Gold Investor Profit and Protection Despite Banking Cartel Intervention
Commodities / Gold and Silver 2012 Dec 14, 2012 - 02:10 AM GMTBy: DeepCaster_LLC
“Western central banks conceal their gold loans and swaps because information about them is ‘highly market-sensitive and accountability about them would hinder secret currency market interventions by central banks, according to a confidential report by the International Monetary Fund obtained this week by GATA. …
“This is, the explicit but secret policy of Western central banking toward gold is to deceive and manipulate markets, as GATA long has complained. …
“…they considered that the Special Data Dissemination Standard reserves template should not require the separate disclosure of such information but should instead treat all monetary gold assets, including gold on loan or subject to swap agreements, as a single data item.”
“Secret IMF report: Hide gold loans and swaps for market manipulation,”
The GATA Dispatch, Gold Anti-Trust Action Committee, 12/11/2012
In a remarkable Coup, the Gold Anti-Trust Action Committee (gata.org) has uncovered even more evidence that Major Central Banks and their Allied Banks are Systematically Suppressing the Prices of Gold and Silver.
This Ongoing Price Suppression legitimizes and bolsters the Ostensible Value of their Treasury Securities and Fiat Currencies as stores and measure of value vis-à-vis Gold and Silver.
Remarkably, The BIS, The Central Bankers’ Bank, advertised in June, 2008 that one of its “Products” was “Interventions” in the Gold Market, as well as Currencies.
The Price Suppression Scheme is International, involving many Banks as Mr. Rigaudy’s characterization implies.
“Our Products – Forex and Gold Services > Interventions”
The Bank for International Settlements (BIS): An Introduction
Jean-François Rigaudy, Head of Treasury, June, 2008
This came as no surprise to the GATA (GATA uncovered the BIS advertisement) nor to Deepcaster, nor to others of us who have for years contended that a Cartel (Note 1 below) of Mega-Banks (including those who own the private for-profit U.S. Federal Reserve, and Key major Eurozone Bankers) is engaged in an ongoing campaign to suppress Gold and Silver Prices.
Market Manipulation (and not just of the Precious Metals Markets as we shall see) provides a Challenge to Investors, and a Threat to their Wealth, but also an Opportunity to Profit and Protect Wealth, as we explain here.
First, reviewing several facets of, and Key Points in the History of Manipulation is crucial to understand the variety of effects, and how to Profit and Protect from them (and see e.g., Notes below). Consider…
“There is a whole mammoth industry out there - the big banks, hedge funds etc. - whose whole purpose is to make money from money and the more you have in the first place the easier it is to do. Not by producing anything useful, but through manipulation of prices through short selling in huge volumes to drive prices down, buying on the turn, allowing prices to rise back up, taking profits, then more short selling to drive prices down again and the cycle continues. This works better in a bull market, which gold has been in for the past ten years or so.
“The amount of money that can be devoted to such exercises is almost beyond belief - and the regulators turn a blind eye to such blatant manipulation that works strongly against the small or even medium-sized investor in favour of the really big ones. If there is anything that may bring the capitalist system crashing down it is, perhaps, the power of big money to rule all our lives…
“Sometimes they get it wrong… as happened with the subprime mortgage fiasco (basically another financial institutions' manipulation affair). But do the people who caused the problem in the first place suffer - for the most part no.”
“Opinion: Gold price manipulation - probably. Conspiracy - a matter of semantics!”
Lawrence Williams, Mineweb.com, 6/29/10
Another Essential to understand is that The Fed is a private for-profit entity, owned by Global Mega-Banks, some of which are headquartered in Europe. David Stockman explains some of the Negative consequences of this Mega-Bank Cartel for Investor Citizens around the World.
“We have had a Fed engineered serial bubble, that has created the appearance of wealth, that has caused people to consume beyond their means through borrowing, and that has flushed the income and wealth of our society up to the top, as a result of the Fed turning the financial markets into a casino. These are pure casinos, they are not capital markets, they are not adding to the productive capacity of our economy, they simply are a bunch of robots trading with each other by the millisecond as a result of the Fed giving them zero cost overnight money, and giving them all kinds of hand signals on what to front-run.
“The Fed is destroying prosperity by funding demand that we can't support with earnings and production, causing massive current accounts deficits and the flow of funds overseas and the build up in China, OPEC and Korea of massive dollar reserves which is a totally unsustainable, unsupportable system, and we are coming near the edge of where that can continue to remain stable.”
David Stockman, Former Reagan OMB Director, December, 2010
Among the Mega-Banks holding huge Precious Metals and other Derivatives Positions are familiar names (JPM Chase held a Derivative Portfolio of some $70 Trillion Notional value in 2010).
“This report (Q1 2010 Bank Derivatives report – ed.) contains more evidence that a flood of paper gold and silver instruments are being used to divert investor capital away from the purchase of the actual physical metals in order to suppress prices…
“Two bullion banks, JPM and HSBC, continue to dominate the precious metals derivatives market with positions that are outrageously oversized compared to the underlying metals markets…”
“Manipulative Gold & Silver Derivative Positions Continue to Grow!”
Adrian Douglas, Marketforceanalysis.com, 6/26/10
Other Negative Consequences of Massive Fed and other Mega-Bank QE (Money “Printing” and Credit Facilitation) were presciently identified by Bob Chapman (R.I.P.) and Warren Buffet.
“Banana Ben, like his equally pernicious predecessor, Easy Al, is trying to paper over declining US living standards by orchestrating asset bubbles. Ironically, Ben has driven the public into bonds and his QE 2.0 is now bursting the mother of all bubbles, the bond market.
“Soon Ben will be at his Rubicon. He must then either monetize everything or allow short rates to explode higher. This of course would precipitate the dreaded debt deflation that solons have tried to avert.”
Bob Chapman, International Forecaster, 12/18/10
“Charlie and I are of one mind in how we feel about derivatives and the trading activities that go with them: we view them as time bombs, both for the parties that deal in them and the economic system.”
Warren Buffet, February 21, 2003
Indeed, Ben’s Fed has arrived at his Rubicon is reflected in the recent Fed decision to conduct Q.E. to Infinity. The Time Bomb to which Buffet refers has started to explode. And The Fed and other central Bankers are Massively Monetizing (i.e. printing/digitizing Money and Buying) Sovereign and other Debt, and thus creating another Massive Asset Bubble.
For example, in the December, 2011 to February, 2012 period The ECB injected One trillion Euros’ into the International Economy on top of all the Fed QE and other injections. And it is this Immense and Ongoing QE which provides Great Profit Opportunities (see Notes) as well as Great Systemic Threats, as we explain.
But it is important to understand that it is not just the P.M. Markets that are manipulated but Equities, Bond, and other Markets as well. Consider one example:
“…All told, the Fed has bought $20 billion worth of Treasuries in this fashion, $11.15 of which it purchased last week alone. With this kind of weekly money pumping in place, Bernanke and pals don’t need to continue their “behind the scenes” games (like the options expiration week money pumps).
“Or do they?
“Unbeknownst to most investors, last week Ben Bernanke pumped an additional $11.05 BILLION into the system ON TOP of the $11.15 pumped via the POMOs. In plain terms, the Fed juiced the system by $20+ billion in a single week, bringing its liquidity pumps RIGHT BACK to QE 1 LEVELS.
“If you want to know why stocks have rallied in the last month (September, 2010; Ed.) this is THE reason. The economy isn’t improving and the European Crisis isn’t over. Nothing has improved. All that has happened is the Fed funneled money into the Primary Dealers who ramped the market.
“This is also the reason why the latest rally has almost entirely consisted of gap ups: the Primary Dealers ramp the market and then the computer trading programs take care of the rest.
“In plain terms, the market is being juiced higher, plain and simple. There is no fundamental reason for stocks to be rallying. Moreover, we have numerous signs of a top forming (mutual fund cash levels, insider selling to buying ratios, negative divergence, etc). Those who choose to buy into the farce of a rally are going to get what’s coming to them. And when they do, it won’t be pretty.”
“The Only Reason Stocks Have Rallied This Month”
Graham Summers, Seeking Alpha, 9/28/10
See also “Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer” 2/20/2012, Bob Janjuah, Nomura International Strategist.
Indeed, near the end of the Fall, 2008 Equities Market Crash (i.e. as of December 2008) there were about U.S. $548 Trillion in Notional OTC (i.e. Dark, Not Exchange Traded; thus traded mainly by Mega-Banks) Derivatives still outstanding worldwide.
Yet over three and one-half years later (as of June 2012 – the latest BIS Report date) that total was at about $639 Trillion, which nearly equals the all-time pre-Crash (June, 2008) High of $684 Trillion, according to the Central Banker’s Bank, the Bank for International Settlements (www.bis.org, path: Statistics>Derivatives>Statistical Tables, Table 19).
Clearly, a Conclusion that Systemic Risk (generated by Derivatives Exposure which existed, e.g., at AIG) has somehow been substantially lessened by the actions of the private for-profit Fed, the European Central Bank, the U.S. Government, or any other source, is wrongheaded.
Given the Massive Size and Impact of the over $600 Trillion in Dark OTC Derivatives, Investing or Trading without addressing the issue of likely Cartel* Market Interventions is a recipe for disaster.
Thus, we offer the following Overview and Update regarding The Interventional Universe to provide a Springboard for the Profits and Protection Strategy which we describe below. And in our 2011 and 2012 letters and Alerts, we offer Buy Recommendations designed to profit from impending Forecast Mega-Moves.
This December, 2012 Article is the Thirteenth in a series of Deepcaster's work originally entitled "Juiced Numbers". It provides an Updated Overview and Summary of Market Intervention and Data Manipulation. It reflects Analysis of key recent Releases from (and actions of) the BIS (Bank for International Settlements – The Central Banker’s Bank), BLS (Bureau of Labor Statistics) and The U.S. Federal Reserve, as well as Highlights of recent Interventions, and updates regarding The Cartel* “End Game.” For the sake of Brevity, we refer to our earlier articles in this series.
Bailouts and Stimuli have afforded The Cartel a whole panoply of additional tools for Market Intervention which they did not possess even five years ago. These tools make tracking “The Interventionals” ever more challenging. In sum, this report provides even more evidence of increased Risk of Hyperstagflation and/or Systemic Collapse, and of the beginning of the attempted implementation of The Cartel’s Nefarious “End Game” (see “Saving Investments, Sovereignty, & Freedom from the Cartel ‘End Game’ (1/13/11) in the ‘Articles by Deepcaster’ cache at deepcaster.com).
Moreover, it provides evidence that the private for-profit Fed’s and its allied Mega-Banks’ Policies and Actions are the Primary Cause of the Economic and Financial Crises from which we suffer today.
Therefore, Deepcaster suggests below a Systemic Solution and a Strategy for profiting and protecting from the Interventional Regime’s actions and policies, and coping with its ‘End Game’ Strategy.
The Covert Interventional Context – Overview
Deepcaster is periodically asked to explain, and provide evidence for, our view that a U.S. Federal Reserve-led Cartel* (apparently composed of the U.S. Federal Reserve, Major Central Bankers and key Primary Dealers manipulates a wide variety of markets. [Apparently one “Operational Vehicle” through which The Cartel works is called “The Working Group on Financial Markets” established after the 1987 crash, and which is often informally and widely referred to as “The Plunge Protection Team” or PPT.]
Essential to maximizing profits and to avoiding losses is to recognize that the Fed-led Cartel (Note 1) manages two complementary Interventional Regimes – one quite public, and the other dark one, at least as powerful, covert. Thus, a critical key to profit and loss is tracking the “Dark Interventionals” (which leave “Tracks” so to speak) as best one can, as well as the public ones.
Moreover, whether an Intervention is Overt or Covert is often a matter of degree. Overt Intervention often has a Covert aspect (e.g. how was that TARP Bailout Money used and who received it?), and Covert ones are often difficult to detect, but nonetheless can often be tracked using publicly available information. Consider for example, the Graham Summers Quote above.
It is important to note also that by “Cartel Intervention” we do not (usually) mean that the Cartel totally controls prices in any particular market, at all times. Various markets are affected in varying degrees, at varying times, by Cartel manipulation attempts.
In markets such as the (relatively) Small Cap markets for Gold and Silver Bullion and especially Mining Stocks, Cartel manipulation attempts can have much more impact and are, at times, and for certain time periods, tantamount to control. But although the Cartel’s ability to manipulate certain of these Markets has been significantly weakened in recent months for reasons we explain in our Spring, 2010 and later, Letters, Articles and Alerts (e.g. “Profit from a Weakening Cartel, July, 2010 Letter”) it is far from Insignificant – note the $90ish one day February 29, 2012 Takedown of the Gold Price e.g. Here we do not focus on the Overt Interventions since they are described at length in various mainstream financial publications.
COVERT DIRECT INTERVENTION
Covert Direct Intervention to manipulate a variety of markets appears to be accomplished primarily via three categories of vehicles:
- “Repo” Injections from The Fed (TOMO’s & POMO’s though POMO injections have become more widely reported recently)
- Over The Counter (OTC) Derivatives (reported at www.bis.org, see above)
- “Bailout” monies and Authorizations which Congress unwisely gave the Fed without requiring full disclosure or Oversight and, in particular, the TARP and TSLF (Term Securities Lending Facility) injections by The Fed, QE1, QE2, QE3 and the ongoing QE4, and other Vehicles such as the Primary Dealer Credit Facility (PDCF)
- Debt Monetization and Credit Facilitation by other Banks such as the ECB and its $1 Trillion Dec. 2011, February 2012 LTRO Operation.
[For fuller Explanation, see Deepcaster’s Article “PROFIT & PROTECTION FROM CARTEL INTERVENTION -- Including New Interventional Tools Description “ (12/23/09) in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com and for details regarding Cartel use of Repos, Derivatives, Bailout Monies and other Vehicles see the July, 2009 Letter.]
The Challenge: Determining the Impact of The Interventionals
The challenge for Investors and Forecasters is to determine where (i.e. in what Sector/s) and how (immediately, in increments, etc.) the Repo-backed funds and/or TARP/TSLF/Bailout QE/LTRO Funds and/or OTC Derivatives (“Interventional Funds”) etc. will be employed. Deepcaster and those very few others, who monitor the Interventional Funding (and related Cartel and Allies’ actions) to the extent that is feasible, make educated Forecasts of where and how such funds are likely to be used based on patterns, tendencies, and judgments virtually all of which can be gleaned or inferred from publically reported information. But no outsider can know for sure.
Those who doubt whether the Cartel has the capacity to manipulate the markets (and especially the larger markets like the multi-trillion dollar currency and bond markets) are invited to inform themselves about the U.S. Trillions plus of OTC Derivatives at Fed Primary Dealer J.P. Morgan Chase, or U.S. at Fed Primary Dealer Goldman Sachs and Fed Primary Dealer Citibank.
Indeed both Opportunities for and Threats to Investors are generated by Cartel Policies and the Massive OTC Derivatives positions. Consider:
“With Key Mega-Financial Institutions around the World claiming in 2008 that they risked collapse if they were not bailed out, one must ask which ones benefited from the $15 Trillion plus Increase in Gross Market Value of their OTC Derivatives in the six months between June, 2008 and December, 2008 when the Equities Markets were crashing and Investors around the world were losing trillions? A logical Conclusion: Key Central Bankers and Favored Financial Institutions of The Fed-led Cartel*, quite possibly including the shareholders of the private for-profit U.S. Federal Reserve” (cf. BIS Table 19 cited above)”
Deepcaster, May 29, 2009
INDIRECT MANIPULATION
Key Statistics continue to be gimmicked by Official Sources including especially the USA and China much to the detriment of American Citizens and Investors Worldwide. One result of this is that the extent to which Mega-Bank Policies result in the confiscation or devaluation of Investor Wealth, is hidden.
Investors and citizens-at-large are misled by Official Statistics which have been gimmicked, as shadowstats.com demonstrates. All of the following Real Numbers for the USA are calculated by shadowstats.com, which calculates them according to traditional methods used in the 1980s, and early 1990s, before The Political Adjustments currently being utilized began in earnest.
As the Real Numbers mentioned below demonstrate, our ongoing economic and financial crisis is not merely a “normal” business cycle Recession, but a System-Threatening Crisis. Indeed, we are on the Threshold of a Hyperinflationary Depression. (See below)
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported November 15, 2012
2.16% / 9.82%
U.S. Unemployment reported December 7, 2012
7.7% / 22.9%
U.S. GDP Annual Growth/Decline reported November 29, 2012
2.49% / -2.10% (i.e. a Negative 2.1%)
U.S. M3 reported December 8, 2012 (Month of November, Y.O.Y.)
No Official Report / 3.54% (e)
Knowing these Real Numbers facilitated Deepcaster’s recommending “Opportunities in the Impending Perfect Storm” – the title of his early September, 2008 (pre-Crash) Article warning of the impending Crash (available in the Articles Cache at www.deepcaster.com) and his making five short (and subsequently quite profitable) recommendations to subscribers at about that time.
To understand the motives and Goals for Fed and Cartel Policies and actions consider:
A Brief Anatomy of the “U.S.” Federal Reserve
Indeed, the Profit Motive lies behind Fed Actions. Even the most causal student of Economic History knows that the United States’ Federal Reserve system, or “The Fed” as it is called, is not a U.S. government owned or controlled entity.
Various international private banks, several of which are headquartered in Europe, own “shares” in the “United States” Fed. Moreover, this “United States” Fed leads a Cartel of Central and Private Banks* who collectively intervene in a wide variety of markets, as Deepcaster demonstrates here. All this is obviously quite financially incestuous.
These International Bankers, acting through their “U.S.” Fed, profit both by creating money out of “thin air” and by collecting “interest” from U.S. Taxpayers on the Treasury Securities it has bought with U.S. Dollars (Federal Reserve Notes) it has created out of thin air. The Dean of the Newsletter Writers, Richard Russell, eloquently describes all this:
“I still can’t get over the whole Federal Reserve racket…
“The damnable result is that the Fed effectively controls the U.S. money supply. The Fed is …not even a branch of the U.S. government. The Fed is not mentioned in the Constitution of the United States. No Constitutional amendment was ever created or voted on to accept the Fed. The Constitutionality of the Federal Reserve has never come before the Supreme Court. The Fed is a private bank that keeps the U.S. forever in debt - - or I should say in increasing debt along with ever rising interest payments.”
Richard Russell, “Richards Remarks,” dowtheoryletters.com, 3/27/2007
[Historical note: recall that President John F. Kennedy was unhappy with Fed policy and therefore caused U.S. Notes to be printed by the U.S. Treasury as Constitutionally Authorized and as a substitute for Federal Reserve Notes. The issuance of these Notes ceased shortly after President Kennedy's Assassination.]
The one conclusion that one can make from the foregoing is that the failure to take account of the power, force and pervasiveness of Fed-led Cartel Manipulations (i.e. The Interventionals) is an invitation to financial and investment suicide (see 12/23/09 Article, Ibid).
The Interventional Regime – Motive, Causes and Consequences
Clearly, The Cartel has created a Financial System subject to ever-greater Systemic Risk. Why?
Harry Schultz, the Eminence Grise of the Financial Newsletter writing fraternity, puts the question in this way when writing about the Financial Crisis –
“what is the reason for this 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.” (emphasis added)
Ibid.
Since the cornerstone of The Cartel’s power lies in maintaining the legitimacy of their Fiat Currencies and Treasury Securities, the last thing they want is to have Gold, Silver and Tangible Assets held by investors to increasingly be seen as the Ultimate Stores and Measures of Value rather than their Fiat Currencies and Treasury Securities, in other words, as money. Thus they will continue attempts at Takedowns of Gold and Silver prices.
Cautions for Investors and Traders Regarding Interventions
We issue a word of caution to our readers. So long as The Cartel is in a very active interventional mode (e.g. as in taking down the price of Gold and Silver periodically) one should not be lured into thinking that the periodic up spikes in the prices of Gold and Silver necessarily present a "breakout" or a buying opportunity. As a practical matter, technical breakouts are sometimes a lure designed to suck in more "longs" prior to a subsequent deeper Takedown. Consider the parabolic spike up in both Gold and Silver prices in the hours before the December 13, 2012 Takedown began.
However, the Cartel’s ability to sustain Takedowns has been considerably weakened recently largely because of increasing demand for delivery of Physical Metal (as opposed to “paper” e.g. Certain ETF shares) – See Below.
Nonetheless, it is essential to study the Fundamentals and Technicals even though the Interventionals can temporarily override the Fundamentals and Technicals. One must study the Fundamentals not only for all the usual reasons but also because Fundamentals somewhat constrain the timing and effectiveness of Interventions by The Cartel.
Similarly, one should study the Technicals for all the usual reasons and, in addition, because it is in The Cartel’s interest to make its actions seem technically plausible in order to continue to “run mainly under the radar.” It is not in The Cartel’s interest to make its Interventions any more visible than they already are. Indeed, there is powerful evidence that The Cartel often uses and/or helps create technical patterns (aka “Painting the Charts”) which lure certain investors (such as hard asset investors) into getting “off sides” before Cartel actions such as taking down the price of Gold or Silver.
Interest Rate Manipulation & The Bond Market
(See March, 2012 Update)
Specific Interventions
For a full discussion of the following Interventions and Tools, see Deepcaster’s July, 2008, December, 2008, July, 2009, December, 2009, July, 2010, December, 2011, and 2012 Jan-March Letters & Alerts posted in the ‘Letters’ & ‘Alerts’ Archive at www.deepcaster.com:
- The Spring 2006 Interventional Takedown
- The August through October, 2006 Interventions
- The August and September, 2007 Market Interventions
The March 2008 Crisis-Induced Takedown of Gold & Silver
- A New Interventional Tool: Fed Intervention in the Equity Markets Via the Primary Dealer Credit Facility
- Equities Markets Boosting: March, 2009 – June, 2010
- QE 1, 2, & 3, Operation Twist, & LTRO Infusions 2011 & 2012
Increased Systemic Risk and “Earned” Liquidity versus “Borrowed” Liquidity
A key point is that the Fed/Treasury Actions of 2008, 2009, 2010, 2011, and 2012 are not long-term fixes. One reason they are not long-term fixes is that they “fix” a liquidity problem in a way that allows insolvent or nearly insolvent financial institutions to have liquidity that would allow certain normal but often deleterious operations (i.e. the continuation of even more lending based on borrowed liquidity) to continue temporarily. Deepcaster has previously demonstrated the perils inherent in an economy increasingly relying on “borrowed liquidity” (i.e. debt) as a result of Fed policies rather than the traditional “earned liquidity” (i.e. savings) – see Deepcaster’s January, 2008 Letter.
Thus, the “borrowed liquidity cure” is worse than the disease. At about 100% of GDP, the USA’s debt cannot ever reasonably be repaid nor the debt of other countries (e.g., Japan where debt is 220% of GDP, and several Eurozone countries where debt exceeds 100% of GDP). Thus, what The Fed and ECB have given us is a flawed Financial Band-Aid, and only a Taxpayer guaranteed Band-Aid for the Mega-Bankers (and profit for The Fed and its Shareholders which make more money as borrowing increases) at that. The FASB is complicit in this Deception because it continues to allow Mark to Myth rather than requiring Mark to Market accounting for Toxic Assets.
We must not forget another fundamental factor which demonstrates that The Fed Actions are neither a long-term, nor an adequate, remedy. Consider McHugh’s comments regarding the Bail Out:
“This Fed injection does nothing for households. And it is households that will determine if we avert depression or not. Consumer spending is 70 percent of GDP…Somebody ought to be arrested. What a heist.”
Robert McHugh, Tuesday, 3/11/2008 Briefing
A Systemic Solution
Allowing the International Economy to be based on a Fiat Reserve Currency managed by a Private For-Profit Central Bank, The Fed, is unsustainable. No Fiat Currency Regime in history has ever survived indefinitely. Many have ended in Disaster.
So The Systemic Solution is apparent. We outline it as follows:
1) Re-link the World’s Reserve Currency (still the U.S. Dollar though China is moving relentlessly to displace it with the Yuan) to Gold and Silver, the Monetary Metals which are both stores and measures of value, tangible value.
Failure to re-link currencies to Gold and Silver will allow a continuing massive and unsustainable inflation of the money supply and debt by the Fed and ECB-led Cartel (Note 1) of Central Bankers. Unless such re-linking to Gold and Silver is accomplished, the U.S. Dollar and other Fiat Currencies are likely doomed in the long-run, with severely negative consequences, including a continuing de facto confiscation of the Wealth of Savers, Investors, and Retirees via (largely concealed) Fiat Currency Purchasing Power Degradation.
Excessive Money supply inflation ultimately leads to price inflation and until recently, the continuing extraordinary rate of increase in the money supply, (as a number of commentators have pointed out) is leading us down the path to a Hyperinflationary Depression. (c.f. shadowstats.com). And, more ominously, it is leading us to a Cartel attempt to implement The Cartel “End Game” (see “Saving Investments, Sovereignty, & Freedom from the Cartel ‘End Game’ (1/13/11) in the ‘Articles by Deepcaster’ cache at deepcaster.com).
But the private for-profit U.S. Federal Reserve, ECB, and its Cartel Allies are not likely to give up their Fiat Currency and “un-backed” Treasury Securities that easily - - they are the source of its power. The Fed and associated International Financial Allies will strenuously resist. See “Antidote to Globalists’ Threat to U.S. Dollar-Gold Investments (11/18/10)” in the ‘Articles by Deepaster’ Cache at www.deepcaster.com. Thus,
2) Legendary investor Jim Rogers recently neatly expressed The Solution to the problem of The Fed: “The Fed should be abolished and Chairman Bernanke should resign.” (March, 2008, CNBC)
An excellent idea. Indeed, The Fed is a private for-profit group of International Banks, whose main motivation is in providing profits for, and protecting the interests of, The International Bankers Cartel and favored institutions and parasites, not in serving the needs of U.S. citizens (or most citizens of other countries for that matter). Rep. Ron Paul and the nonprofit group Carrying Capacity Network (www.carryingcapacity.org) are among those advocating Auditing and Abolishing The Fed. And the Ongoing Agony of Eurozone Citizens, could, in the long run, be halted by returning to National Currencies backed by Gold and Silver.
- To replace The Fed, and in order to protect ordinary citizens interests, the U.S. Congress should create a genuinely National Bank under the auspices of the U.S. Treasury Department as authorized by the U.S. Constitution. That truly National Bank should be the money issuer for the United States, not the private for-profit Cartel of International Bankers known as The Fed.
This is not such a radical idea. President Kennedy caused U.S. Notes to be issued late in his presidency as a replacement for Federal Reserve Notes. [He was killed a few months after the issuance was started and the U.S. Notes disappeared from the market.]
The Cartel End Game
Thus assuming The Cartel leaders know what they are doing what is their ‘End Game’? For details regarding The Cartel ‘End Game’ see “Investor Advantage: Revisiting the Cartel's 'End Game'” (3/6/09) and “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It (09/23/10)” in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
A Strategy for Investors & Trader
Fortunately, the following considerations and guidelines help enable Investors to Profit and Protect in spite of Cartel Intervention, and particularly regarding Interventions in the Precious Metals Markets.
- Although The Cartel is still Potent, it is significantly less potent than it was even a few months ago due primarily to:
- The years-long efforts of the leaders and members of GATA in exposing Precious Metals Price Suppression
- The stunning Allegations that Major Gold Repositories do not have nearly as much Physical Gold (or Silver for that matter) they say they do. See the allegations regarding a major Gold ETF and the London Bullion Market Association in Deepcaster’s April 9, 2010 article (“Climacteric for The Cartel; Opportunity for Investors (04/09/10)” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com).
- Increasing shortages of Physical Gold and especially Silver.
These reports are doubtless leading Major Gold and Silver Investors to demand Delivery and possession of Physical Gold – a wise decision. But 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 temporarily (witness the 2/29/12 and 12/13/12 Takedowns). In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and that is a tremendous advantage; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.
- Thus we recommend that Investors follow their lead with a significant portion of the funds allocated to Precious Metals purchases committed to purchasing, and taking Personal Delivery of (no Bank Vaults, please), Physical Gold and Silver.
Indeed, because Physical held in one’s personal possession is so precious, some forms of it trade at as much as a 20% premium to the spot price of “paper” Gold.
But not all forms of Physical are Equal, as it were. Some forms are much more liquid than others, and some are much more susceptible to counterfeiting, as e.g. by Tungsten-lacing.
Deepcaster has recommended Purchase of One Form of Physical Gold (and Silver), that is quite liquid, not easily susceptible to counterfeiting, and commands a considerable premium over the spot price of Paper Gold (and Paper Silver). See also Deepcaster’s Alert for the week ending March 9, 2012 and his December, 2010 Letter “Gold with Income; in the ‘Alerts & Letters Cache’ at www.deepcaster.com. (See Notes 1 and 2.)
- Do not give Short Shrift to Gold and Silver Miners and other Tangible Assets in sustained and relatively inelastic demand (see Alert & Buy Reco for week ending September 30, 2011 in ‘Alerts Cache at www.deepcaster.com.)
But purchasing shares of these should be done with particular care, because, being “paper” (or, usually, electronic entries on some remote server) Miners shares are especially vulnerable to periodic Cartel attacks and Price Takedowns.
Thus, they are most profitably accumulated near Interim Lows resulting from Cartel Interventions.
In order to estimate these Interim Lows one needs not only to consider Fundamentals and Technicals, but also Interventionals.
Note: A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan while at the same time insulating oneself from future Cartel Takedowns. The following points provide an outline of The Strategy (particularly as applied to the Gold and Silver Markets) and are designed to help avoid such unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
- Accumulate Hard Inflation Resistant Assets near the Interim Bottoms of Cartel- induced Takedowns (see Note 2, 3, and 4 below regarding specific recommendations). And for income for the short to medium term, acquire High Yield stock aiming for a Total Return exceeding Real Inflation (e.g. 9.82% in the U.S., see Note 5 below).
- In order to know when one is near the bottom of a Cartel-generated takedown, it is essential to take account of the Interventionals as well as the Technicals and Fundamentals.
- 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. 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 options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
- Indeed, 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.
- For Speculators, at that Interim 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.
- At 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.
- Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of the Central Banker Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets only to have those assets effectively de-valued by Cartel Takedowns and Fiat Currency Purchasing Power Degradation. 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.
Note, importantly, that Central Banks themselves are buying Physical Gold now. In November, 2012 the Bank of Korea bought $780 Million (14 tonnes) worth. Note Well!
Best regards,
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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