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Profiting from Coming QE / Debt Consequences

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“Peter Schiff, CEO of Euro Pacific Capital,… recently gave a presentation of his book…. The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country, which warns that the next crisis will dwarf that of 2008…

“Schiff reiterated a theme … that quantitative easing will never end, but the tolerance of the market for dollar-denominated assets will end and bring about the next crisis episode….”

“Euro Pacific Capital’s Peter Schiff Warns of The Great Crash,” moneynews.com, 08/19/2014

European Central Bank Head, Mario Draghi recently signaled Eurozone QE is Dead Ahead. And the World has yet to deal with the Consequences of past and ongoing Fed, Japanese, and Chinese Monetary Policies. The coming Consequences of Central Bank QE and other Policies are reflected in the following Major Investors’ Actions and Analysts recommendations.

1) An Eminence Grise of the Newsletter Writing Fraternity just reiterated his recommendation that his Subscribers get entirely out of One Very Major Sector except for select small holdings in one Subsector.

2) And a Multi-Billionaire Investor recently made a $2 Billion Bet that a Turning Point in a Very Major Sector is impending.

3) And Multi-Decade Charts “Forecast” a Major Trend Turn in a Major Sector.

4) And a near-billionaire Investor just Published a Book describing why that Trend Turn was a High Probability.

5) And consider the Prophetic comments from David Stockman

“Central banks all over the world have been massively expanding their balance sheets, and as a result of that there are bubbles in everything in the world, asset values are exaggerated everywhere. The Fed is exporting this lunatic policy worldwide….

“It’s only a question of time before the central banks lose control, and a panic sets in when people realize that these values are massively overstated.”

“Former Reagan Budget Head David Stockman: Fed Has Created Gargantuan Global Bubble,” David Stockman, moneynews.com, November 2013  

6) And Deepcaster’s own Research Impels him to agree with all five of them.

The important point is the Rationale that each has for the Position Expressed.

1) Various Fundamental and Technical (“the Stock Market is exhausted”) Factors are cited to support Richard Russell’s recently expressed view that his “Subscribers (are) hopefully out of all common stocks except for Gold Miners.”

2) A $2 Billion Bet on a Market Crash via e.g., Puts on the S&P 500 placed by George Soros speaks for itself.

3) And that Multi-Decade Equities Bearish Expanding Wedge is the Ultimate Jaws of Death Technical Pattern forecasting an Equities Market Crash some time in the next few months—stay tuned for Deepcaster’s Timing forecasts in this regard.

4) And perhaps a Major Cause of the Impending Crash — the fact that Equities Markets have been artificially buoyed up by Fiat Money Printing by the Central Banks, coupled with Massive Sovereign and other Borrowing—a Hermageddan Credit Bubble as author Bill Bonner would put it.

5) And Jim Rickards joins Peter Schiff in identifying the Mega- Bankers as the Main Culprits

“Bankers’ parasitic behavior, the result of a cultural phase transition, is entirely characteristic of a society nearing collapse. Wealth is no longer created; it is taken from others. Parasitic behavior is not confined to bankers; it also infects high government officials, corporate executives and the elite societal stratum….

Jim Rickards, The Death of Money, June 2014

And regarding Parasitic Bankers helping other Bankers (to the detriment of virtually everyone else), David Stockman well describes the ostensibly American private for-profit Fed’s Gift to the Foreign Mega Banks.

“This profit stripping operation is simple. Foreign banks on Wall Street borrow from money market funds at an infinitesimal 3-6 basis points and then shuffle the loot down to 33 Liberty Street where the New York Fed pays them 25 basis points on the same funds. This gift is known as the IOER payment for excess reserves. It is a short-term trade which is rolled-over day after day and is absolutely risk free….

“This seems like a screaming outrage that couldn’t be true—especially because the real beneficiaries of the Fed’s largesse are Europe’s giant banks which are insolvent but socialized wards of the state. …  

Just as the Fed instructs foreign banks to ‘come and get it’ with its locked-in IOER/money market spread, it delivers the same message to the entirety of what has become the Wall Street gambling casino….

The heart of the evil is interest pegging itself. That is, the replacement of market prices with administered prices—direct and indirect—throughout the financial system….

“Now that is the essence of Fed Policy. An all-powerful, un elected arm of the state has transformed itself into a crooked croupier and has no intention of leaving the casino.”

“Why The Fed’s Outrageous Gift to Foreign Banks—Risk Free Arbitrage On IOER—Is Just The Tip Of The Iceberg,” David Stockman, davidstockmanscontracorner.com, 08/23/2014

And it is not merely that The Fed is primarily engaged in helping its Mega-Bank Clients/Shareholders but that its policies are hurting Investors, Wage-earners and Retirees and indeed the entire Real Economy.

“The Fed has not made the world a better place with its interventions. It has created moral hazard, encouraged the formation of asset bubbles that eventually pop (leaving economic messes), widened the wealth inequality gap to record levels, discouraged savings and investment, severely penalized retirees on fixed incomes, encouraged spending, funded massive government deficit spending by monetizing the debts, lengthened the recession and likely reduced the number of jobs that would have been created if the economy had been allowed to take its normal course. Eventually, the Fed’s policy interventions will also have created debilitating, widespread consumer inflation, the cruelest tax against the poor and middle classes.”

Fred Hickey, (aka the High-Tech Strategist) August, 2014

Indeed, a Fed-led Cartel has and is manipulating Prices in many markets and suppressing the prices of Gold and Silver. But one can use knowledge of these Manipulations to Profitable Advantage – see Note 2 re The Cartel.

6) But Deepcaster and Richard Russell both expect one more Major Upside Equities Surge to “New Record Highs” before The Great Crash Begins.

In this regard, see Deepcaster’s Forecasts and Buy Recommendations at Deepcaster.com and note how our Monitoring Fundamentals, Technicals and Interventionals has facilitated recent profitable positions (see Note 1 re Recent Profits Taken).

Of course, Intensifying Negative Geopolitical Events, and/or weakening Fundamentals, and/or rising interest rates could launch The Great Crash at any Time.

“Since the beginning of July, we’ve seen a sputtering stock market, a 65 basis point widening in high-yield spreads, a 15 basis point flattening of the Treasury curve (2s-10s) and a strong dollar (DXY US dollar index up 1.5%). This is typical of how the markets behave three or four months ahead of the onset of a Fed rate-hiking cycle.”

David Rosenberg, 08/14/2014

Apparently David Rosenberg and George Soros (and notwithstanding his destructive deconstructive political views) agree with Deepcaster about what is coming – mainly a Consequence of Major Central Bank Policies.

Finally, it is essential to Monitor The Real Numbers (e.g., US CPI at 9.8% and Real Unemployment at %) rather than the Bogus Official One (see Note 3).

To be forewarned facilitates being forearmed for Profit and Wealth Protection as we were in 2008 (see Note 2). In other words, to profit from the coming QE/Debt Consequences, closely monitor the Fundamentals, Technicals and Interventionals, and The Real Numbers, not the Bogus Official ones.

Best regards,

Deepcaster
August 29, 2014

Note 1: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*

  • 55% Profit on Double Short Euro Call on August 6, 2014 after just 106 days (i.e., about 200% Annualized)
  • 65% Profit on Energy Storage & Management Company on July7 15, 2014 after just 342 days (i.e., about 70% Annualized)
  • 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
  • 75% Profit on Equity Index Call on May 27, 2014 after 21 days (i.e., about 1305% Annualized.)
  • 30% Profit on Equity Index Call on May 13, 2014 after 34 days (i.e., about 320% Annualized)
  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)
  • 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)
  • 40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

Note 2: 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 July, 2014 Letter entitled "Profit, Protection, Despite Cartel Intervention" 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, 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.

Note 3: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported August 19, 2014
1.99%     /    9.73%

U.S. Unemployment reported August 1, 2014
6.2%     /     23.2%

U.S. GDP Annual Growth/Decline reported August 28, 2014
2.48%        /     -1.66%

U.S. M3 reported August 18, 2014 (Month of July, Y.O.Y.)
No Official Report     /   4.69% (i.e., total M3 Now at $16.008 Trillion!)


 

Booming Initial Estimate for Second-Quarter GDP Largely Was Fluff….

“With the government’s estimates of GDP activity so far removed from reality, the issue here is not whether the U.S. economy is booming along or not. It is not; it never recovered from the collapse into 2008 and 2009. The issue with today’s numbers is in the timing of a more-formal financial-market and political recognition of the issues and ongoing severe difficulties involved here for consumers….

“The GDP remains the most-worthless and the most-heavily modeled, massaged and politically-manipulated of government economic series. It does not reflect properly or accurately the changes to the underlying fundamentals that drive the economy. Underlying real-world economic activity suggests that the broad economy began to turn down in 2006 and 2007, plunged into 2009, entered a protracted period of stagnation thereafter—never recovering—and then began to turn down anew in second- and third-quarter 2012…

“…the full economic recovery indicated by the official, real GDP numbers remains an illusion. It is a statistical illusion created by using too-low a rate of inflation in deflating (removing inflation effects) from the GDP series….”

“Second-Quarter 2014 GDP, GDP Benchmark Revisions, Household Income,” Commentary Number 646, John Williams, Shadowstats.com, 07/30/2014

Main Stream Media Distortions and News Blackouts coupled with Bogus Economic Numbers and “Communications Policy” Distortions from the U.S., European and Chinese Central Banks, and others Misleads Investors and puts their Investments at Risk.

Deepcaster aims to continue to inform investors of these Disinformation Risks before the fact. For example, we have reiterated the Dangers of the Massive and Intensifying Worldwide Credit/Debt Bubble which reared its head with Greece and Cyprus and now in Argentina’s Default.

The most Recent Official Statistics’ Distortion is reflected in the 2 nd Quarter U.S. GDP Numbers which shadowsstats.com correctly labels “‘Fluff’, massaged and Politically Motivated.”

So here we Identify Major Distortions and News Blackouts to inform Investors and to facilitate Wealth Protection and Profit.

Yet another Major Threat arises from Central Bank Monetary Hyperinflation.

“Monetary Malfeasance by the Federal Reserve is seen in its process of seeking to provide liquidity to a troubled banking system, and also to the U.S. Treasury, with a current pace of monetization at 94.1% of effective net issuance of the Federal Debt to be held by the public so far in calendar year 2014 (through July 16 th), 75.3% since the January, 2013 expansion of QE3.”  

John Williams, Shadowstats.com, 07/23/2014

Extraordinary it is that the pace of Fed Monetization of U.S. Treasury Debt issuance continues to accelerate and has now reached 94.1% of Net Issuance.

This means that there is a dramatically decreasing Real (i.e., from other sovereign or Institutional Investors) Demand for U.S. Treasuries, and, by implication, for the U.S. Dollar.

But regarding Net New Issuance, the Monetization “Music” must stop at 100%.

But consider that, regarding Timing, we are nearly there Now.

This Ominous Trend spells Trouble, Serious Trouble for the U.S. Dollar as World Reserve Currency, and indeed as a Reservoir of Purchasing Power and Wealth.

The Tipping Point for the $US is very Near, so Deepcaster increasingly reiterates his Timing Forecasts.

Thus, the Consequences of a dramatically weakening $US for $US-denominated Assets (and, since the $US is still the World’s Reserve Currency, for Most Major Assets) will be Profound.

And these Consequences will begin to become evident very soon.

Former OMB Director, David Stockman, Counters the Main Stream Media Spin and Blackouts, and lays out the Essential Fundamentals.

“The 2008 Wall Street meltdown is long forgotten, having been washed away by a tsunami of central bank liquidity. Indeed, the S&P is up nearly 200% from its March 2009 low. Yet four cardinal measures of Main Street economic health convey nothing like a 2X pick-up from the post-crisis bottom.

“To wit, in June the count of breadwinner jobs was 68.5 million or 5% below where it stood as the crisis got underway. Likewise, business investment in real plant and equipment is still 5% below its late 2007 peak. So too with the real median family income at about $53k—it’s still down by 6%. And unlike past cycles where safety net programs like food stamps shed recipients as the recovery gained momentum, there are still nearly 47 million Americans in the program compared to 30 million in March 2009.

“This juxtaposition has been explained away by Wall Street stock touts under the heading that “this time is different”. … owing to record corporate profits and an upward re-rating of PE multiples reflecting lower than historical interest rates. And, indeed, the raw facts can be marshaled to this end. (For example) … profits are at 60-year highs.

“This is just the trouble, however. The robust rate of profit growth during recent years reflects a one-time gain in the profit share of factor income. This gain in all probability cannot be replicated again … (and) is extremely vulnerable …

“The same can be said of low interest rates. … No amount of money printing and financial repression by the central banks can keep yields on the massive trove of $12 trillion of publicly-held treasury debt at a negative after-tax and after-inflation rate indefinitely.

“… PE multiples are at the top of their historic range and at a point of extreme vulnerability where market crashes have invariably occurred in the past. …

“Given these adversities, there is no reason to assume that US real growth will sharply accelerate from the tepid trends of the recent past….

“And that points to the real evil of monetary central planning and the serial financial bubbles that it inexorably produces. Bubbles are only recognized after the burst into a flaming crash….”

"This Time is Not Different: Why the Market is headed for a Fall," David Stockman, 07/24/2014

Indeed, the BIS, the Central Bankers Bank, warned at the beginning of July 2014, that there are “dangerous new asset bubbles.” Yes, indeed!

And as a further Impending Threat to $US Dominance, a whole variety of Major Countries (including several of those in the Western Alliance) are entering into Bilateral Currency-Swap Agreements with China, thus excluding the $US. And when the $US Falls, the U.S. Economy and Markets Crash along with it.

As well, it is clear the BRICS Nations (Brazil, Russia, India, China, and South Africa) are rapidly moving toward a non-$US based World Reserve Currency, and indeed, an Alternative Central Banking System, thus bypassing the IMF. This BRICS recently met to create the $100 Billion BRICS Development Bank and a Reserve Currency Pool of Similar Size!

Compounding the problem is the compelling evidence that The Fed is increasing QE not “tapering” it. Were this Evidence to become widely accepted as Reality, it would be very $US Destructive and very Bullish for Gold, by the way.

Consider the Evidence for former Asst. Secretary of the Treasury, Paul Craig Roberts.

“Is the Fed ‘tapering’? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.

“From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.

“Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?

“No, Belgium’s trade and current accounts are in deficit.

“Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?

“No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.

“So where did the $141.2 billion come from?

“There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month….

“Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?

“Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week….

“The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of ‘banks too big to fail’ and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets. The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering….

Washington’s power ultimately rests on the dollar as world reserve currency. …

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills….”

“Fed Disguising QE by laundering it through Belgium,” Paul Craig Roberts, paulcraigroberts.org, 05/12/2014

And if we look at The Real Numbers and not the Bogus Official Ones, the U. S. Economy is not nearly as Robust as the Main Stream Media would have us believe.

Seriously-Flawed Headline Jobs Growth and Unemployment Reporting Miss Underlying Reality by a Wide Margin. May 2014 headline jobs growth of 217,000 and headline unemployment at 6.3% both were close to market expectations, but they were far removed from common experience and underlying reality….

“With broad unemployment topping 23% and with monthly payroll-employment reporting currently overstating jobs growth by a couple of hundred thousand jobs, the economy never recovered from its plunge into 2009. It also is not about to recover, but instead it is turning down anew, as other discussed in 2014 Hyperinflation Report-Great Economic Tumble – Second Installment….

“…Headline employment reporting currently overstates monthly jobs growth by at least 200,000…”

“Monthly Payroll Gains Overstated by 200,000-Plus Jobs,” Commentary Number 633, John Williams, Shadowstats.com, 06/06/2014

And even the most recent Headline numbers reflected weakening Job Growth!

Yet Fed and other Major Central Bank Policy is not helping, and indeed is hurting Retirees, Savers and the Middle Class, the Bulwark of Consumer Spending, 70% of the U.S. Economy.

And we note another Ominous Trend: in June 2014, 523,000 full-time jobs were lost, but 800,000 part-time jobs were created for a net gain of 288,000 “jobs.” Progress? Hardly!

For a Chart comparing other “Bogus versus Real” Statistics, see Note 2 below.

As well, confirming the foregoing

“…We learned this week that the net worth of the median household in the U.S. was 43 percent lower in 2013 than it was in 2008. This is remarkable but not surprising. Think about that. Net worth has declined by almost half. Yet if you listen to pundits and the Central Planner economic reports, including those from the Fed, they would have you believe everything is chugging along nicely. Bullbleep. 1 st quarter U.S. GDP was negative. It could be revised lower soon. If we see the second quarter also negative, then by the Central Planners’ own admission, the U.S. would officially be in a recession. Weather related? That dog don’t hunt.”

“Housing is at a freeze, construction is at a standstill. Down payment requirements are ridiculously high…. This is a bad situation. It will act like a black hole, eventually sucking/contracting our economy so fast and deep that the Fed can print all the cash it wants to and hand it to Wall Street and it will not have a meaningful effect on reversing the economy. Five trillion was just printed since 2008 and handed to Wall Street and most of it didn’t get into the hands of the general public. Only a few benefited. It caused a ton of inflation which is not reported in the CPI numbers. Food, medical and housing inflation. Automobile price inflation.

“About every mistake that can be made by the Central Planners is now underway….”

Robert McHugh, Ph. D, 06/27/2014

The Consequences of the foregoing Realities and Trends for the Economy, Key Equities Sectors and $US are Grim. But to comprehend the likely extent of those consequences and for Indications about how to surmount them and to Profit and Protect Wealth, consider the following overview of the International Fiat Currency System through an analysis of the prospects for Gold, Silver and the U.S. Dollar;

Mark Thornton: “…I have been studying this issue ever since. The only thing that has really surprised me about this is that it has taken so long to get to this place in time and by this place, I mean a world in which fiat money is the sole circulating means of exchange and where central banks are engaged in a world currency war, trying to manipulate the value of their currencies downward in a simultaneous battle across the globe. But in particular the United States, the European Central Bank, Japan, and China and then of course many other countries engaged in the war in a defensive status where countries like Switzerland and Norway are pumping up their money supplies and engaged in quantitative easing in order to stabilize the exchange value of their currency.

“So here in the United States, the ramifications of that are fairly easy to see that the Federal Reserve has manipulated markets to an extreme and to a level that I never thought they were going to be willing to go to. But they’ve manipulated stock markets and bond markets have created bubbles throughout the economy in the US in terms of, of course, the stock market reaching all-time high levels, bond markets reaching all-time high levels, junk bond yields down to historically low levels, rising real estate prices, rising art prices.  

“It’s truly remarkable to the extent that they’ve been able to engineer this. They’ve taken so many unprecedented measures. I really never thought that central bankers would go to this extreme but they’ve done it. So right now, what we’re looking at is a worldwide currency war. We’re looking at real estate housing bubbles all around the planet, whether it’s Canada, in Asia, in Manhattan, in Washington DC….

“…eerie correlation of the building of record setting skyscrapers and world economic crises.

David Morgan: “The way I see it, all debts are either paid, defaulted upon, or partially paid off. But at some point in time, there is a reconciliation of the monetary system.

You’re either going to default outright saying that we cannot pay back the debt or you’re going to default on a currency, which means that you’re going to continue to print money until the currency becomes worth less, worth less, and then it’s worthless.

“Can we default outright? Can we default via currency default, or do we have a combination? What are your thoughts?

MT: “Well, David, it’s a very good question and it’s a very, very important question. As you say, all debts are ultimately paid. The question is, “By whom?” Is it going to be the borrower or is it going to be some other party that ends up footing the bill for those debts?

“The governments of the world have built up huge national debts and obligations going forward that are unsustainable and that in my view cannot be paid off in a rational way which is using part of your revenues to pay off or pay down those debts….  

“So the more likely, the most likely alternative and one that looks increasingly obvious to me is that they will continue to use the printing press. They can pull back at any time but the pain, the political pain and the economic pain in the short run is so difficult for them to accept, that it’s likely that they’re going to go down the path of printing up ever-increasing quantities of money, engaging in quantitative easing and so forth….

“In my estimation, it’s a very dangerous situation. I don’t think the world has ever been in a more dangerous economic situation than it is today….”

“Gold, Silver, and the Future of the Dollar,” Interview with Mark Thornton by David Morgan at The Morgan Report, 07/26/2014.

One Intensyfing Consequence, which Deepcaster has repeatedly Documented, is Monetary Hyperinflation which is now transmogrifying into Price Hyperinflation. The U.S.A. is already Threshold Hyperinflationary with Real U.S. CPI at 9.8%, per Shadowstats.com.

Regarding moving into Full Blown Price Hyperinflation, the Salient Issue is Timing. Therefore our Major Focus is keeping our Subscribers updated re Forecasts for Timing in light of the foregoing Realities, Forces and Trends. Monitoring a Variety of Interventional, Fundamental and Technical Signals has already facilitated Significant Profitable Positions (See Note 1).

Regarding Potential Triggers for $US and Equities Takedowns consider the latest Distorted U.S. GDP Report.

We along with the Honest and Brilliant Economist, John Williams, (Shadowstats.com) expected the July 30 GDP Report to show weaker-than-expected, but nonetheless positive, GDP Growth. Instead, courtesy of the Bogus Numbers Manufacturers, it showed a stronger than expected Number. Equities and the $US should have taken a hit but they did not, until the day after. Perhaps the Release of the September 26 2 nd Quarter GDP Report Revisions – which should, if honest, show an outright U.S. GDP contraction – will at least approach honest reporting.

If Honesty, rather than Political Numbers, prevail that would be an acknowledgement that the USA has been and is still in a Recession (defined as 2 successive Quarters of GDP Contraction).

Other Numbers, for example, the recent drop in Durable Goods orders, and weakening Employment Picture actually reflect the Recessionary Reality.

Couple that will the recent EIA Report showing that Stockpiles of WTI Crude at the Delivery Point in Cushing, Oklahoma are at the lowest level since 2008! (See below.)

This means the Economy (and Equities Market) is likely to get little or no relief from high Crude Prices for the foreseeable future!

Yet the U.S. Market is still Trending up (but just barely after the late July Takedown) while Major Eurozone Markets are trending down.

But the Global Dow has thus far this year maintained its uptrend. Yet these Uptrends are un confirmed by several indicators, including the Transports, down significantly in the last week of July.

In some week soon, the Realities of the Real Economy will overcome the Spin and Blackouts, and the Significant Consequences will be felt in many Key Sectors, as we have and will continue to forecast.

In sum, To Surmount Distortions and News Blackouts Threatening Investments, look to Independent Information Sources such as Deepcaster and those mentioned here.

Best Regards,

Deepcaster August 1, 2014

Note 1: Our attention to Key Timing Signals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in the last six months in our Speculative and Fortress Assets Portfolios*:

  • 65% Profit on Energy Storage & Management Company on July 15, 2014 after just 342 days (i.e., about 70% Annualized)
  • 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
  • 75% Profit on Equity Index Call on May 27, 2014 after 21 days (i.e., about 1305% Annualized.)
  • 30% Profit on Equity Index Call on May 13, 2014 after 34 days (i.e., about 320% Annualized)
  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Put on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

Note 2: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported July 22, 2014
2.07%     /    9.81%

U.S. Unemployment reported July 3, 2014
6.1%     /     23.1%

U.S. GDP Annual Growth/Decline reported July 30, 2014
2.43%        /     -1.66%

U.S. M3 reported July 21, 2014 (Month of June, Y.O.Y.)
No Official Report     /   4.49% (i.e, total M3 Now at $15.910 Trillion!)


 

<b>Profit, Protection, Despite Cartel Intervention – July, 2014 Letter</b>

“Bankers’ parasitic behavior, the result of a cultural phase transition, is entirely characteristic of a society nearing collapse. Wealth is no longer created; it is taken from others. Parasitic behavior is not confined to bankers; it also infects high government officials, corporate executives and the elite societal stratum….”

Jim Rickards, The Death of Money, June 2014

A Major Goal of the intensifying Mega-Bank Markets Interventions is arguably continued Mega-Bank Profits from (aka Parasitism on) the Economies which Support them. A Factual Overview is essential to understand this phenomenon and to Profit and Protect.

Seriously-Flawed Headline Jobs Growth and Unemployment Reporting Miss Underlying Reality by a Wide Margin. May 2014 headline jobs growth of 217,000 and headline unemployment at 6.3% both were close to market expectations, but they were far removed from common experience and underlying reality….

“With broad unemployment topping 23% and with monthly payroll-employment reporting currently overstating jobs growth by a couple of hundred thousand jobs, the economy never recovered from its plunge into 2009. It also is not about to recover, but instead it is turning down anew, as other discussed in 2014 Hyperinflation Report-Great Economic Tumble – Second Installment….

“…Headline employment reporting currently overstates monthly jobs growth by at least 200,000…”

“Monthly Payroll Gains Overstated by 200,000-Plus Jobs,” Commentary Number 633, John Williams, Shadowstats.com, 06/06/2014

In order to Profit and Protect despite Cartel (Note 1) Interventions, it is first important to understand that Official Statistics and News Reports in Major Countries are often Bogus.

Considering the U.S., for example, Real Unemployment (June, 2014) is 23.2% and Real Inflation is 9.86% per Shadowstats.com which calculates the statistics the way they were calculated decades ago before the numbers became so politicized. (See the section “Indirect Manipulation” below)

And the Economy is not recovering.

Just as many official Statistics are Not Accurate, Inaccurate often also are Mainstream Media (MSM) Reporting of Major Financial and Economic Events.

For example, as former OMB Director David Stockman points out, The Fed’s 2008 Bailout Actions via TARP et al were basically a multi-hundred Billion Wealth Transfer from Savers and Taxpayers to the Mega Banks and other Financial Institutions. But the Mainstream Media certainly did not present it that way. Instead, they propagated the fiction that the Bailouts were necessary to “save the Financial System.”

“Then, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the threat of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history….

“Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars (from The Fed – ed.) for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.

“Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system.

“The banks quickly worked out their solvency issues because the Fed basically took it out of the hides of Main Street savers and depositors throughout America….

“Well, once you basically unplug the pricing mechanism of a capital market and make it entirely an administered rate by the Fed, you are going to cause all kinds of deformations as I call them, or mal-investments as some of the Austrians used to call them, that basically pollutes and corrupts the system. Look at the deposit rate right now, it is 50 basis points, maybe 40, for six months. As a result of that, probably $400-500 billion a year is being transferred as a fiscal maneuver by the Fed from savers to the banks. They are collecting the spread, they’ve then booked the profits, they’ve rebuilt their book net worth, and they paid back the TARP basically out of what was thieved from the savers of America.”

David Stockman, Frmr Head, OMB & Member, House of Representatives, (1977-81) The Great Deformation: The Corruption of Capitalism in America, 2013

The private-for-profit Fed’s Ongoing Intervention in the Markets on behalf of their owners/shareholders, the Mega-Banks, is an old and ongoing story. Unfortunately, it is having several ongoing and worsening Negative Consequences (including those Stockman points out) on Investors, Retirees and Main Street in general.

Not so well publicized is The Fed/Mega Banks’ ongoing interventions to Suppress the Prices of Gold and Silver (and boost the $US) because Gold and Silver are the Legitimate Competitor to the Fed’s (and other Central Banks) Fiat Currency(ies) and Treasury Securities.

And recently, former Asst. Secretary of the U.S. Treasury, Paul Craig Roberts, has exposed another Federal Reserve activity to disguise their continuing manipulation. Indeed, pointing out, many Central Banks actions are Covert. For example, The Fed is not really Tapering in 2013-2014:

“Is the Fed ‘tapering’? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.

“From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.

“Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?

“No, Belgium’s trade and current accounts are in deficit.

“Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?

“No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.

“So where did the $141.2 billion come from?

“There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month….

“Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?

“Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week….

“The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of ‘banks too big to fail’ and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets. The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering….

Washington’s power ultimately rests on the dollar as world reserve currency. …

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills….”

“Fed Disguising QE by laundering it through Belgium,” Paul Craig Roberts, paulcraigroberts.org, 05/12/2014

Mega-Bank Market Manipulation extends to Boosting Prices (e.g., recently in Equities Markets) and Price Suppression (as for years in Gold and Silver Markets).

Even the August Financial Times of London has recently run a set of Articles revealing the Central Banks’ “Burgeoning Market Manipulation Support” which the website, Naked Capitalism, accurately summarizes as “Mission Leap” at The Fed. The Central Bank is moving unabashedly into price-setting, and stealth, or formally backstopping, of more and more Markets. — Do we have a move toward Marxist Central Planning here?

These Interventions provide a Challenge to Investors, and a Threat to their Wealth, but also Great Opportunities to Profit and Protect Wealth provided one understands and tracks them, as we explain here.

The Gold Antitrust Action Committee has done a remarkable job in Exposing this price suppression in Gold and Silver Markets.

“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. …

Secret IMF report: Hide gold loans and swaps for market manipulation,” The GATA Dispatch, Gold Anti-Trust Action Committee, 12/11/2012

Gold and Silver are the Metallic Canaries which, absent Price Suppression, would signal many Economic Negatives, including the inflationary effect of The Fed’s and other Central Banks QE. The Fed et al have become increasingly desperate to conceal these Hidden Realities as the Cartel’s (Note 1) dramatic April, 2013 Takedown shows.

“[O]n Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale.  …  

“… with naked shorts, no physical metal is actually sold…

“Consider the 500 tons of paper gold sold on Friday. Begin with the question, how many ounces is 500 tons? There are 2,000 pounds to one ton. 500 tons equal 1,000,000 pounds. There are 16 ounces to one pound, which comes to 16 million ounces of short sales on Friday.

“Who has 16 million ounces of gold? At the beginning gold price that day of about $1,550, that comes to $24,800,000,000. Who has that kind of money?

“What happens when 500 tons of gold sales are dumped on the market at one time or on one day? Correct, it drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1,168,000,000.

“Who can afford to lose that kind of money? Only a central bank that can print it.”

“Assault on Gold Update,” Paul Craig Roberts, Frmr Asst Treasury Sec’y Reagan Administration, PaulCraigRoberts.org

Roberts also explains one Major Reason The Fed is short selling bullion .

“The fact that the Federal Reserve is short selling bullion means that there is something desperate going on. I assume it is related to the USDollar. If the dollar drops sharply in exchange value, the Fed cannot control the interest rate and the bond price, and so all of the bubbles would blow up. All of the recent reports of countries moving away from the dollar to settle their international payments have most likely caused a great many countries to look at getting out of dollars. We not only have the BRICs moving away from the use of the dollar, but also China, Japan, and all of the East Asians. Recently we have even seen reports out of Australia that they are going to deal directly with China in their own currency. So this drop in demand for dollars when the Fed is creating one trillion new dollars every year means the exchange value of the US dollar is untenable .” (Emphasis added –ed.)

Dr. Paul Craig Roberts, quoted in “Global Money War Report,” via Jim Willie, goldenjackass.com, 04/21/2013

This Ongoing Suppression of Gold and Silver Prices tends to legitimize and bolster the Ostensible Value of Major Nations’ 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 BIS Treasury, June, 2008

Indeed, the aforementioned recent example of the Cartels Precious Metals Price Takedown shows The Cartel’s (Note 1) increasing desperation and determination to hide the Negative Effects of QE from the Public. But increasing purchases of Gold and Silver by, and Delivery to, China and India make it increasingly hard for The Cartel to maintain its Price Suppression Scheme. Indeed, Deepcaster expects to be able soon to forecast the timing of a Great Launch up of Gold and Silver Prices. Indeed, the recent Launch Up of Gold from the mid-1200s to $1320ish as we write show the Great Launch Up is Impending.

Further, it is essential to review several facets of, and Key Points in the History of and current record of Manipulation which are crucial to understand the variety of Effects, and how to Profit and Protect from them (and see e.g., Notes below). Consider…

Indeed, there are several Negative consequences of this Mega-Bank Cartel Market Manipulation 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.”

Stockman, 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, for example).

“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, …

“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

The Fact that The Fed has not been tapering but rather is increasingly monetizing could reasonably be considered one of The Time Bombs to which Buffet refers. And The Fed and other central Bankers are Massively Monetizing (i.e. printing/digitizing Money and Buying) Sovereign and other Debt, and thus creating Massive Asset Bubbles in the Treasury Bond and Equities Markets as well.

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 2, 3 and 4) as well as Great Systemic Threats, as we explain.

Thus it is important to understand that it is not just the Precious Metals Markets that are manipulated but Equities, Bond, and other Markets as well. The following is just one example of this phenomenon which has been occurring for years:

“…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….

“In plain terms, the market is being juiced higher, plain and simple. There is no fundamental reason for stocks to be rallying.”

“The Only Reason Stocks Have Rallied This Month” Graham Summers, Seeking Alpha, 9/28/10

Indeed, the recent Official Monetary and Financial Institutions Forum (OMFIF) (a Central Bank Advisory group) Report revealed that Central Banks and other public entities owned a Staggering $29 Trillion of Equities. These are held by 400 public sector institutions – including central banks – in 162 countries. (cf. Financial Times, June 2014)

See also “There are no Free Markets anymore,” CPowell, gata.org

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 nearly six years later (as of December 2013 – the latest BIS Report date) that total was at about $710 Trillion, which exceeds 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). Consider that the entire world GDP is only about $70 Trillion.

Warren Buffet is surely correct to label Derivatives as “Time Bombs” because the leverage inherent in them is both a threat to Investors and to the financial system.

Clearly, a Conclusion that Systemic Risk (generated by Derivatives Exposure which existed, e.g., at AIG prior to the Crash) 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 $700 Trillion in Dark OTC Derivatives, Investing or Trading without addressing the issue of ongoing and prospective 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 outline below . And in our Letters and Alerts, we offer Buy Recommendations designed to profit from Forecast Mega-Moves. See Notes 2, 3 and 4 below, for example, re Buy Recommendations and Performances.

[This July, 2014 Article is the Fifteenth 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 ten 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 President’s Working Group on Financial Markets” established by Congress 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. (A glimpse into this Covert Regime was afforded via the Partial Audit mandated by the Dodd-Frank Bill.) Thus, a critical key to profit and loss is tracking the “Dark Interventionals” (which often 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’ and Paul Craig Roberts’ Exposés of Covert Interventions 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.

COVERT DIRECT INTERVENTION

Covert Direct Intervention to manipulate a variety of markets appears to be accomplished primarily via four 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 The Fed and other Banks such as the ECB and its $1 Trillion Dec. 2011, February 2012 LTRO Operation, or The Fed’s covertly Purchasing U.S. Treasuries through Belgium in 2013-2014 (see above).

[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 (see www.bis.org Path: Statistics>Derivatives) at Fed Primary Dealer J.P. Morgan Chase, or those 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

For further details see our July, 2009, Letter, and 12/23/09 Article at Deepcaster.com, Ibid.

INDIRECT MANIPULATION

Key Statistics continue to be gimmicked by Official Sources in Major Countries 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 in the USA, 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, the USA’s ongoing economic and financial crisis is not merely a “normal” business cycle Recession, but an ongoing 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 June 17, 2014
2.13%     /    9.86%

U.S. Unemployment reported June 6, 2014
6.3%     /     23.2%

U.S. GDP Annual Growth/Decline reported May 29, 2014
2.05%        /     -1.85% (i.e., Negative 1.85%)

U.S. M3 reported June 16, 2014 (Month of February, Y.O.Y.)
No Official Report     /   4.57% (i.e, total M3 Now at $15.870 Trillion!)

Knowing the Real Numbers facilitated Deepcaster’s and others Investment Recommendations and his making five short (and subsequently quite profitable) recommendations to subscribers just before the 2008 Financial Crisis.

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, and, to the extent The Fed regulates these Banks, it is a clear Conflict of Interest.

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 U.S. Notes ceased shortly after President Kennedy's Assassination a few months later.]

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 disaster (see 12/23/09 Article, Ibid. See also Note 4 regarding Deepcaster’s attention to Key Timing Signals and Interventionals and accurate statistics which has facilitated Recommendations which have performed well in the last eight months ).

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 Eminent Guru 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)

Harry Schultz, HSLetter

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 and other Hard Asset 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.

“THE DIVERGENCE BETWEEN THE PAPER GOLD PRICE AND THE METAL GOLD PRICE IS GROWING, CURRENTLY AT ABOUT 40%. It means the Western Gold market is broken. …

“The signal for an ambush came over a week ago, when ABN Amro defaulted on gold delivery in the Netherlands. They and the rest of the Boyz had no gold bars in inventory. They need it desperately, but the price drop will not win them much gold. It will win them a force majeure from which they will attempt to wiggle out legally from a mountain of contracts. The coin demand is rising by 80% to 100% per year, again contradicting the fallen price. Look forward to the day when COMEX shuts down. The day will come. However and urgent warnings. When the COMEX shuts down, the event will occur at the same time as several big financial firms going bust. They will use the occasion to steal private citizen money in private accounts. If observers want the COMEX to be busted, then they must hope for a paper versus metal price divergence even larger, like 100%. Therefore, the Jackass is encouraged by the smashdown, and increasingly annoyed by the childlike whining within the gold community, which really does not comprehend the gold market at all. They fail to comprehend that the COMEX price is not the true valid defensible gold price which is governed by equilibrium between Supply & Demand.”

“Gold and Currency Report”, Jim Willie, 04/21/2013

Indeed, the London “Silver Fix” is scheduled to terminate in August 2014. 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.

Nonetheless, we reiterate that increased purchases of Physical, especially by India and China, make it increasingly difficult for The Cartel to implement or sustain Takedowns.

Interest Rate Manipulation & The Bond Market

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 and 2013 Letters & Alerts & Articles posted in the ‘Latest Letters & Archives,’ ‘Alerts Cache’ and ‘Articles by Deepcaster’ Archives at 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
  • December, 2012 Takedown
  • April, 2013 Takedown
  • October, 2013 Takedown
  • May, 2014 Takedown

Thus, the net-result of Fed/Treasury actions have been to increase long-term Systemic Risk , Hyperinflation Risk and consequent Taxpayer Liability rather than diminish it.

Increased Systemic Risk and “Earned” Liquidity versus “Borrowed” Liquidity

A key point is that the Fed/Treasury Actions of 2008, 2009, 2010, 2011, 2012, 2013 and 2014 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 and former Deutsche Bank Chief, Kurt Richebacher’s (RIP) writings.

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.

A Systemic Solution

Allowing the International Economy to be based on a Fiat Reserve Currency managed by a Private For-Profit Central Bank, whether it be The Fed or European Central Bank or Bank of Japan, is unsustainable. No Fiat Currency Regime in history has ever survived indefinitely. Many have ended in Disaster. Indeed, N.B., it appears the Chinese are preparing a Gold-backed Yuan to be the World’s next Reserve Currency. The Chinese have entered into Bilateral Currency Swap Deals with Russia, Australia and others, which development increasingly threatens the U.S. Dollar status as World Reserve Currency.

So The Systemic Solution is apparent. We outline it in our December 2012 Update. Suffice it to say that one Element of The Solution involves taking Legendary investor Jim Rogers’ Advice recently neatly expressed as 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). Former 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.

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 deepcaster.com.

But it must be said that The Mega-Bank Cartel leaders know that Fed policy is destroying the $US as World Reserve Currency. Its collapse will surely bring a Market Collapse and much Social Upheaval. Regarding this Scenario, both Deepcaster and Jim Rickards, writing in his new Book, The Death of Money: The Coming Collapse of the International Monetary System, agree.

The question is, what Currency will supplant the $US. Rickards argues (based on a 2011 IMF paper, “Embracing International Monetary Stability – a Role for the SDR”), that IMF SDRs will be the World’s Reserve Currency. Rickards thinks this will happen, but the Evidence indicates it is only one of several possible Scenarios, and not the most likely one.

But we both agree that if IMF SDRs are to be the New Reserve Currency that will allow the current Mega-Banker Power Elites to maintain Control. Rickards describes the Motivation and Consequences of Current Central Banks Policy.

“Bankers’ parasitic behavior, the result of a cultural phase transition, is entirely characteristic of a society nearing collapse. Wealth is no longer created; it is taken from others. Parasitic behavior is not confined to bankers; it also infects high government officials, corporate executives and the elite societal stratum….

“Central banks, especially the U. S. Federal Reserve, are repeating the blunders of Lenin, Stalin and Mao without the violence, although they violence may yet come through income inequality, social unrest and a confrontation with state power….

“The climbers and skiers at risk can never know when an avalanche will start of which snowflake will cause it. But they do know that certain conditions are more dangerous than others and that precautions are possible…One cannot predict avalanches, but one can try to stay safe.”

Jim Rickards, Ibid., June 2014

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 regarding Interventions in the Precious Metals Markets.

  1. 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 and other organizations and writers 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 deepcaster.com) and Deepcaster’s April, 2013 Articles and Alerts.
    • Increasing shortages of Physical Gold and especially Silver due mainly to buying by China and India.

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 and April, 2013 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.

Nonetheless, Buying the Dips is an intelligent Strategy at this time.

2. 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 Note 1)

3. Do not give Short Shrift to Gold and Silver Miners and other Tangible Assets in sustained and relatively inelastic demand.

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, and have especially suffered such since Gold’s September 2011 Peak.

Thus, they are most profitably accumulated near Interim Lows resulting primarily 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 to some degree from future Cartel Takedowns. (For an outline of The Strategy, particularly as applied to the Gold and Silver Markets, see December 13, 2012 Article and Regarding Specific Recommendations for Profit and Protection, see Notes 2, 3 and 4.) Certain Other Tangible Assets (such as certain Commodities – see our Recent Recommendations) – should be acquired before the next Market Crash and $US Takedown.

Note, importantly, that Central Banks themselves are increasingly buying Physical Gold (and Equities) now. In November, 2012 the Bank of Korea bought $780 Million (14 tonnes) worth and China has become the World’s largest Producer and Importer. And Central Banks are repatriating Gold held in New York and London Vaults. Note Well! Indeed the prospects for the $US look increasingly poor.

Perhaps A. Migchels’s Forecast and Warning regarding Gold and the $US is correct:

"The Petrodollar is based on the Black Gold standard and it is dying, as is the US Empire. But central banks all over the world are buying Gold like there is no tomorrow. Gold is assaulted by the Fed to maintain Dollar credibility, while the Money Power's international central banks and other insiders are very grateful for a 500-1000 dollar per ounce discount to prepare for the transition. The New World Order cannot collapse the financial markets until they collapse Gold, get our firearms, and get everyone into paper. They are trying to get everyone into the stock market, which will then flash crash."

Real Currencies, Anthony Migchels, April 2013

In sum, in addition to Physical Gold and Silver, Key Tangible Assets (see Deepcaster’s recent Recommendations) are the Keys to Profit and Wealth Protection.

Deepcaster, like Jim Sinclair, believe it likely that Gold will launch into a New Record-Setting Bull Phase this (Northern Hemisphere) Summer. See “30 Reasons the Bear Phase in Gold Ends This Summer,” Sinclair, jsmineset.com, June 2014.

Deepcaster’s word to the wise: Get Physical.

Best regards,

Deepcaster June 26, 2014

Note 1: *We encourage those who doubt the scope and power of Overt and CovertInterventions 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.

Note 2 : Two Key Sectors are Signaling that they have begun to launch, and another that it has begun to dive, all as we earlier forecast.

In our forecasts we identify these Sectors and the reasons they are launching or swooning.

If you are not already in position it is not too late to get in certain of these.

Enjoy the ride! These moves should last for a while, but not for a long time.

We thus provide Timing Forecasts in Deepcaster’s recent Alert, “Major Moves Signals ; Forecasts: Gold, Silver , U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates , Equities, Crude Oil,” posted in ‘Alerts Cache’ on Deepcaster.com. And, as our recent profitable Buy Recommendations indicate (see Note 1), profit can be made from our Analyses and Financial and Geopolitical Intelligence.

Note 3: There are Four Fortress Assets most Investors should hold in Today’s environment of increasing Geopolitical Economic, Financial and Market Risk.

And in buying into today’s Buy Reco, you would be obtaining an ownership interest in two of them, neither of which is a Precious Metal.

Perhaps most important in our June Letter published today, we describe Why these two Assets are among the 4 “Must Own” Fortress Assets.

Indeed, all Four Taken Together are the Must-Own “Fortress Assets Quartet.”

And all have Unparalleled Profit and Wealth Protection Potential, regardless of what comes.

Fortress Assets are those which offer considerable Profit Potential and a considerable degree of protection from inflation, hyperinflation or deflation.

To identify this Quartet and to see our Forecasts for what is coming Next in Key Market Sectors, read Deepcaster’s June Letter, “2 Fortress Assets in 1 Buy Reco; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, Equities, Gold & Silver, Crude Oil, T- Bonds, & Interest Rates,” posted in Latest Letter and Archives’ on Deepcaster.com.

Note 4 : RECENT PROFITS TAKEN: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in the last six months in our Speculative and Fortress Assets Portfolios*:

  • 95% Profit on Crude Oil Call on June 11, 2014 after just 73 days (i.e., about 470% Annualized)
  • 75% Profit on Equity Index Call on May 27, 2014 after 21 days (i.e., about 1305% Annualized.)
  • 30% Profit on Equity Index Call on May 13, 2014 after 34 days (i.e., about 320% Annualized)
  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

 


Who are the good guys? Who are the bad guys?

Posted by: ettienn

Tagged in: Untagged 

ettienn

In today's international drama, the once noble western nations appear to be drawing the line in the sand in the Ukraine.  Here, noble Europe, under the guidance of the U.S. is determined that the Ukraine will be part of the European economic community.   While Russia is being painted by the old cold war brushes of totalitarian communism.

It is difficult to determine who is telling the truth about the events in the Ukraine, however, there seems to be mounting evidence that there is a history in this regions that comes out of the Dark Ages as to the uncivilized history of behavior in that region - a behavior that is playing out today.

I found a documentary on Russian TV (RT) that reveals some truths from the past (check your Wikipedia for veracity) that appear to be representative of the the behavior of the Ukraine Right.  The sad truth here is that, like most of the history of mankind, a small minority of people can hijack a nation and cause dastardly behavior of the part of its 'so called government'. This may well be what is occurring in today's Ukraine.

If you are curious, give a watch: checking the schedule on RT for when it is rebroadcast.  It can be found on the URL below.

Volyn: No statute of limitations

http://rt.com/shows/documentary/


4 Essential Assets for Profit and Protection

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“The Renmembi will become the World’s Reserve Currency.”

Pan Gongsheng, V.P. China Central Bank,
Caijing Financial Magazine, 05/20/2014

There are Four Fortress Assets Investors should hold in Today’s environment of increasing Geopolitical Economic, Financial and Market Risk.

Indeed, one of the 4 “Must Own” Fortress Assets is an interest in Food Production.

“Given the trends in world food production, energy prices, droughts, El Niños, depleting aquifers, and the like -- we actually have to work very hard to come up with any scenarios wherein food prices might fall instead of rise.”

“Rising Resource Costs Escalate Odds of Global Unrest: The critical 40% income-to-food threshold,” C. Martenson, 05/13/2014

But owning some of all four is very important. Indeed, all Four Taken Together are the “Fortress Assets Quartet.”

And all have Unparalleled Profit and Wealth Protection Potential in today’s increasingly risky environment.

Fortress Assets are those which offer considerable Profit Potential and some considerable degree of protection from Inflation, Hyperinflation or Deflation.

To identify this Quartet consider that the world’s population is about 7 billion and increasing by about 80 million per year.

A purblind economist may salivate over the fact that more people usually means more consumption and thus more GDP growth from increased economic activity.

But what really counts is GDP per capita. If population increases faster than wealth production, the population as a whole is poorer. That is, GDP per capita is less. And this is happening in much of the world today, (e.g., why India and China still have hundreds of Millions living in poverty) and is in large part why the middle class in the USA is diminishing. The population of the USA is increasing faster than any increase in Wealth.

In other words, one must consider the issue of carrying capacity (resources) limits. Available Topsoil for food production is one limiting factor, which is why China (with nearly 1.4 billion people) is having difficulty feeding itself. Topsoil is created only by natural processes and, once lost, takes decades to replace.

Twenty percent of China’s arable land has been irretrievably lost to toxic pollution or topsoil loss. China must, therefore, increasingly import food.

As well, “free” or low cost potable water for human consumption and agriculture is increasingly scarce when considered on a per capita basis.

“•The Ogallala aquifer that waters the Great Plains will be gone “in our lifetime,” according to the U.S. Agriculture Department

“•Half the rivers in China have disappeared since 1990

“•Worldwide demand for water will outstrip supply by 40% come 2030, according to a 2009 study prepared for a handful of giant companies including water guzzlers like Coca-Cola, Nestle and brewer SABMiller.”

“One Index Finally Makes Water a Great Investment,” Addison Wiggin, Dailyreckoning.com, 05/13/2015

But still-rapidly-growing countries like China and India (with nearly 1.2 billion people) nonetheless have an increasingly (for a while) large economic middle class, i.e., with increasing purchasing power.

These burgeoning new middle classes demand more of the good things in life, but they also need food and potable water, and increasing amounts of each. Thus these facts have given rise to several of Deepcaster’s Buy Recommendations.

Accordingly, costs for Food have been and are rising rapidly with concomitant social upheaval (and were, e.g., the primary cause of The Arab Spring Riots) as is inflation generally, though most Bogus Official figures disguise it (See Shadowstats Note 1 below re True Inflation (9.69%) and Unemployment (23.2%) in the USA. Relying on such accurate figures has facilitated Deepcaster’s recent profitable recommendations – (see Note 2).

Consider

“There's quite a bit of research to support the idea that people who spend above a certain percent of their income on food are more likely to protest, riot, or otherwise become restive. That number seems to have a minimum threshold of 40% of income to food costs, give or take:

“Since the beginning of 2014, riots have occurred in countries including Thailand and Venezuela. Although they’re different cultures on different continents, these mass protests movements may all have one commonality; increasing food prices may have contributed to their occurrence. The cost of food has been steadily increasing in both Thailand and Venezuela; last month demonstrators in Caracas took to the streets marching with empty pots to protest food shortages. According to Dr. Yaneer Bar-Yam and fellow researchers at the New England Complex Systems Institute (NECSI), events such as these may be anticipated by a mathematical model that examines rising food costs.

“The events of 2014 aren’t without precedent; the price of food has provoked (and placated) throughout history, beginning in Imperial Rome when Augustus introduced grain subsidies. In recent years, the Middle East has been particularly affected by the cost of grain. Centuries after Egypt developed bread as we recognize it, the nation experienced a bread intifada – the country rioted for two days in January 1977 following Anwar Sadat’s decision to drastically decrease food subsidies. More recently, under the rule of Hosni Mubarak, the price of grain rose 30 percent between 2010 and 2011. Then, on January 25, 2011 a new revolution began in Egypt….

”Saudi Arabia’s main aquifer is slated to run out as early as 2016. Because it has abundant energy resources Saudi Arabia will be able to turn to desalination plants, but for how long and at what costs to their ability to export oil as that same oil is being used to power those plants?

“It takes up to 1,000 tons of water to grow one ton of wheat. Therefore, when China imports grains, like corn, soybeans and wheat, it is actually importing water, something it increasingly needs to do because of aquifer depletion and surface water pollution.

“Given the trends in world food production, energy prices, droughts, El Niños, depleting aquifers, and the like -- we actually have to work very hard to come up with any scenarios wherein food prices might fall instead of rise.”

“Rising Resource Costs Escalate Odds of Global Unrest: The critical 40% income-to-food threshold,” C. Martenson, 05/13/2014

Thus rising essential resource costs are pushing all of us toward an inflationary future.

Indeed, because most Major Central Banks continue to debase their currencies via intensifying printing of their Fiat Currencies (cf. our essays on the Currency Wars) it is highly likely Hyperinflation is in our future. In other words, the Cost of Essentials with limited (“easy”) availability like Food, and Potable Water and Energy will increasingly Rise. Indeed, if one considers the Real Numbers, the U.S. is already on the Hyperinflationary (i.e., intensifying U.S.$ debasing) Threshold (Note 1).

This concern that there not be a run on the $US, is why the private, for-profit U.S. Federal Reserve takes pains to conceal the fact that it is not tapering but rather intensifying its Bond Buying Program.

“Is the Fed ‘tapering’? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.

“From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.  

“Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?

“No, Belgium’s trade and current accounts are in deficit.

“Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?

“No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.

“So where did the $141.2 billion come from?

“There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month….

“Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?

“Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week….

“The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of ‘banks too big to fail’ and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets. The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering….

Washington’s power ultimately rests on the dollar as world reserve currency. …

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills….”

“Fed Disguising QE by laundering it through Belgium,” Paul Craig Roberts, paulcraigroberts.org, 05/12/2014

What incentive would a country like Belgium have for cooperating with The Fed?

Money

Consider the following from the Establishment The Wall Street Journal of all places.

“Foreign banks are collecting billions of dollars in interest from the Federal Reserve, analysts said, a sum that stands to rise when the central bank ultimately begins raising interest rates.

“In 2014, the Fed will pay … an estimated $3.37 billion headed to foreign banks specifically, according to an analysis from J.P. Morgan, which used Fed data.”

“Foreign Banks Collecting Billions from the Fed,” Mike Cherney Blogs.wsj.com, 05/08/2014

Ah yes, $3.37 billion in printed $US “paid” to Non-US Banks for “Interest.” Such a deal!

Of course, this intensifying printing increasingly diminishes the Value (Purchasing Power) of the $US denominated Assets, and the Purchasing Power of the Dollars in which they are denominated. And while the value of paper Assets can be “gamed,” the cost of Tangible Assets in de facto Limited Supply (e.g., Food, Water, Energy) will continue to increase in Fiat $ terms so long as Money Printing intensifies.

That is one reason all that money printing will come to a very bad end according to noted Investor, Jim Rogers, with whom we agree.

Consider that Russia reduced its holdings of (sold) U.S. Treasuries by 20% in March 2014 – no surprise there. And China just agreed to a non-$US Settlement deal with Russia’s largest bank, VTB. And China and Russia just agreed to a $400 Billion 30 year Natural Gas Purchase Agreement.

The move away from the $US and the Currency Wars, in general, are intensifying and it is increasingly likely the Chinese Yuan will displace the $US as the World’s Reserve Currency.

For Profit and Protection as this Displacement and Currency Wars intensify, Investors will want to own or hold ownership interests in the Fortress Assets Quartet: Food, Water, and Gold and Silver.

Best regards,

Deepcaster
May 23, 2014

Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported May 15, 2014

1.95% / 9.69%

U.S. Unemployment reported May 2, 2014

6.3% / 23.2%

U.S. GDP Annual Growth/Decline reported April 30, 2014

2.33% / -1.85%

U.S. M3 reported May 12, 2014 (Month of February, Y.O.Y.)

No Official Report / 4.15% (i.e., total M3 Now at $15.782 Trillion!)

Note 2: Our attention to Key Timing Signals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in the last eight months*:

  • 30% Profit on Equity Index Puts on May 13, 2014 after 34 days (i.e., about 320% Annualized)
  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)
  • 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)
  • 40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)
  • 135% Profit on Equity Index Call on October 28, 2013 after just 13 days (i.e., about 3800% Annualized)
  • 110% Profit on Equity Index Call on October 22, 2013 after just 7 days (i.e., about 5800% Annualized)
  • 120% Profit on Equity Index Put on October 9, 2013 after just 16 days (i.e., about 2700% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.


Bogus Numbers, Real Threats, Real Opportunities

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“The U.S. Jobs report came out announcing that 288,000 new non-farm payroll jobs were created in April. It turns out, 234,000 those are fiction. The Labor Department fudged over 80 percent of the reported number using their CESBD estimate, the estimate they believe of new jobs that were created by new companies in April. That is an impossible number to estimate…

“To include an estimate of these jobs, which is way off the mark anyway, is ludicrous. It is a bogus attempt to pretend the economy is stronger than it actually is. There are very few sold signs on homes anywhere; a recent ABC survey showed 71 percent of folks dissatisfied with the economy; good people have to work two jobs, and or long hours at one job just to keep their positions. Most successful people I meet are working 12 hour days, 6 days a week. To pretend the economy and jobs market is strong is nonsense.”

McHugh’s Mid-day Market Update, Robert McHugh May 2, 2014

And Jeremy Grantham, who manages $120 Billion in Assets says the S&P 500 is overvalued by 65%.

Unfortunately, both Grantham and McHugh are correct.

Put another way, Bogus Official Numbers and Fed QE (et al) policies have artificially inflated Equities Prices – they are a “Mirage” as Carl Icahn says. And they have greatly distorted other Markets’ Prices as well. Indeed, if one looks at the Real Numbers (cf. Shadowstats.com below) one realizes the Economy is not recovering and is in fact weakening. And on that basis one can reasonably conclude the S&P is 65% overvalued.

But the foregoing Realities mean that Nasty Market Surprises (and thus Opportunities) Await Investors, and sooner rather than later.

For Investors it is Crucial to know the Real Numbers so one can Avoid (or Profit from) the Threats and Profit from the Opportunities.

So here we first describe key Real Numbers and then identify Threats and certain Excellent Opportunities.

Employment is Key to recovery as the citizens of the USA and Eurozone know all too well. Employed persons consume, thus making improved Corporate Earnings possible.

And the Employment Reality in the USA (and elsewhere) is actually worsening but is hidden by Bogus official statistics. Consider Shadowstats:

“April Labor Data Were Nonsense, at Best. To the extent that the headline April unemployment data are to be believed, the labor situation is spinning negatively out of control, and the happy cheerleading from the Bureau of Labor Statistics (BLS) is without merit. Most likely, there are unstable seasonal adjustments at work here, as with the payroll series, but the BLS keeps those household-survey numbers secret….

“Unemployment Disaster. The April unemployment rate dropped, but that was in a manner that reflected horrendous deterioration in labor-market conditions. The “good” news was that the headline unemployment rate U.3 dropped to 6.28% in April from 6.71% in March. The bad news is that of the 733,000 people no longer counted as unemployed in the aggregate numbers, an even greater number effectively stopped looking for work or lost their employment, with total employment in decline. There was a loss of 73,000 employed, plus 733,000 unemployed, with a resulting, combined 806,000 drop in the headline labor force.

“How does the unemployment rate plunge when there is a net drop in employment? The key is the breakout of the 806,000 leaving the labor force. Here is how the math works, where the unemployment rate is calculated as a percent of the labor force. For March, 10.486 million unemployed / 156.227 million labor force = 6.71%. For April, [(10.486 – .733 = 9.753 million unemployed] / [156.227 -.733 (decline in unemployed) -.073 (decline in employed) = 155.421 million labor force] = 6.28%....

“As the headline unemployed become discouraged, they rollover from U.3 to U.6. As the headline short-term discouraged workers rollover into long-term discouraged status, they move into the ShadowStats measure, where they remain. …

“…headline April 2014 U.3 unemployment at 6.3%, down from 6.7% in March; headline U.6 unemployment at 12.3% in April, down from 12.7% in March; and the headline ShadowStats unemployment measure holding at 23.2% for the fourth month….” (emphasis added)

Commentary No. 624, John Williams, Shadowstats.com, May 2, 2014

And it is not merely that Employment is weak.

Another Burden the Middle Class and Working Poor have to bear is that the Purchasing Power of their $US (and several other) Fiat Currency continues to decline. Indeed, the Fed’s (and other Central Banks) various Money Printing and Credit Expansion Policies have caused a 98% decline in the Purchasing Power of the $US since The Fed was founded in 1913. And Savers and Retirees are getting the Currency Devaluation Shaft as well.

And though the Private, for-Profit Fed’s QE Policies have been touted as helping the Economy and Employment they Actually do no such thing. They merely support The Fed’s owners – the Mega-Banks – and bolster Asset Prices.

In sum, the Fed’s policies do not help the Economy or Middle Class via the Wealth effect. Instead, they hurt both. Consider the following cogent analysis of The Fed’s “Correlation Error” so far as the alleged Wealth Effect is concerned.

“[M]edian earnings for men in 2009 were lower than they were in the early 1970s. And it gets worse. [...] Between 1960 and 2009, the share of men working full-time fell from 83% to 66%, and the share not making formal wages tripled from 6% to 18%. When you take all men, not just those working full-time, [you see] a plummet of 28% in median real wages from 1969 to 2009….

“Start with that correlation error: What actually occurs during periods where stock prices are rising? As Benjamin Graham observed, over the long term, markets act like a weighing machine – valuing equities based on their cash flow and earnings.

“During periods of economic expansion, it is the rising fundamental economic activity that reflects the positive things wrongly attributed to the wealth effect. Companies can hire more and increase their capital spending. Competition for labor leads to rising wages. Employed, well-paid workers spend those wages on capital goods such as cars and houses, and discretionary items like entertainment and travel.

“Oh, and along with all of these economic positives, the stock market is buoyed as well, by increasing profits and more buoyant psychology.

“In other words, all of the same forces that drive a healthy economy, leading to happy consumers spending their plump paychecks, also drive equity markets higher. The Fed, though, seems to think that the stock-market tail is wagging the fundamental economic dog.”

Michael Greenstone & Adam Looney Hamilton Project, Brookings Institution

And it is not just the Currency Devaluation (i.e., loss of Purchasing Power) and Bubbles (e.g., the artificial inflation of Asset Prices) which Fed and other Central Bank Policies create. One could argue that Fed Policies are in fact creating the sort of Centrally Planned, Centrally Controlled Economy that the Marxist Pathology envisioned. To the extent that this is True, we are in a World of Trouble.

In any event, the Transformation over recent decades of Major Economies from being based on Savings for Investment (“Earned Liquidity” to use Dr. Richebacher’s RIP term) to being based on Borrowing (“Borrowed Liquidity”) has not only facilitated Bubbles and Crashes (cf 2001-2002 Internet Bubble Crash, 2007-2009 Real Estate Bubble Crash) but it has also opened the Door to other Chicanery which is profitable for the Mega Banks but harmful to nearly everyone else.

Consider

“Taxpayers are paying billions of dollars for a swindle pulled off by the world’s biggest banks, using a form of derivative called interest-rate swaps; and the Federal Deposit Insurance Corporation has now joined a chorus of litigants suing over it….

“Derivatives . . . have turned into a windfall for banks and a nightmare for taxpayers…. While banks are still collecting fixed rates of 3 to 6 percent, they are now regularly paying public entities as little as a tenth of one percent on the outstanding bonds, with rates expected to remain low in the future. Over the life of the deals, banks are now projected to collect billions more than they pay state and local governments – an outcome which amounts to a second bailout for banks, this one paid directly out of state and local budgets.

“It is not just that local governments, universities and pension funds made a bad bet on these swaps. The game itself was rigged,…

“On March 14, 2014, the FDIC filed suit for LIBOR-rigging against sixteen of the world’s largest banks – including the three largest US banks (JPMorgan Chase, Bank of America, and Citigroup), the three largest UK banks, the largest German bank, the largest Japanese bank, and several of the largest Swiss banks. Bill Black, professor of law and economics and a former bank fraud investigator, calls them “the largest cartel in world history, by at least three and probably four orders of magnitude.”

“LIBOR (the London Interbank Offering Rate) is the benchmark rate by which banks themselves can borrow. It is a crucial rate involved in hundreds of trillions of dollars in derivative trades, and it is set by these sixteen megabanks privately and in secret….

“The rate-rigging banks have been caught red-handed, but the greater manipulation of interest rates was done by the Federal Reserve itself. The Fed aggressively drove down interest rates to save the big banks and spur economic recovery after the financial collapse. In the fall of 2008, it dropped the prime rate (the rate at which banks borrow from each other) nearly to zero.

“This gross manipulation of interest rates was a giant windfall for the major derivative banks. Indeed, the Fed has been called a tool of the global banking cartel….

“Bill Black concurs, stating, ‘Our system is completely rotten. All of the largest banks are involved—eagerly engaged in this fraud for years, covering it up.’”…

“The Global Banking Game Is Rigged, and the FDIC Is Suing,” Ellen Brown, via lemetropolecafe.com, April 13, 2014

Quite apart from the illicit Wealth Transfers exposed in the foregoing, one important Takeaway is that there is now yet another Great Bubble, a Credit/Debt Bubble, a Bubble destined to loudly Pop with Seriously Negative Consequences for Citizens around the world.

Among the most prominent are the USA’s $17 Trillion plus Debt which can never reasonably be repaid, nor can Japan’s Debt which is 220% of GDP.

And much of China’s Huge Shadow Banking Debt will have to be written off.

Yes indeed. This bubble will pop. Indeed, the signs are that the “Pop” is near, but not before the Central Banks’ attempts to prevent its popping (via more QE et al) generate Hyperinflation.

I felt something changing last Friday. Was the truth breaking out? Lies, untruths and lies, propaganda, lies and damn lies. What are the lies? Lies that the Fed and the government are telling us -- Federal Reserve Notes ("dollars") are money and silver and gold are outdated relics of another age. What I sensed on Friday (with gold up 17 dollars and silver up 50 cents) was that the basket of lies was beginning to fall apart.

The US public will swallow lies for just so long, and then the truth breaks through the barriers. The public knows that 'their' inflation is more like 12% than the 1.2% that the Labor Department says it is. The public is beginning to wake up to the fact that silver and gold are real money -- pure wealth that has been respected for thousands of years.

Meanwhile the Fed is pumping trillions of dollars into the banking system in an attempt to push core inflation up to 2 percent. The system absorbs all this liquidity, and actual 'poor man's inflation' gradually increases. But somewhere ahead (I think it will be this year) inflation will break out of its current bounds, and today's 'mild inflation' will turn into hyperinflation. That's when interest rates will break out and head violently higher. At that point the Fed will administer the only medicine it knows -- more QE, more liquidity.

Judging by past history, there are only two certain events -- wars and currency depreciation….

Towards the end of the year, all the liquidity that the Fed has created will be released, and instead of deflation, the US will be dealing with hyperinflation. Russell advice -- Take a position in physical silver and gold, and be patient, very patient.

Richard Russell, 05/05/2014

Consider some of the Signals

– US Debt of $17 Trillion plus is unpayable and increasing.

– The BRICS Nations are establishing a Trade Settlement System as an alternative to the Western SWIFT System and as well establishing an Alternative Bank to the Western IMF.

– Much US and Eurozone Gold has been dumped for years to hold Gold Prices down and the $US up, but the Physical supply in the West is nearly exhausted. China and India have been and are purchasing Western Gold and taking Delivery.

– The Russian Parliament has ordered $US Abandonment (albeit not with sudden implementation) and other countries (e.g., China) are beginning to trade for oil in Currencies other than $US. Thus the Reign of the PetroDollar (and therefore the $US) is nearing its end.

– The $US is increasingly testing its 50 DMA

– We reiterate the U.S. Economy is not recovering.

As a final dose of Reality Therapy, consider that the Equities Market will not be helped by Ostensible Job “Growth,” Noah Sugarman via Greg Guenthner explains why: “It turns out that private sector job gains have lagged the growth in adult working age population since 2008,” explains Rude researcher Noah Sugarman. “In 2008, there were about 2 working-age adults for every private sector job. Today, that ratio has widened from 2 to 2.13. That means we’d actually need to total more than 123 million jobs to really get back to where we were before the recession.” [And this raises the question how in the world could the U.S. Benefit from the Senate Amnesty Bill (S744) Tripling of Legal Immigration, Amnestying Illegals and increasing H1B Visas, when 12% of the USA’s own STEM graduates and Millions of others are unemployed?]

And now there are two relatively new Negatives – Momentum Stocks have Cratered, and Margin Debt (recently at record highs) has reversed and fallen. The last two times margin debt reversed (2000-2001 and 2007-2008) the Markets Crashed.

And there is The Threat which becomes ever more threatening as the days pass.

And that Greatest Threat is that the $US is on its way to being finished as the World’s Reserve Currency. It does not please us to say this, but the private for-profit Federal Reserve’s decades-long devaluing of the $US for the benefit of its Mega-Bank Owners is The Main Culprit.

But the Key Point Now and going forward is that the current long-term downtrend in the $US could turn into a rout at any time, which it will when Big Money players realize that the $US Days as Reserve Currency are over.

Long-term therefore, since The Fed (and other CB’s) will have to continue, and eventually increase, QE again to keep interest rates down and Equities propped up a while longer, the already ongoing debasement of the $US Purchasing Power as a result of the Ongoing Currency War will become increasingly evident.

Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency. That is where we are headed, like it or not. In other words, the Winners in the Currency Wars will be the Holders of Tangible Assets — Gold & Silver above all, as well as Agricultural and certain (but not all) Energy Assets. Acquiring these now is The Opportunity of the decade.

But the foregoing Developments are also Signals which have facilitated our Profitable Recommendations described in Note 1 below. And we are close to recommending leveraged short positions as we profitably did in 2008.

Regarding Gold and Silver Prices, they have been subject to ongoing Price Suppression, (Note 2 below) however this suppression cannot continue much longer, due to increasing Chinese and Indian purchases and deliveries.

“Writing in the small hours of Wednesday (05/08/14) morning, chart and momentum factors induced *The Gartman Letter* to make optimistic noises about gold. To JBGJ’s memory, during the long bottoming process for gold around the years 1990-2001 when the confluence of these factors caused *TGL* to do this violent selloffs frequently promptly materialized. The *BullionVault*reminded this morning *UK Gold Sales, 15 Years to the Day.* That was a classic case of rising expectations being suddenly crushed. It looks as if the gold vigilantes are back….

“If indeed gold has reverted to the pattern of a decade and more ago, eventually Asian demand will oblige the overhead surveillance to retreat. And that is after all what was seen in late March.”

JBGJ, LLC, John Brimelow, 05/08/2014

Finally, we note one entirely avoidable Threat – holding an Excess of a Fiat Currency.

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

Warren Buffet, 05/07/2014

Best regards,

Deepcaster
May 8, 2014

Note 1: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent profits taken*:

• 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)

• 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)

• 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

• 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

• 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

• 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

Note 2: 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.

 


Unspinning the Spin

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

 

 

“Former Assistant U.S. Treasury Secretary, Paul Craig Roberts, speculates that the U.S. Government has recruited its satellite countries, like Belgium, to compensate for the ‘tapering’ being done with purchases of U.S. Treasuries by the Federal Reserve.”

“U.S. recruits satellites to compensate for Fed’s ‘tapering’ Roberts tells KWN,” gata.org, 04/16/2014

Indeed, “Tiny” Belgium is now the holder of the third largest Hoard of U.S. Treasuries. Fancy that!

It appears the Fed’s “Tapering” is being at least offset by Belgian Buying.

This and other shenanigans like Bogus Official “statistics” (see Note 1 re Shadowstats.com) make the 2013 Equities Bull Run and the recent Equities Market Sell-Off unsurprising to us.

Indeed, much of our writing is devoted to separating Truth from Spin in order to facilitate more Profitable and Wealth Protective Investing. Thus we offer the following mini-buffet.

Regarding one Major Untruth –that the U.S. Economy is recovering – the Reality is quite the opposite. Indeed, one consequence of the Non-Recovering U.S. Economy is the ongoing Impoverishment of the American Middle Class.

Clearly, (and especially in Inflation-adjusted terms) the Real Median Income of U.S. Households has dropped dramatically since 1989, and since 2007, because U. S. Unemployment is High (23% per Shadowstats.com – Note 1) because American workers are competing against low wage Foreign and Immigrant Labor and because the Economy is not recovering.

“Median U.S. Household Income in 1989 - $51.682

“Median U.S. Household Income in 2007 - $55,000

“Median U.S. Household Income in 2012 - $51,017”

Figures are NOT Inflation Adjusted.

Richie King, Quartz, 2014 Data from U.S. Census

Even worse, because the Purchasing Power of the U.S. Dollar has dropped dramatically in recent years (and The Cause is primarily Fed Money Printing and Fed Credit Bubble facilitation), Americans’ Standard of Living has diminished far more than the nominal Income Numbers would suggest. Thus Americans’ Constrained incomes and the Non-Recovering Economy are suppressing corporate Earnings and Prospects.

But the recent Equities Sell-Off and Mixed (at best) Economic Numbers raise the question “What’s Next?” Is it the beginning of a Great Crash, or a New Rally? We answer these questions in the context of our Forecasts, including Timing Forecasts; and most important, we make recommendations for Profit and Protection in light of these forecasts in our recent Letter and Alerts.

One Key Consideration for the U.S. and International Economy, and therefore Equities Market performance, is that Consumption continues to be Constrained because of continuing Impairment of Structural Consumer Liquidity. Diminishing Real Wages and High Debt loads are The Culprits. Therefore, any Recovery is thus prevented. The same is true of other Major Developed Economies.

Bottom line: The Economy is not recovering (cf. Shadowstats.com, see Note 1) and not likely to recover so long as consumer liquidity is impaired.

A related important Point is that Consumers have not been helped by successive doses of Central Bank QE, notwithstanding Fed and other Central Bank Spin to the contrary.

This is not surprising since QE is aimed at propping up Financial Institutions, (several of which own the Private for-Profit Fed) not (contrary to Bank Public Pronouncements) at helping “Main Street.”

Important to note is one (of several) Quite Significant Deleterious Effect of ongoing Fed QE.

The most Important Deleterious Effect of Ongoing QE is the ongoing Destruction of the World Reserve Currency Status of the $US.

From a Multi-Year Perspective, we have recently had an Harbinger of what is to come as the $US value (basis USDX) dropped below 80. Even the Chinese, who hold Trillions in Dollar Denominated Assets are hurt by the diminished purchasing power of the $US.

This recent $US drop was occasioned in part by decreasing U.S. Purchasing Power Parity. Again, Real Wages have been falling. And unpayable Debt has been rising.

And, Ongoing QE (i.e., Money Printing) is the Primary Culprit.

Fed Policy is destroying the $US as the World’s Reserve Currency, and inflicting a Credit Monster of Excess Debt on the World. The Fed-led Transformation from the Savings-funded Economy of a few decades ago to a Debt-funded one is not sustainable since debt loads of Key Sovereigns have become unpayable.

And if intensifying U.S. Sanctions against Russia impel Russia to begin to accept payment for Russia’s oil and Gas in currencies other than the $US and/or if China pays for Iranian oil and Gas in Yuan, the Demise of the $US will be hastened.

In any event, long-term, since The Fed (and other cooperating CB’s) will have to continue, and increase, QE again to keep interest rates down and Equities propped up a while longer (cf. Deepcaster.com), the already ongoing debasement of the $US Purchasing Power as a result of the Ongoing Currency Wars will become increasingly evident. Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency. That is where we are headed, like it or not. In other words, the Winners in the Currency Wars will be the Holders of Tangible Assets ¾ Gold & Silver above all, as well as Agricultural and certain (but not all) Energy Assets.

Of course, The Big Winner will likely be China which is importing Huge Quantities of Gold and acquiring Tangible Assets around the World.

And, unspinning the Spin on the Equities Front, consider that Equities are generally overvalued, overhyped (especially the Tech/Social Media Sector which is why we correctly, earlier, warned about Facebook) and supported by Central Bank QE, and “Communications Policy” et al. This recent little Tech Takedown is just the beginning of the Popping of the Tech Bubble. Before it is over it will be worse than 2001-2002.

Billionaire Carl Icahn is correct when he says current Equities levels are “a Mirage.”

Thus we have recently answered the question whether Equities will still have one “Last Gasp Rally” before a Great Crash begins. Consider that the Fed is still engaged in Market Intervention via QE, albeit in Reducing levels, and the Recovery Fiction has been “sold” to most of the Retail Public. [Indeed, our recently recommended profitable Trades have been facilitated by attention to such Interventionals as well as Fundamentals and Technicals (Note 2).]

In any event, we expect the spikes up to be punctuated by Spikes down as Investors realize stocks are quite overvalued. The recent Mini Crash of the NASDAQ is but one example.

As a final dose of Unspun Reality Therapy, consider that the Equities Market will not be helped by Ostensible Job “Growth,” Noah Sugarman via Greg Guenthner explains why: “It turns out that private sector job gains have lagged the growth in adult working age population since 2008,” explains Rude researcher Noah Sugarman. “In 2008, there were about 2 working-age adults for every private sector job. Today, that ratio has widened from 2 to 2.13. That means we’d actually to total more than 123 million jobs to really get back to where we were before the recession.”

In closing it is important to reiterate our earlier observation that the Shortage of Physical Gold is intensifying. Asian, and especially Chinese and Indian Buying, and taking Delivery of Physical continues at Record levels.

Couple that with China’s record January, 2014 lending (i.e., credit creation) year over year (also a 4 year high) and China’s Credit Bubble and Fed Chair Yellen’s promise to Open the Monetary Spigots in the event of a slowdown, and one can see why Gold and Silver have been rising this year until very recently. Inflation is not only already here, with Real U.S. CPI at 9.20% (cf. Shadowstats.com) but it is now becoming visible on the Horizon. The Great Launch up is coming notwithstanding ongoing Cartel Price Suppression (Note 3) and other Mega-Bank attempts to diminish Investor interest in Gold and Silver.

Looking above, beneath and beyond Main Stream Media Spin is essential for Profit and Wealth Protection.

Best regards,

Deepcaster
April ­­18, 2014

Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported April 15 , 2014
1. 51 %     /     9.20 %

U.S. Unemployment reported April 4 , 2014
6.7%     /     23.2%

U.S. GDP Annual Growth/Decline reported March 27, 2014
2.59%        /     -1.40%

U.S. M3 reported April 15 , 2014 (Month of February, Y.O.Y.)
No Official Report     /   3. 77 % (i.e, total M3 Now at $15. 725 Trillion! )

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent * :

  • 75% Profit on Crude Oil Call on April 14, 2014 after 13 days (i.e., about 2000% Annualized)
  • 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)
  • 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)
  • 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)
  • 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)
  • 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

Note 3: 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.


 

“– Washington has apparently fomented or supported a coup in the Ukraine that increases the likelihood of war in Europe dramatically therefore sending the gigantic pools of liquid financial assets in the world scurrying into the greenback and US Treasuries, which the Chinese have stopped gobbling up;…

“Guest Post: How Monetary Policy Drives Foreign Policy,” Tyler Durden Zerohedge.com, 03/11/2014

The Chinese sold a record Amount of U.S. Treasuries in December, 2013.

The WAR in The Key Financial Sector is moving into Stage 2.

The Stage 2 War will have Substantial Effects on virtually all Sectors of the Economy and Markets. Those aware of its Prospective Effects will be able to Profit and Protect Wealth. Those Unaware will likely suffer Great losses.

Consider the Prospective Effects.

Until Fed Chair Yellen’s comments recently that Interest Rates could go up about “six months after” tapering is scheduled to complete (i.e., about April, 2015) the US$ was in a serious Downtrend, closing several times below 80, basis USDX. A Key Factor in this War so far as the value of the $US is concerned is and will continue to be, weak U.S. fundamentals as well as Fed Money Printing. Consider Housing for example.

“Based on this mornings (March 20 th) Reporting, existing house sales were declining at an annualized quarterly pace of 24.4%.”

 Shadowstats.com 3/20/14

Contrary to Mainstream Media Reports, the U.S. Economy is not recovering (Note 1). But the Prospective Rise in interest Rates signaled by the Yellen comment, coupled with ongoing Geopolitical Concerns would, and did, drive up the $US temporarily as an Ostensible Safe Haven.

Unstated was the fact that Interest Rates will have to rise anyway to stave off the inflation that Fed Money Printing has already created in the Economy. Real US CPI is already 8.81% per Shadowstats.com. And the other Real Numbers also show the U.S. Economy is not recovering (Note 1).

But with the Chinese and other Sovereigns and Major Players already selling the $US, the $US as World Reserve Currency is already threatened. Foreign Holders of U.S. Treasuries are at a 10-year low!

So other Measures have to be taken (in the eyes of the Private-for-Profit Fed), and other Powers that be, to shore up the $US. But such Measures will provide only a temporary boost to the $US in the ongoing Currency War.

Regarding Geopolitics and the value of the $US, consider the following fuller Explanation of the Coup overthrowing the Yanokovich government of the Ukraine.

“– Washington has apparently fomented or supported a coup in the Ukraine that increases the likelihood of war in Europe dramatically therefore sending the gigantic pools of liquid financial assets in the world scurrying into the greenback and US Treasuries, which the Chinese have stopped gobbling up;…

“Russia has repeatedly stated over the past decades that an EU move on the Ukraine crosses a red line. The EU ignored the warning, and with the US's help and the ire of Ukrainians sick of a corrupt government crossed Putin's red line. What the Ukrainians want is democracy and relief from their corrupt plutocrats (see previous post's article by Paul Craig Roberts).

“The US has no compelling strategic interest in the Ukraine, or in the Crimea remaining part of the Ukraine. Yes, the Ukraine has been looted by its oligarchs, just as Russia was, and just as the US is being looted by its oligarchs right now; incomes of a majority of American households are falling so the banks can collect on bad debts. It would be nice for people everywhere if they could break the grip of the plutocrats over their livelihoods. In the Ukraine, to substitute debt servitude to Western banks for the domination of the oligarchs would only accelerate the collapse of the EU. And it's not clear the EU, if it offers help, won't be ripped off by the oligarchs as well. The new government in the Ukraine has already increased the power of the oligarchs by giving them provinces to rule, so it's not clear the Western "rescuers" are even able to help solve the fundamental problem at all, and might end up losing their shirts again, as they have in Greece, Portugal, et al.”

“Guest Post: How Monetary Policy Drives Foreign Policy,” Tyler Durden Zerohedge.com, 03/11/2014

In sum, the prospect of rising Rates, the Ukraine Crisis, and relative Chinese and Emerging Market weakness, drove investors to the Ostensible Safe Haven $US and US Treasuries very recently. Result: A $US Bounce, albeit a temporary one.

Longer term, rising rates will be lethal to U.S. Treasuries and the U.S. Economy ¾ already ¼ (one-fourth!) of available U.S. tax Dollars are used to pay interest on the $17.4 Trillion U.S. National debt.

But it is critically important not to let the aforementioned Developments Mask The Fundamental Reality: An International Fiat Currency War is in progress and is being played out in Economic, Financial and Geopolitical Arenas.

“Markets have been sanguine about geopolitical risk for several years now, a phenomenon illustrated by the relaxed approach they have taken to Ukraine’s crisis. There are understandable reasons for this, but contrary to a popular saying, this could well be a case where the trend is not necessarily the markets’ friend.”

Mohamed El-Erian, chief economic adviser to Allianz Financial Times, 03/24/2014

El Erian’s comment arguably applies to the Ongoing Currency War.

That is, Major Powers are engaged in a Competitive Devaluation of their Currencies. A Key Policy of Abenomics in Japan is the ongoing Devaluation of the Yen. And recently, the Chinese made a Major Move to devalue the Yuan.

But the Chinese have less reason to worry long-term about the relative “Paper Price” of the Yuan, because the Yuan is de facto backed by over Three Trillion Dollars in Foreign Exchange Reserves, and an increasing Hoard of Physical Gold and interests in Real Tangible Assets around the World. And Russia’s Ruble in de facto backed by Precious Metals & Energy Assets.

And the $US and Euro are backed by … Nothing Comparable which is Tangible. Thus China and Russia can not be successfully isolated economically.

And in the entire History of the World, Fiat Money backed by “Nothing Tangible” has failed 100% of the time. The Incremental playing out of these Failing Fiat Currencies sends Signals to those who are tuned in to them and thus present Opportunities and Threats. These Signals have already facilitated Opportunities for Profit (Note 2).

In sum, as Major Governments and Central Banks have now begun actively and competitively to devalue their Currencies (and now with that Currency War moving into the Geopolitical Realm), we have Moved into Stage 2 of that War.

Further consider the Reality that The Fed cannot stop printing (i.e., devaluing the $US), although it is likely to continue tapering a while more; eventually (next few months) it will have to start printing again.

The Equities and other Markets have come to depend on it, as is obvious.

Long-term, since The Fed (and other CB’s) will have to continue, and eventually increase, QE again to keep interest rates down and Equities propped up a while longer, the already ongoing debasement of the $US’s Purchasing Power as a result of the Ongoing Currency War will become increasingly evident.

Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency. That is where we are headed, like it or not.

In other words, the Winners in the Currency Wars will be the Holders of Tangible Assets ¾ Gold & Silver above all, as well as Agricultural and Energy Assets. Stay tuned for Forecast Timing of the Trend Shifts and Climacterics which provide both Opportunities and Threats.

Consider another effect of our “progress” per the foregoing Currency War Scenario — the prospects for the Equities Markets.

Absent a Major Market Destabilizing Event — e.g., Ukraine threatening to turn into a Hot War, or several overleveraged Chinese Trust entities defaulting on loans, either of which is possible — Equities have already launched into their Last Gasp (i.e. before The Crash Begins) Rally. But it is not without Trauma, as recently the NASDAQ fell under its 50 day moving average, led by the vastly over-hyped, overvalued social media stocks such as (as we earlier indicated) Facebook.

Indeed, ongoing QE and QE to come (and notwithstanding de minimus temporary tapering) and the Main Stream Media-Promoted (False) Notion that the Economy is Recovering, and Deep Pockets Intervention in the Markets, all Contribute to this last Gasp Equities Push up.

If one considers the Fundamentals providing the basis for our forecast of a Crash, which could start at any time, one sees that they are nearly all directly or indirectly related to the ongoing intensifying Currency War.

In sum, underlying Key Fundamentals are quite weak. Indeed, Fundamentals and Jaws of Death Rising Bearish wedge and other Key Technicals “forecast” a Major Market Crash beginning soon – we communicate probable timing as we receive signals. It is important to consider the Indicators of Fundamental Economic Reality.

Indicator #1 – Q4 U.S. GDP was revised down to 2.4% from 3.2% -- Not Bullish.

Indicator #2 – The Case – Shiller PE Ratio (Google it) reached 28 recently. But the Mean and Median since the 1880s is about 16. Historically, a reading as high as 28 indicates an Equities market which is grossly overvalued, and has typically resulted in a Crash.

Indicator #3 – Retail Sales, and Job Growth, and housing and Industrial Production have slowed.

Indicator #4 – Technically, as we have demonstrated in our recent Alerts, the Equities Markets are making Multi-year Tops, with all exhibiting Jaws of Death Patterns.

Indicator #5 – The Russia-China “Squeeze Play,” i.e., the Ukraine, is just aborning (see recent Alerts ).

Indicator #6 – Insider Selling is Heavy.

Indicator #7 – Margin Debt is near Record Highs.

The Currency War, Stage 2, is already Manifest in another Way. Consider that the Economic/Financial Crises of the early 1930s were characterized by Bank Runs.

And we are already seeing such runs this year in Crimea, Ukraine and Rural China.

Defaults in China have left Depositors understandably nervous. Deepcaster’s Forecast: there will be more Bank Runs and they will spread, eventually to the Eurozone and U.S.A. Physical Gold and Silver and Tangible Assets such as Energy and Agricultural Products will be the Investors’ Salvation.

Regarding Energy, unsurprisingly to us, OPEC recently estimated that World Demand has now risen to 90 Million/bbl/day – an all-time record. China’s demand continues to increase (albeit more slowly) and the U.S. still produces only about 45% to 50% of what it consumes.

Fracking is not all it is cracked up to be (pun intended) so far as production increase is concerned. Depletion rates are too high (60% to 70% in the Bakken reportedly) and the EROI is too low.

Indeed, the Crude Price is probably the best (i.e., least easily manipulated) Indication of Real Price Inflation – i.e., Fiat Currency Purchasing Power Devaluation – and the WTI Crude Price has recently moved back up over $100/bbl.

Only the next Episode of The Currency War-facilitated Great Equities Crash will likely serve to substantially deflate Crude Demand and thus Prices significantly once again, but only for a while.

Intensifying Currency Wars provide Opportunities and Threats for those who Track their Dynamic Effects on Key Markets.

Best regards,

Deepcaster
March 28, 2014

Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported March 18, 2014
1.13%     /    8.81%

U.S. Unemployment reported March 7, 2014
6.7%     /     23.2%

U.S. GDP Annual Growth/Decline reported March 27, 2014 2. 59 %        /     -1.40%

U.S. M3 reported March 16, 2014 (Month of Febr uary, Y.O.Y.)
No Official Report     /   3.48% (i.e, total M3 Now at $15.641 Trillion!)

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

• 60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)

• 100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

• 30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

• 55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

• 140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

• 40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)


Intensifying Currency War Consequences

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“When the dollar collapse comes, it will happen in two ways: gradually then suddenly. That formula, famously used by Hemingway to describe how one goes bankrupt, is an apt description of critical state dynamics in complex systems. The gradual part is a snowflake disturbing a small patch of snow, while the sudden part is the avalanche. The snowflake is random yet the avalanche is inevitable. Both ideas are easy to grasp. What is difficult to grasp is the critical state of the system in which the random event occurs.”  

Jim Rickards, Currency Wars

Major Fiat Currency Printers around the World are devaluing their currencies by “printing” ostensibly in order to bolster their economies.

But the consequences of The U.S. Fed’s QE for example, have been increasingly to artificially inflate financial Assets and enrich The Fed’s Mega-Bank Owners. It has not resulted in an improving U.S. Economy or Employment Picture.

But Fed QE and related forms of Money Printing have unleashed Serious and Impending Financial and Economic Threats.

These Threats are Signaling Impending Mega-Moves. Such Signals have already facilitated recent Profitable Recommendations (see Note 2).

But the impending Threats are also opportunities for Profit and Protection for the Well-informed!

Consider the U.S. Economy:

Indicator #1 – Q4 U.S. GDP was revised down to 2.4% from 3.2% -- Not Bullish.

Indicator #2 – The Case – Shiller PE Ratio (Google it) is nearly 28 today. But the Mean and Median since the 1880s is about 16. Historically, a reading as high as 28 indicates an Equities market which is grossly overvalued, and has typically resulted in a Crash.

Indicator #3 – Retail Sales, and Job Growth, and housing and Industrial Production have slowed. Real U.S. Unemployment is 23.2% per Shadowstats.com.

Indicator #4, technically, as we have demonstrated in our recent Alerts, the Equities Markets are making Multi-year Tops, with all exhibiting Jaws of Death Patterns.

Indicator #5 – The Russia-China “Squeeze Play” is just aborning (see below).

But, above all, The Currency War is being played out in the Ukraine.

Indeed, there is much more, and different than the Mainstream Media Version, about the Ukrainian Situation than meets the eye. And it is most Threatening to $US Hegemony as World’s Reserve Currency. Of the Many Factors causing that Conflict, Currency Hegemony, and Consequent Economic Hegemony is the main one.

The $US has been under increasing pressure in recent months as Sovereign Nations, and others have been increasingly selling $US and $US-denominated Assets.

There is much credible evidence that:

Russia, and China, and Russia in concert with China, are fed up with what they feel to be U.S., U.K. Eurozone (except to a degree Germany and the Nordics) Bullying-in-general. In their view, U.S. involvement in the Ukraine is only the latest example. Indeed, East Ukraine and Crimea which are historically and ethnically a Part of Russia, with millions of Russian-Ukrainian conjugal families as Testimony to this Fact. Indeed, Ukraine itself was part of Russia for 300 years.

Lest one think that this interpretation Mischaracterizes the perspectives of ethnically Russian Ukrainians consider that the Crimean Parliament just voted to join Russia and hold a referendum in 10 days on the matter. (Ukraine’s Acting President has predictably called the referendum “a farce.”)

But Russia-China see the overthrow of the elected Russian-backed government by an unelected Cabal (with ties to the West, and Western Banking and Financial interests and NATO!) on Russia’s Doorstep, to be unacceptable.

Indeed, in their view, the Obama Adm. – facilitated Coup, and attempt to isolate Russia can not succeed because Russia-China can not be isolated. And Russia and China are now de facto allies. Together Russia-China control 30% of US Financial Assets as well as Resources around the World. And China’s Control of African and Latin American Resources, plus China’s Leadership of the BRICS-controlled BRICS summit last year, provide an alternative to US-Eurozone (and thus $US) Hegemony.

The Renminbi has already been listed at the MICEX (Moscow Interbank Currency Exchange) and Russia-China intend to use only their own currencies for bilateral trade.

The Eurozone in Particular, and the World in general need the Energy and Food Production Assets Controlled by Russia and China.

Indeed, Investor Wilbur Ross, who has made Billions by not being wrong, recently said Putin is “leader of the World.”

Result: leverage for Russia & China

Couple all the aforementioned with what Russia sees (with considerable justification) as the West’s attempt to surround it with NATO-linked Nations, to control/limit the Export of Russia’s Gas via pipeline through Ukraine and neighboring countries, and control Ukrainian Oil, Gas and Food Exports. Russia has also been aggravated by the West’s attempt to limit/stop/control the export of Iranian Oil and Gas through the Russian-Controlled pipelines and Syrian Port, and to disrupt/stop Russia’s Gazprom and other Russian companies, from clearing their Transactions through Cypriot Banks, and you are looking at an outraged Russia, in league with China and with the support of resource rich Iran.

These three constitute an Axis which can not be Economically or Militarily isolated, however much the West try.

Most important for Investors is that there is new evidence that Russia’s Outrage and China’s Self-Interest are about to lead to a serious Attack on the $US and US T-Bonds. Indeed, Russian Presidential Advisor, Sergei Glazer, recently indicated that Russia’s Response to John Kerry’s “crippling sanctions” could be that “authorities should dump U.S. Government Bonds.” And China’s recent commitment to 7.5% GDP Growth but also to a 12.5% Increase in Military Spending is not comforting.

Indeed, China has already been preparing to replace the $US as World Reserve Currency, by a Gold-backed Yuan. And Russia has indicated it would support the inclusion of Gold in a weighted basket of a new Global Currency.

In sum, longer term, given the US Fed’s QE and other Central Bank’s Money Printing Frenzy of recent years, we forecast the $US will dramatically lose Purchasing Power and be displaced as The World’s Reserve Currency by a Gold-backed Chinese Yuan, as the Russia-China Squeeze takes its effect. The Fed-led Cartel (Note 1) Profligate Printing nearly guarantees that.

Indeed, Key Major Multi-Year Technicals and Fundamentals Signal a Crash is coming largely as a result of Fed and other Major Central Bank Money-Printing Policies..

Consider that, as The Fed (eventually) increases QE to counter The Crash (or if Russia-China start to implement their Squeeze Play First), the $US will start to Collapse (first slowly and then in a cascade, as Rickards points out) and, consequently, U.S. Treasury strength will reverse and That Biggest of all Asset Bubbles will begin to deflate and then Burst.

In other words, since The Fed (and other CB’s) will have to continue, and eventually increase, QE again to keep interest rates down and Equities propped up a while longer, the already ongoing debasement of the $US Purchasing Power will become increasingly evident. Therefore at some point the ongoing modest selling (i.e., refusal to support or purchase) of the $US by Sovereigns (e.g., China sold a record amount of U.S. T-Bonds in December, 2013) will turn into a Rout (as will selling of U.S. Treasuries), likely resulting in the collapse of US Treasury Securities Values as well as the displacement of the $US by the Gold-Backed Chinese Yuan as World Reserve Currency.

This will impel Gold and Silver Prices much higher, notwithstanding Ongoing Cartel (Note 1) Price Suppression attempts. Gold & Silver, remarkably, as the Ukraine Crises was heating up a bit and the $US Weakened (both should have impelled Gold Higher). Gold (and Silver) showed some weakness, until the Ukraine Crises heated up a lot, then they shot up.

This tells us the Cartel is still active, and somewhat successful, in suppressing Precious Metal prices, but not nearly as effective as in earlier days.

As well, for reasons we have laid out before (e.g., increasing Physical Demand from China), we believe Cartel Price Suppression can not be sustained.

We reiterate our earlier observation that the Shortage of Physical Gold is intensifying. Asian, and especially Chinese Buying, and taking Delivery of Physical is at Record levels. And Deliverable (Registered) Physical at Major Exchanges like the Comex is at Record lows.

Couple that with China’s record January, 2014 lending (i.e., credit creation) year over year (also a 4 year high) and Fed Chair Yellen’s promise to open the Monetary Spigots in the event of a slowdown, and one can see why Gold and Silver have been rising recently. Inflation is not only already here with Real U.S. CPI at 9.2% (cf. Shadowstats.com) but it is now becoming visible on the Horizon.

Thus, our view is that a Great Launch Up for the Precious Metals is impending, and may indeed already have begun.

Regarding the Currency War’s impact on Present and Prospective Crude Oil Prices, consider that The Ukraine Dispute has multifaceted Impact. In Part it is a battle over who Controls Ukraine’s Oil and Gas reserves, and access to Russia’s (via pipelines running through Ukraine); in part about controlling Russia’s Port on the Black Sea, and in part a conflict between the Russia-Speakers in East Ukraine and Crimea, and Euro-centric Citizens of the West, and above all about the Major Powers Conflict (Currency War) Scenario outlined above.

From the Russian-Chinese perspective, The Westerners facilitated the overthrow of the Democratically elected, (albeit Brutal and Corrupt) Government, and the installation of a Rogue Cabal linked to NATO and willing to Direct Energy and Food toward the West, which exacerbated the foregoing Disputes.

Whatever develops, (except peace, which is unlikely) it will be Bullish for the Oil Price in $US terms, since we are witnessing a weakening $US.

Given our Currency Wars Analysis, it is no surprise that our Crude forecast has thus far been “spot” on, pun intended. We correctly forecast Crudes Rally back up to $100/bbl. See our recent Alerts for Updated Forecasts. Indeed, signals from the Intensifying Currency War have facilitated several quite Profitable Recommendations recently (Note 2).

Also Unsurprisingly to us, OPEC recently estimated that World Demand has now risen to 90 Million/bbl/day – an all time record. China’s demand continues to increase.

In sum, it looks as if the Fed-Generated $US Currency Devaluation will lead to an Equities Crash and another Global Financial Meltdown.

This is only one of the Many Negative Consequences flowing from The private, for-profit Fed’s Policy of supporting its Owners/Shareholders through “Monetary Morphine,” a former U.S. Representative Dr. Ron Paul explains

“‘Monetary morphine.’

“That's how some are now referring to the Fed's risky and unprecedented print-now, ask-questions-later policies. “As a doctor, I can tell you morphine is one of the most dangerous and addictive substances known to man. First, just a little of the opiate masks a patient's pain. But then, addicts crave more and more until overdoses result in death. “…the Fed has tried hard to mask many of our economic problems for years now. But today, the first cracks are starting to appear in what I believe will be nothing less than a Federal Reserve-created, global financial meltdown. “And every second Congress waits to finally audit and EXPOSE the Federal Reserve - the first step toward finally ENDING the Fed once and for all - the problems get bigger and bigger.

 

“Monetary Morphine,” Congressman Ron Paul

But the Hot War is the Intensifying War over the Future of the $US. John Williams of Shadowstats.com provides an excellent analysis and Forecast.

“…The End Game Begins .  The U.S. currency and U.S. financial system have faced an intensifying, broad range of vulnerabilities in recent months.  Negative shocks in the areas of economic activity, domestic- and global-political circumstances have continued, while U.S. government and Federal Reserve authorities increasingly have found themselves unable to address a non-recovering economy as well as the mounting risks of financial-system instabilities. 

“Under these circumstances, Russia’s military action against Ukraine, and related bellicose comments from Russia concerning the U.S. dollar and banking system, have raised the risks markedly of instabilities in the dollar and the domestic financial system.  Talk of action to abandon the dollar as the global reserve currency; to move to dump the dollar; and to damage U.S. banks financially, cannot be taken lightly.  China has been supportive of the Russian military action and also previously has called for the removal of the dollar as the global reserve currency.  There have been stories of discontent within OPEC as to the dollar’s reserve status.

“The risks here are manifold.  Keep in mind that in 2008, the U.S. financial system was on the brink of actual collapse.   All the actions taken then by the Fed and the U.S. Treasury, including creating or spending whatever money was needed, all the bailouts, guarantees, interventions, etc., were only stopgap measures.  The actions forestalled a financial-system collapse, temporarily, but they did little, if anything, to restore normal economic activity or financial-system solvency.

“The problems of 2008 remain.  A renewed crisis largely is  just a matter of timing.  As the system moves again to the brink, however, the Fed and the Treasury likely will find themselves with their ammunition much reduced, as a result of the post-2007 battle, which still is being waged in certain quarters.

“Then there is the unexpected.  Something goes wrong, and various financial triggers are pulled, as threatened or otherwise.  To the extent the rest of the world sees a pending demise in the U.S. dollar, there likely will be a number of large investors, sovereign and private, who would look to front run the Russians, or other hostile states, looking to get out of the U.S. currency while they could.

“A panicked sell-off in the U.S. dollar and dumping of dollar-denominated paper assets remains in the offing.  Where a bad economic statistic, or fiscal or monetary blunder by the government or Federal Reserve had been viewed as the most likely proximal triggers for the dollar’s demise, global political instabilities also have become a leading contender.  There likely will be a confluence of negative factors that will accelerate the decline in the dollar’s value.  How that translates into inflation and other detail, again, is covered in Hyperinflation 2014—The End Game Begins.  Physical gold and silver remain the primary hedges for those looking to preserve the purchasing power of their wealth and assets. …”

Commentary Number 605, John Williams Shadowstats.com, 03/05/2014

And regarding the USA’s Real Fiscal Deficit according to GAAP:

“Subject to possible minor refinement, the federal deficit for fiscal-year 2013 (year-ended September 30th) was roughly $6.2 trillion, versus $6.6 trillion in 2012, based on the government’s generally-accepted accounting principles (GAAP), and as adjusted for a consistent-estimation basis with 2012 and for the year-end 2013 accounting and reporting gimmicks of the U.S. Treasury, which had been operating at its statutory debt-ceiling for five months, and was on the brink of a government shutdown.  The federal government’s GAAP-Based fiscal deficit, remains beyond control and containment, and the long-term U.S. sovereign-solvency issues remain a significant concern for the global financial community.

“The headline cash-based deficit for 2013 was reported at a headline $680.3 billion, down from a $1089.4 billion headline deficit in 2012.  Before accounting for the changes in unfunded liabilities for government programs, the GAAP-based 2013 deficit was about $1,157 billion, versus $1,316 trillion in 2012.

“Total federal obligations at year-end 2013 totaled $91.7 billion, up from $85.4 trillion in 2012.  These obligations included gross federal debt and the net present value of unfunded liabilities.  The 2013 total was 5.7 times the level of nominal (not-adjusted for inflation) GDP for the full fiscal-year. …”

Commentary Number 606, John Williams, Shadowstats.com, 03/06/2014

And Richard Russell summarizes the Prospects for the Markets and Economy

“…The stock market continues to be levitated by the Fed’s quantitative easing. The risk to reward ratio for being in the stock market is negative.

“Meanwhile, the US economy remains in recession. And once the truth breaks out, the stock market will slip into crash mode. The stock market is up on Fed manipulations, and the economy is up on lies and propaganda. It’s a poisonous combination.”

Richard’s Remarks, Richard Russell, 03/05/2014

Daily monitoring of the “Progress” of the ongoing Currency War allows Investors to Be prepared for Profit and Protection.

Best regards,

Deepcaster
March 7, 2014

Note 1: 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.

Note 2: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

60% Profit on Water Management Company on March 3, 2014 after 454 days (i.e., about 50% Annualized)

100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

 


Essential Knowledge for Maximizing Real Gains

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

March, 2014

“Noted investor Jim Rogers says outgoing Federal Reserve Chairman Ben Bernanke has set the stage for the collapse of the U.S. central bank within the next decade, and had turned the nation’s fiscal balance sheet into ‘garbage.’

“In a recent interview with the British financial website Mineweb, Rogers said Bernanke and his fellow central bankers in other countries have brought the global economy to the brink of disaster….

“Rogers predicted that history will remember Bernanke as ‘the guy who set the stage for the demise of the central bank in America.’

“‘It’s not a possibility,’ Rogers said, ‘it’s a probability. People will realize that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last five years, and a lot of it’s garbage.’…”

“Jim Rogers: The Federal Reserve’s Days Are Numbered,” Moneynews, 01/06/2014

Master Investor Jim Rogers’ Negative view of the private-for-profit Fed is echoed by former Director of the OMB, David Stockman, who said that The Fed has created “The Mother of All Bubbles.” We agree, and would add that the ongoing and prospective Effects of Fed Policy and Market Interventions are the Most Essential Data (among several) for Maximizing Real Gains going forward.

So it is Important to Understand How and Why Fed Policies and their Effects are Most Essential. And How can Investors and Traders Profit and Protect from them?

Indeed, Signals from Interventions, as well as Fundamentals and Technicals have facilitated Deepcaster’s recent Profitable Recommendations (see Note 3 below).

“Since its inception in 1913, The Federal Reserve Board has been responsible for almost 95% devaluation of the U.S. Dollar. All this has been achieved through its ability to continually inflate the money supply.  

“And, between 1985 and 2005, the Federal Reserve Board has increased the money supply by five times. This extraordinary money creation is merely the catalyst for debt creation. In a fiat money system, money is debt…there is absolutely no way this money can ever be repaid except by continued inflation. But, now that the credit bubble is blown up, inflation is no longer an option; bankruptcy looms.”

“The Federal Reserve…What Has It Done For You Lately?”
Ian Gordon, December 29, 2007, www.axisoflogic.com

Indeed, a few months after Ian Gordon correctly announced “the credit bubble is blown up,” it (the housing Bubble), bust and the 2008-2009 Market Crash ensued.

But there is an even greater wealth destroying effect of Fed money-printing Policies – the Destruction of the Purchasing Power of that Fiat Currency itself.

Pick any period of rising U.S. Equities Markets whether from the September, 2002 lows through the September, 2007 high, or the December, 2011 lows to the late March, 2012 highs.

These Highs lulled some investors and several commentators into believing that they had Real Gains as of September, 2007 or March, 2012. Unfortunately, when properly measured, many of these Ostensible Gains actually are not.

Deepcaster contends that the Proper Measure for Gains is “Purchasing Power.”

Consider, specifically, the rise in the U.S. Equities Markets from 2005 through 2006. If one owned shares in the S&P 500 (SPX – the market basket of S&P 500 Securities) for the 12-month period ending April 30, 2006, the value of that market basket of securities would have risen in U.S. Dollar terms.

But it would have declined over 30% since the summer of 2005 when measured by the price of Gold. The point is that, from the summer of 2005 until late April 2006 the S&P 500 was in a Bull Market in Dollar terms, but in a Bear Market in Gold terms.

As an Alternative Measure, consider also the United States Dollar. From January 2002 through late April 2006; for example, the U.S. Dollar, as measured by the USDX (the U.S. Dollar‘s value as measured by a market basket of other currencies) lost Purchasing Power in an amount exceeding 25%.

Since many, if not most, of the prices of goods and services purchased are determined in an international economy, such a loss of Purchasing Power is quite substantial. Thus, a person whose increases in U.S. Dollar income from January 2002 through April 2006 collectively amounted to less than 25% actually suffered a loss of Purchasing Power in the international economy in that period.

Such Purchasing Power losses are even Greater when one takes Account of Real Inflation. Real Inflation in the U.S. for example, is 9.17% (as of February, 2014) per shadowstats.com. Shadowstats measures Inflation the way it was measured in the 1980s before the Official Figures became Politicized and therefore Bogus (see Note 1 and Chart).

One key point is that one must decide what asset or asset class one will use as the “baseline asset” against which to measure one‘s wealth and income increase or decrease. And one must also take account of Real Inflation.

Deepcaster‘s view is that the Ultimate Measures of Value should be Gold (first), then Silver and the other Precious Metals and Key Strategic Commodities (i.e., generally, Tangible Assets including especially Crude Oil rather than Paper “Assets”).

Why? Because the Private-for-Profit Fed, the ECB, and other Central Banks are increasingly Printing/Digitizing Fiat Money and Credit into existence ($Trillions in recent years—including The Fed’s $4 Trillion Balance Sheet!) well in excess of any increase in Global Production of Goods and Services, thus diminishing Fiat Currencies‘ Purchasing Power. This is why the Purchasing Power of the U.S. Dollar (Federal Reserve Note) has declined by over 95% since The Fed was founded in 1913.

Another Key point is that this Fiat Currency Creation out of Thin Air continues to increase at an accelerating rate and thus is a sure Precursor to Price Inflation (see Note 1). Even Money of Zero Maturity (MZM) has increased 10-fold since 1980.

Thus Gold and Silver Prices should reflect this Monetary Inflation, and indeed they have with the Gold Price increasing four-fold in the past decade. But owning Gold and Silver is challenging.

In other words, one should employ this Golden Tangible Asset ―Ultimate‖ Valuation Measure but with caution because the prices of the aforementioned Precious Metals and other commodities, as well as Equities, are periodically the victims of Interventional Action by a Fed-led Cartel (see Note 2) of Central Bankers and their Allies and Agents. Indeed, some Interventions are conducted quite publicly. Interest Rate Adjustments are the most publicly visible. The August 17, 2007 Fed Discount Rate Cut is one example. Less visible, but not less potent, are the nearly daily Repurchase Agreement (Repo) injections (by The Fed, via their Primary Dealers), used, inter alia, to manipulate the levels of the Equities Markets. And there are other Potential and Ongoing, but barely visible, Interventions as well.

For example, nearly $470 billion in OTC (i.e. Dark, not Exchange Traded) Derivatives were available to suppress Gold prices alone as of June, 2011 (as reported by the BIS, the Central Bankers’ Bank based in Switzerland - www.bis.org. (Path: www.bis.org>statistics>derivatives>statistical tables). Indeed, were it not for active Gold Price Suppression by The Cartel, Deepcaster believes Gold would have exceeded $3000/oz. by now.

For example, observing the markets upon arising on Tuesday, August 19, 2008, Deepcaster noted that the two main stories headlined in the Big Financial Media were the prospective collapse of Fannie Mae and Freddie Mac, as well as the July PPI increase of 1.2% — twice what was expected.

Of course, as Safe Havens, Gold and Silver should have rocketed up on this news but, instead, Gold was taken down several dollars at the time and moved very little when the PPI number was announced.

Similarly, in mid-March, 2008 when the Financial Crisis culminated (temporarily) with the demise of Bear Stearns, Gold and Silver were smashed down, whereas in a Free Market they would have shot up.

Clearly Gold and Silver Prices were and still are subject to capping attempts, as they seem to have been nearly every time negative economic data or market developments are revealed.

However, the Cartel is finding it increasingly difficult to successfully and sustainably cap paper prices because of huge drawdown of available bullion, bullion which is increasingly being shipped to China (e.g., recent 360% increase year over year).

One insight which we garner, again, from these and many similar observations is that it is essential to consider the Interventionals as well as the Fundamentals and Technicals when making a Market Forecast or Buy or Sell Recommendation.

Thus, for example, the price of Gold and Silver on any given day may not reflect anything near their Ultimate Value. See Deepcaster‘s March, 2012 Article “Profit, Protection Despite Cartel Intervention” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.

Unfortunately, there are also ongoing Interventions in Major Markets other than the Gold and Silver markets. They are especially visible in the U.S. Equities Markets via, for example, the (nearly daily) Repo injections. [However, on the positive side, our attention to Interventions and related signals has facilitated several Profitable Recommendations recently – see Note 3].

Importantly, this fact of Ongoing Intervention is one major reason a mere ―Buy and Hold‖ strategy increasingly fails, especially as far as Equities are concerned. A Holder of the S&P through the last decade would have lost substantial value when Real Inflation is considered, and will likely lose more as Fiat Money Printing intensifies. And it Surely will.

“QE to Infinity is set in cement in the ‗European Stabilization Mechanism Treaty‘. This is the new European Union and the euro. It will be in place and operative by July of 2012.

“The European Stability Mechanism (ESM) is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism in the 17-member Eurozone. The ESM is due to be launched as soon as Member States representing 90% of the capital commitments have ratified it, which is expected in July 2012.”

Jim Sinclair, Mineset, 04/19/2012

And Ellen Brown eloquently describes the profitable consequences of the ESM bailout coup for private mega banks, some of which are shareholders of The private, for-profit Fed!

“The Goldman Sachs coup that failed in America has nearly succeeded in Europe—a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers”

“The European Stabilization Mechanism, or How the Goldman Vampire Squid Just Captured Europe,” Ellen Brown, webofdebt.com/articles, 04/18/2012, via LeMetropoleCafe.com

The Cartel’s motivation for takedown attempts of Gold, Silver, and other Tangible Assets is clear: they do not want the further legitimization of Gold & Silver (or Tangible Assets in general, for that matter) as Measures and Stores of Value (i.e. Real Money) to compete with their Treasury Securities and Fiat Currencies.

But, notwithstanding the Interventions, one can still utilize a “comparative valuation” approach. The benefit of the “comparative valuation” approach outlined above is that it actually gives one a different and illuminating perspective on Asset Inflation, Asset Deflation, and Purchasing Power. For example, if the reader chooses not to use Gold (Deepcaster‘s ―baseline asset‖ of choice) or other Precious Metals as a baseline asset, because their Paper Prices are Manipulated. We invite the reader to consider the consequences of using the Energy Assets Class instead.

But again, the Interventional Caveat applies: there exist $Trillions of OTC Derivatives available to manipulate the price of Crude Oil and other Commodities — see BIS Table referenced above.

As long as the private-for-profit United States Federal Reserve and ECB continue to profligately expand the supply of money and credit, we will see continuing debasement of the U.S. Dollar and Euro in Purchasing Power Terms and this virtually guarantees Price Inflation and another Bubble, a Financial Assets Bubble which caused Billionaire Carl Icahn to correctly call the current (3/1/2014) levels of Stock Prices a “Mirage.” Thus much of the Financial Asset, in terms of U.S. Dollars, which we have seen in recent years, is really only dollar depreciation. Indeed, the U.S. Dollar has depreciated over 30% between January, 2002 and July, 2008, for example.

In sum, therefore, if one holds appreciated (in dollar terms) financial “assets” one must consider "appreciation (or depreciation) vis-à-vis what?” Depending on one's choice, one may find that the ostensible appreciation is really depreciation. [And especially so, if one factors in the tax consequences of being taxed on a larger number of U.S. Dollars which have a substantially decreased Purchasing Power.]

Specifically, for example, measured (as of May 1, 2006, just to pick a salient date) against Gold or even other currencies, the ostensible appreciation of financial assets from late 2002 through the end of April, 2006 is arguably only a delusion . That is, it is arguably only an artifact of the Fed's profligate printing of paper money and increase of credit — enabling an unhealthy “borrowed liquidity” as opposed to a healthy “earned liquidity” (e.g. savings) to use the late Dr. Kurt Richebacher‘s (R.I.P.) superb distinction. Given this Reality, the ostensible appreciation reflects only the Increasing depreciation of the Purchasing Power of the U.S. Dollar. That is we have Prices Inflation which The Cartel and its Media Allies and Agents try to hide from us.

John Brimelow, a savvy long-time observer of Markets writes,

“Bloomberg, which in JBGJ‘s informed opinion is exceptionally top-down directed on an ideological basis even by American mainstream Media standards, has apparently been mobilized to counteract inflation fears: CPI Conspiracy Theories Fail to Die with Banana-to-Haircut Check. The invocation of the ‘Conspiracy Theory’ concept in the context of 21st Century America polemics is the most extreme form of antithematization. “Excommunication if this severity suggests alarming inflation data at least at the anecdotal level is looming.”  

JBGJ LLC, 04/18/2012

In the long run, Deepcaster believes one can find no better “Safe Haven” and Measure and Store of Value than in the Precious Monetary Metals, Gold and Silver, and selected other Tangible Assets, like basis Foodstuffs, interests in Food Producers and Distributors and Crude Oil.

BUT, we must reiterate that one essential Caveat regarding finding a “Safe Haven” and Measure and Store of Value in Precious Monetary Metals: in the short run they are still subject to the considerable price manipulation Suppression Attempts by The Cartel of Central Bankers (Note 2).

[Indeed, as 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 Massive February 29, 2012 Takedown began.]

However, there is increasingly reason for optimism . The Cartel‘s ability to implement and sustain Takedowns has been considerably weakened recently largely because of increasing demand for Delivery of Physical Gold and Silver (as opposed to “paper,” e.g., Certain Precious Metal ETF shares) – See Below.

Moreover, Central Banks have begun to be Acquirers of Physical, and China has become (and India is) a Major net importer.

Therefore, 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.

So the question is, in the next round, will The Cartel price suppressors win out when it comes to Precious Metals and other Tangible Assets prices, or will increasingly Bullish fundamentals propel them further up? Deepcaster provides his most recent Forecasts in his latest Letter and Alerts posted at www.deepcaster.com.

Whatever the answer, the mounting evidence is that the Fed-led Cartel is knowingly creating conditions designed to force the U.S (and, indeed, the entire industrialized world), to eventually choose between a Hyperinflationary Depression and the Cartel‘s ominous “End Game,” which Deepcaster has described in its Alert of 8/13/07 “Massive Financial-Geopolitical Scheme Not Reported by Big Media” and June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” all and 9/23/10 Article “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It” available at www.deepcaster.com.

As Jim Rogers and David Stockman point out, Fed Policy is impelling us to such a Climax.

In addition to acquiring Gold and Silver, another way of surmounting the Hyperinflationary Effect of ongoing Fed and ECB QE is to Invest in High Yield stocks such as those listed in Deepcaster‘s High Yield Portfolio with selections aimed at achieving Total Return (Gain plus Yield) in excess of Real Inflation (9.17% as of February, 2014 in the U.S. See Note 1)

In sum, among the key components of Deepcaster‘s prescription for achieving ―Real Gains‖ are:

1. Locating one‘s capital primarily in Tangible Assets which are in great and relatively inelastic demand, including in

2. The Agricultural Commodities, Production and Distribution Sector (which by the way, have generally begun to uptrend in late February, 2014), and in the

3. Precious Monetary Metals (e.g., Gold and Silver) but, preferably when acquired near the interim bottoms of Cartel-generated Takedowns. Timing and Selection here are key. For further details see Deepcaster‘s 12/23/07 Alert entitled “A Strategy for Profiting From Cartel Intervention in Gold, Silver, Crude, & Other Tangible Assets Markets” at www.deepcaster.com.

4. Stay informed, daily, as much as possible, regarding “The Interventionals” as well as the Fundamentals and Technicals.

5. Know the Real News and Real Statistics. Do not rely on often-spun MSM “News” and Bogus Official Data.

6. Monitor the Value of the $US, since it is the Advent of Major Climacterics.

Ultimately, the authentic stores and measures of value are Gold and Silver and other key Tangible Assets, not paper Fiat Currencies and Treasury Securities. But with the Interveners extremely active it behooves investors to regularly attend to the Interventionals as one acquires, and disposes of, and reacquires Key Tangible Assets.

Deutsche Bank assures us that the Worst is yet to come

“The worst may be yet to come in the global financial crisis as the central bank spending that kept defaults low runs out, according to Deutsche Bank AG.

Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments including Spain and Italy jumped 26 percent in the past month as the region‘s crisis flared up.

“’If these implied defaults come vaguely close to being realized then the next five years of corporate and financial defaults could easily be worse than the last five relatively calm years,’ the analysts in London said.  

Much may eventually depend on how much money-printing can be tolerated as we are very close to being maxed out fiscally.”

 “Deutsche Bank: Worst of Global Crisis Yet to Come as Rescue Cash Runs Out,” Bloomberg, 04/18/2012

That analysis, written nearly two years ago, is even more strongly applicable today.

Be Prepared!

Best regards,

Deepcaster February 28, 2014

Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported February 20, 2014
1.5%     /    9.17%

U.S. Unemployment reported February 7, 2014
6.6%     /     23.2%

U.S. GDP Annual Growth/Decline reported January 30, 2013
2.74%        /     -1.40%

U.S. M3 reported February 15, 2014 (Month of January, Y.O.Y.)
No Official Report     /     3.07% (i.e., total M3 Now at $15.544 Trillion!)

“Only new-home sales data showed positive monthly results. Yet, with that series at 65% below its pre-recession highs, and with headline monthly and annual gains well shy of approaching statistical significance.”

“Durable Goods Orders in Downturn,” Commentary Number 603
www.shadowstats.com, John Williams, 02/27/2014

Note 2: 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.

Note 3: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

100% Profit on Crude Oil Call on February 10, 2014 after 27 days (i.e., about 1400% Annualized)

30% Profit on Equity Index Puts on February 5, 2014 after 8 days (i.e., about 1440% Annualized)

55% Profit on Water Management Company on January 15, 2014 after 406 days (i.e., about 50% Annualized)

140% Profit on Equity Index Call on December 27, 2013 after just 10 days (i.e., about 5200% Annualized)

40% Profit on Equity Index Call on December 19, 2013 after just 2 days (i.e., about 7500% Annualized)

135% Profit on Equity Index Call on October 28, 2013 after just 13 days (i.e., about 3800% Annualized)


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