and, perhaps Q.E. 4 looming on the Horizon.

So the Key Question for Investors (Savers/Retirees/Citizens/Small Business People) is: How do I prevent the considerable ongoing loss of Wealth resulting from the seemingly inexorable Present and Prospective Diminishing of the Purchasing Power of the U.S. Dollar (and those other Fiat Currencies)?

The immediate Answer, and no Surprise to regular readers: Gold (and Silver), which has, unsurprisingly, been putting in Record Nominal Highs lately.

But, in the past couple of decades, though the Gold Price has generally trended upward, it has also been subject to PERIODIC violent Takedowns.

The Evidence is Persuasive that The Fed-led Cartel of Central Bankers has repeatedly attempted to Suppress Gold (and Silver) Prices, with some Success, as our Regular Readers are already quite aware.

*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, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at Deepcaster’s website. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, 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 Deepcaster’s website have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.

But beginning early this year, Insider Testimony about Market Manipulation plus Revelations that Major Repositories do not have all the Gold they say they do have led to a Surge in the Gold (and Silver) Price and Great Difficulties for The Cartel Price Suppression Scheme.

So what next?

Has The Cartel been defeated once and for all? Will Gold move rapidly past its 1980 (Official) Inflation-adjusted High ($2400/oz approximately) or even past its Real-Inflation adjusted high in excess of $7,000/oz (Shadowstats.com)?

The Globalist (as opposed to Internationalist) for-profit Central Bank Fiat Currency and Treasury Securities Purveyors (and their Allies) are not going to give up without a Fight. So what is likely to happen?

Robert Zoellick, World Bank President and former U.S. Treasury Department Official, provides a Major clue regarding both the Great Opportunities and Great Threats.

Let’s Unspin his Recent Pronouncements:

“Although textbooks may view gold as the old money, markets are using gold as an alternative Monetary asset today.”

Our Unspun Interpretation:

The Purchasing Power of the U.S. Dollar is being destroyed and in the next few years will cease to serve as the World’s Reserve currency. Other Fiat Currencies are being similarly Degraded. Certain Major Sovereign Nations (and certain Private) Debts cannot be repaid without this Currency Degradation…we all know Gold (and Silver) is the only Real Money. Thus the Next Money (i.e. World Reserve Currency) must be linked to Gold.

Quote:

“The development of a monetary system to succeed Bretton Woods II launched in 1971, will take time. But we need to begin.”

Our Unspun Interpretation:

“We Globalists know the Major Fiat Currencies (e.g. U.S. Dollar and Euro) are going to Fail and (Wink, Wink) we may just have planned it that way.” (See Deepcaster’s Article regarding The Cartel’s ‘End Game’ in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.)

Zoellick Conclusion (summarized):

A new System is needed using 5 Main Currencies with gold as the “reference” point for future currency Values.

Our Unspun Interpretation:

We Globalists are going to Need (to further increase our Power and Wealth) a New Global Currency (printed out of thin air and issued by us Globalists for profit of course) which to start will be an amalgam of 5 main then-devalued currencies including the U.S. Dollar and Euro which will serve as a Transition to our One World Globalist Currency (likely the “Banco”, as Keynes suggested) which, since we Globalists Control it, will be linked to Gold (which of course will have to come from the Main Nations whose Currencies have been devalued), so it will have some lasting Value, mainly for our benefit, but also yours, for you will gain Stability.

But of course in the process of Sovereign Currency Devaluation, you will lose Much of your Wealth, Much of your Economic Freedom, and Much of (if not all) of your Political Freedom…

Our Conclusion:

Therein lies The Threat.

Of course, in the process, which is already occurring, Gold and Silver will soar in Value (subject of course to occasional Cartel-generated Nasty Price Takedowns).

Therein lies The Opportunity.

Or, as we have explained before, we have developed a Strategy designed to Maximize Profit from The Opportunity and Minimize Damage from The Threat.

We Outline the Background for and the Key Points of that Strategy, as well as points made by others, below. For full details, readers should see “Surmounting the Confiscation or Collapse Scenario” (09/09/10) in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.

Only liquidation of the biggest banks can enable a recovery, period!!

“Gold & Investment in Failure”

Jim Willie CB, GoldenJackass.com, 9/1/10

The Main and Present Problem which we address here is The Issue of how Excessive, and probably unpayable multi-Trillion Dollar (Pound, Euro, etc.), Public and many Private Debts finally gets resolved and how investors can prepare to protect, and profit, NOW, before more Crises and their Toxic Fallout…

And to whom is most of this Public and Private Debt owed? Answer: Mainly to the International Mega-Banks (the same ones who got us into this Financial fix via their pro-bubble credit policies). Hold that important thought…

And there is another Confiscation brewing. The “U.S. Depts. Of Labor and Treasury have Scheduled Hearings on Confiscation of Private Retirement Accounts” P.A…

… such Mandatory Conversion is a de facto Wealth Confiscation.

Investors-Citizens can either submit and allow their Financial future to be determined by the Mega-Bankers (and all the while suffering degradation of the Value of their Assets). OR

They can work to create Political and Financial Structures and Conditions which make a Real Recovery Possible…, as well as investing defensively.

This “Option” of facilitating the U.S. Dollar (Pound, Euro, etc.) Degradation is, we have long maintained, a component of The Cartel’s* End Game for which, evidence increasingly indicates, they have long been planning (see Deepcaster’s articles cited below).

Indeed, The Fed-led Cartel’s* ‘End Game’ Juggernaut is Rallying Profitably Along – “profitably” to the Tune, for example, of a $11.8 Trillion gain for certain Mega-Financial Institutions in the last 6 months of 2008, when Equities Investors worldwide were losing Trillions in the Equities Markets Crash. (See The Central Banker’s Bank’s (The Bank for International Settlements) website www.bis.org (Path:  Statistics>Derivatives>Table 19) and “Opportunities & Threats in Derivatives Shocker” (05/29/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.)

These Massive Gains were doubtless “facilitated” by The Fed-led Cartel’s Interventional Regime which we describe in detail in the articles noted here.

Fortunately there are Steps which Investors worldwide can take to derail the Juggernaut…

… the Fed-led Cartel’s policies appear to have resulted and to be resulting in a massive Wealth Transfer from Investors/Taxpayers around the world to the Fed-led Cartel and their favored financial institutions.

Of course, a key component of this Wealth Transfer involves debasing the value of the U.S. Dollar…

… Investors… have seen the purchasing power of those dollars dramatically eroded by, for example, over 35% in the last 8 years alone…

… Consider this observation by the eminent Harry Schultz

seemingly random monetary mess that multiplies its momentum every day?  The answer, in one word, control.  The elite/insiders already have control of the financial system, but they wanted more, much more…and it was not random, it was planned.”

HS Letter, April 27, 2008

The Cartel* ‘End Game’, as Deepcaster has named it, apparently involves Stealthily transferring ever more Wealth and Power to The Cartel at the expense of Investors/Citizens around the world. (For more details, see “Coping with the Superpower Cartel Threat” (1/30/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.)

In this connection we must consider F. William Engdahl’s contention that the 2008 Credit Crunch and Market Crash were planned: “…in every major U.S. financial panic…the titans of Wall Street…have deliberately triggered bank panics behind the scenes to consolidate their grip on U.S. Banking…”

The Root Cause of The ‘End Game’ Threat lies in the secrecy, structure, functioning and policies of the private-for-profit “U.S.” Federal Reserve…

“This is what the U.S. does - - it issues Treasury Bonds.  The U.S. then sells these bonds to the Fed.  The Fed buys the bonds.  Wait, how does the Fed pay for the bonds?  The Fed simply creates money “out of thin air” (book-keeping entry) with which it buys the bonds.  The money that the Fed creates from nowhere then goes to the U.S.  The Fed holds the U.S. bonds, and the unbelievable irony is that the U.S. then pays interest on the very bonds that the U.S. itself issued.  (With great profit to the private owners of The Fed - - Ed. Note)  The mind boggles.”

Richard Russell, “Richards Remarks,” dowtheoryletters.com, 3/27/07

 

As Richard Russell points out the creation of ever-increasing debt and interest payments is unsustainable. Thus there will inevitably be a Day of Reckoning, a Day which is fast approaching… Argentina in 2002 is coming to the USA.

Masking the True State of the Economy and Financial Markets, is another aspect of The Cartel Regime –  Data Manipulation.

Shadowstats.com calculates the Real Numbers for the U.S. the way they were calculated in the 1980’s and 1990’s, before systematic Official Data Distortion and Interventions began in earnest.

Bogus Official Numbers      vs.      Real Numbers (per Shadowstats.com)

Annual U.S. Consumer Price Inflation reported October 15, 2010

1.14%                            8.48% (annualized September, 2010 Rate)

U.S. Unemployment reported November 5, 2010

9.6%                              22.5%

U.S. GDP Annual Growth/Decline reported October 29, 2010

3.11%                            -1.44%

U.S. M3 reported November 7, 2010 (Month of October, Y.O.Y.)

No Official Report             - 3.36%

One antidote (in addition to Gold and Silver) to Real Inflation of 8.48%/yr. is Deepcaster’s High Yield Portfolio with Recent Yields of 18.5%, 10.6%, 26%, 8%, and 15.6% when added to the Portfolio.

Fortunately and in light of all of the foregoing Deepcaster has developed a Strategy for Protecting Wealth as well as Profiting and notwithstanding near-term outcomes of the battle over Fed Power:

The Strategy – Guidelines for Identifying Opportunities for Profit and Protection

  1. Get the Real Data
  2. Take Account of both Overt and Covert Cartel Intervention.
  3. Buy and Hold” strategy rarely succeeds anymore.
  4. Track the Covert Interventionals as well as the Technicals and Fundamentals and Overt Interventionals.
  5. Perhaps most important, be prepared to go both long and short Major Market Sectors.
  6. Be aware of and Active in the overall Geopolitical Landscape.  Become involved in Political Action:
    1. Become involved in the movement to Audit and then abolish the private-for-profit U.S. Federal Reserve
    2. Join the Gold AntiTrust Action Committee
    3. Work to defeat The Cartel ‘End Game

(See the Article cited above for full details.)

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.

Best Regards,

By DEEPCASTER LLC

www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation         Wealth Enhancement

© 2010 Copyright DeepCaster LLC - All Rights Reserved
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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