Investor Opportunities Credit Crunch
Stock-Markets / Financial Markets 2011 Sep 10, 2011 - 06:55 AM GMTBy: DeepCaster_LLC
“In doing what the Swiss National Bank is doing (Ed. Pegging the Swiss Franc to the Euro), it has effectively ended the Swiss Franc as a currency.” Dennis Gartman, The Gartman Letter
Crises are Magnifying and Intensifying but are also providing Substantial Profit Opportunities, providing one knows what to focus on, and what to avoid – our dual focus here.
The Most Recent Reflection of the Intensifying Crises is the Swiss National Bank’s pegging its formerly Super Strong Currency to the Euro – a de facto Devaluation, and concomitant Wealth Confiscation of those who had earlier flocked to the Swiss Franc because they thought that de facto Fiat Currency was a Safe Haven… another Delusion Punctured.
And that is but one of many signs. Consider others.
While the intensely-politically-pressured German Supreme Court voted YES this week on the constitutionality of the prior Euro Bailouts, the German Parliament may well not approve Germany’s funding their “share” of the Euro $4 Trillion EFSF Bailout fund later this Month.
Even more significant, and omitted by the Mainstream Financial Media (predictably), is the Court’s de facto prohibition of both Eurobonds and a Fiscal Federalism (i.e. a debt Union). The German Safety Net for the Eurozone no longer exists, going forward.
Thus it is no surprise that Credit Default Swaps are rising around the World. Significance: International lending is beginning to freeze up again, just as in 2008.
The U.S. has already Breached its debt ceiling.
And Obama has given another Keynesian “Stimulus” speech i.e. pro-spending and thus inflationary, speech. The National Debt (i.e. borrowings) have increased by some $4 Trillion since he took office and that “Stimulus” has not worked to boost the economy or reduce Unemployment, so it is hard to see how an additional $440 Billion (in temporary stimulus, as opposed to permanent structural reform) will result in anything more than an even larger Debt Hangover.
But the Swiss Franc Takedown is especially significant because it reflects the peril of holding ANY Fiat Currency (and the CHF is a de facto Fiat Currency, notwithstanding Switzerland’s ample Gold reserves) as an (ostensible) Safe Haven Store or Measure of Value.
So are there any remaining Safe Haven stores of Value? Of course – Gold and Silver. But (and regular readers should skip to the next paragraph) Both of these are subject to periodic Price Suppression Attacks by a Fed-led Cartel of Mega-Bankers and their Agents.
*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 www.deepcaster.com. 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 www.deepcaster.com 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.
And once again we have seen The Cartel recently intensify its Takedown Operations. For example, earlier this week Gold went from $1920ish/oz to $1800ish before the late week bounce.
Astute Trader Dan Norcini describes it Well.
“If it is not obvious by now, it should be -an attempt by the Central Banks of the West to derail the rise in the gold price is currently underway…
By the process of elimination and due to the fact that a major attempt by a Western Central Bank (the Swiss National Bank) to deliberately debase their currency occurred less than 24 hours previous to this selling barrage, added to the fact that an obvious raid took place on gold knocking it down below $1900 during the time frame in which the Swiss Franc devaluation was announced, this huge sell order must be therefore traced back to the Western Central Banks which are now going after the gold price in an attempt to cloak their utterly incompetent, impotent and predictable response to the current economic woes of the West.”
“Central Banks Waging War on Gold at This Hour”
Dan Norcini, traderdannorcini.blogspot.com, 9/6/11
All indications are that Cartel Price Suppression Attempts will continue as they have, and with some considerable effect but they will be less effective and less temporally durable. Witness how quickly Gold Bounces back after a Takedown compared with, say, 3 or 4 years ago. Indeed, the Attacks increasing frequency (August 23 to 25, September 6 to 7 and September 9) suggests The Cartel is increasingly desperate.
Indeed, before this latest series Takedown Attacks Deepcaster Forecast “Short-term, we Bulls should be prepared for another Cartel Takedown attempt…” (and that’s why, by the way, Deepcaster recommended Taking Profit on recommended Gold Stock Positions 3 times in the last 5 weeks) before the recent Big Takedowns. And we surely did get our Forecast Takedown attempts!
One Element of that Forecast was that any Modest “Risk On” Equities Move UP would somewhat weaken Investor demand for Safe Haven Precious Metals, thus temporarily rendering their prices vulnerable, and so it did and still does.
Couple this with the Sophisticated “Perception Management” of the Fed and complicitous Mainstream Financial Media and Allies (e.g. in making the Public think the German court might really vote “No” and then, on the “Yes” Vote, Engineering another Gold and Silver Takedown Attack).
Thus these Operations have provided The Cartel an ideal Pretext and opportunity for an Intensified Takedown Attacks on the Precious Metals as we earlier indicated.
So what next?
One recent Major Clue that Gold (and probably Silver) is about to launch again soon on its next major leg upward (after this week’s Takedown) is that Open Interest (in Gold Contracts) at the Comex has been decreasing while the Gold Price has been increasing!
This is not typical. Usually both increase simultaneously.
To us, this means that Traders are increasingly questioning whether the Comex has sufficient deliverable Gold (and we endorse their questioning, and have for some time).
Therefore, we infer that Traders (and China!) are increasingly buying Physical outside of the Comex (which has been one Primary Cause) generating recent stunning Physical Price Rises).
Two conclusions should be drawn from this apparent fact.
- Buy Physical on the dips and Take Personal Possession (No Banks’ Vaults please) and
- To the extent one owns interests in Gold (or Silver) via Paper/Digital Shares (including Mining Shares), one should be attentive to increasing Counterparty Risks.
On an optimistic note there is one long-term Positive Omen for Gold Shares.
"Gold's relative outperformance compared to the XAU Index has reached a level that in the past has marked important turning points. If we take the period in 2008 relating to the collapse of Lehman Brothers as an unusual exception and not likely to be seen again -- or at least not to be seen at the present time -- we can conclude that gold's outperformance has reached an extreme."
“James Turk: Mining stocks on the runway, ready for takeoff”
Chris Powell, Gata.org, 9/6/11
Nonetheless, take advantage of the Tremendous Buying Opportunity these Takedowns offer. Buying and owning Physical allows one to avoid both the Banking System and Depreciating Fiat Currencies. And if one tracks the “Interventionals”, as we do as best we can, one gets a better sense of when Takedown attempts are likely to occur.
In sum, intensifying attacks by the Cartel have created “Crunch Time” for the Precious Metals. But that Crunch Time is Opportunities Time.
We address the question of whether the Cartel will succeed again in its Next Takedown Attempts in our latest Alert. Whether or not it does, the following are some guidelines for Maximizing Profit and helping protect against Loss.
A Strategy for Investors & Traders
Fortunately, the following considerations and guidelines help enable Investors to Profit and Protect in spite of Cartel Intervention, and particularly Intervention 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 Deepcaster and others in exposing Precious Metals Price Suppression
- The stunning Allegations that Major Gold Repositories do not have nearly as much Physical Gold they say they do. See the allegations regarding GLD 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).
These reports are doubtless leading Major Gold 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 at least temporarily. 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, Physical Gold and Silver.
Indeed, because Physical held in one’s personal possession is so precious, some forms of it typically trade at as much as a 20% to 25% 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 recently recommended Purchase of One Form of Physical Gold, that is quite liquid, not easily susceptible to counterfeiting, and commands a considerable premium over the spot price of Paper Gold (and Paper Silver).
- Do not give Short Shrift to Gold and Silver Miners Shares.
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 significantly 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 Assets near the Interim Bottoms of Cartel- induced Takedowns.
- 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.
Note: We no longer recommend shorting or buying puts on Precious Metals or Precious Metal shares as outlined in #10 and #11 below. The probability of an Upside launch is simply too great.
- For Experienced, Well-Heeled Speculators only, 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.
Best regards,
By DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
© 2011 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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