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Profiting from the Inflation/Deflation Puzzle

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

Investors are getting mixed Messages about whether we are facing an Inflationary or Deflationary Future. Answering that question correctly is important both to profitability and protecting wealth.

Major Bankers and some Government Officials Claim they are worried about Deflation.

But rising costs for Health Care, Food and, until recently, Energy, indicate we face an inflationary, and perhaps even a hyperinflationary, future.

Which is it? Inflation or Deflation?

Some sectors have clearly been Deflating in Price in recent months.

— Crude Oil

— Copper

But other Sectors have been Inflating in Price:

— U.S. Equities

— Beef Cattle

— Corn

— Soybeans

— Healthcare

Still, the U.S. Bureau of Labor Statistics claimed that October 2014 U.S. Inflation (CPI-U) is tame at an annual pace of 1.66%.

But, ShadowStats.com pegs Actual U.S. Consumer Price Inflation at an annual 9.38% for the same period.

— And the Biggest Inflation Category of them all — Central Bank Monetary Inflation in all its forms — is roaring ahead. Consider that Japan, China, and the Eurozone are all in the process of devaluing their currencies one way or another

— the ongoing Currency Wars about which we have been writing.

What gives? How can we reconcile Shadowstats U.S. Consumer Price Inflation of 9.38% (clearly correct in our view) with the Clear Price Deflation in other Sectors and Central Bankers complaining they are concerned about Deflation?

Understanding how they are to be properly considered and reconciled provides Great Opportunities for Profit and Wealth Protection going forward.

Failing to Understand and “Reconcile” this Inflation/Deflation Conundrum will create substantial Risk of Loss.

So how are Inflation and Deflation to be Understood and “reconciled”? Nearly two years ago The Bond King, Bill Gross opined

“The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.  

Zero-bound interest rates, QE maneuvering, and ‘essentially costless’ check writing destroy business models and stunt investment decisions which offer increasingly lower ROIs and ROEs.”

Bill Gross, Founder & formerly Co-CIO, PIMCO, 1/3/2013

Indeed, for several years, Notable Independent Commentators, including Deepcaster, have warned that the Elite Central Banks’ Orgy of Fiat Currency Printing, a la QE etc., would eventually result in Price Inflation. And we reiterate that Warning here.

So it was no surprise to us that The Bond King, Bill Gross formerly of PIMCO, with about $2 Trillion under Management, would finally warn, in his January, 2013 letter to Investors, of Impending Price Inflation in Key Asset Classes. And that Price Inflation is now underway in some Asset Classes but not in others.

Clearly, the Central Banks Hypermonetary Inflation has maintained the Profitability of their Primary Clients (in The Fed’s case, owners) the Mega Banks and elevated Equities Prices.

Case in point — the Uptrending U.S. Equities Chart of S&P Price Inflation since 2009 has almost exactly Tracked the Uptrending Balance Sheet of The Fed.

S&P chart from McClellan Oscilator 

(Thanks to McClellan of McClellan Oscillator Fame for permission to reprint.)

And now that The Fed is “Merely” Repurchasing the same Amount of Treasuries as those which mature, the Equities Markets are Topping! Fancy that!

The Hypermonetary Inflation has created and Sustained the Price Inflation (in U.S. in particular) in Equities.

And Note that the Price Inflation in certain Food Commodities has arguably been more influenced by Traditional Supply and Demand (80 Million more people in the World each Year and many with more disposable Income).

In short, Food Commodities Prices are less susceptible to (but not immune from) the Price Suppression which Major Central Banks have been employing to Suppress Gold and Silver Prices.

On the same principle, the recently Deflating Price of Crude Oil is commonly viewed mainly as a function of a recent (albeit temporary) above ground oversupply, plus reduced Market Expectations of supplies being diminished by War or other Disasters, plus the Saudis desire to maintain Market Share. But, perhaps above all, recently lower Crude Prices are a Result of an Increasingly Strong $US, and related covert efforts by the U.S. et al to punish Russia. Eighty percent of the time, oil prices fall when the $US strengthens and vice versa. (cf. Shadowstats.com)

But consider that Prices for Essential Good and Services — Food, Health Care, Utilities, Housing and, until just recently, Energy — have all been dramatically inflating in price in recent years.

Thus we can see why Shadowstats.com’s calculation of Consumer Price Inflation 9.38% is accurate.

So consider the following which explains why the official U.S. annual inflation rate of 1.66% is well below what most people are experiencing in their current day-to-day living.

Since 1980, the government made numerous changes to the methodology used in calculating CPI inflation, with the effect of significantly reducing reported inflation from what it would have been otherwise. The ShadowStats estimate adds back into current official reporting the inflation that was removed by the government's changes.

This reduction in official CPI inflation reporting of recent decades was a deliberate and successful effort by the U.S. government to cut expenses, by creating artificially low cost-of-living adjustments for programs such as Social Security; and to increase tax revenues, with artificially accelerating upside income-tax-bracket shifts.

As a result, today's official CPI no longer measures Consumer Inflation in a manner that is useful or meaningful to individuals as a guide for setting minimum targets for annual income adjustment or for annual investment returns. Generally not understood by the public, current CPI reporting no longer measures the cost-of-living of maintaining a constant-standard-of-living, and it no longer reflects inflation consistent with out-of-pocket expenses. The specifics of the various CPI understatement issues and ShadowStats alternate-inflation estimates are found in Public Commentary on Inflation Measurement. See also Note 1 below for Real U.S. Economic Statistics per Shadowstats.

— But then why are many Central Bankers and Economists expressing concern about Deflation?

Let's first differentiate clearly between several uses of the “Inflation” and “Deflation” terms, concepts that not always are set forth explicitly when a Market Pundit, Economist or Central Banker expresses concern about Inflation or Deflation. These concepts also may appear, at times, to be contradictory. Generally, Inflation may refer to rising consumer or asset prices, or to increasing money supply growth (other measures have been developed specifically for wholesale pricing measures, economic measures, etc.), while Deflation may refer to falling consumer or asset prices, or to declining money supply growth, etc.

Consumer Inflation reflects changes in the costs of consumer goods and services. Most popularly, it is measured in the United States by a version of the official Consumer Price Index (CPI). ShadowStats offers an alternate consumer inflation measure.

Asset Inflation reflects that general appreciation or depreciation of a specific class of assets, such as stocks, bonds, commodities, housing, etc. As an example of potential inconsistencies, an asset deflation, such as a collapsing stock market, is not necessarily inconsistent with rising prices for consumer goods and services or consumer inflation.

Monetary Inflation reflects annual change in the various measures of the money supply, or money in the economy and financial system. Rapidly rising monetary inflation commonly is a direct causal factor in asset inflation, specifically equity markets. The relationship of money growth with consumer inflation is positive, but it is not always as obvious as it should be, due to significant differences in the definitions and estimations of consumer inflation, inflation for Gross Domestic Product (GDP), GDP and the various measures of money supply.

— But, again, why are many Central Bankers and Economists expressing concern about Deflation?

— The big Deflation concern leading into the crisis of 2008 was in terms of a possible failure in the banking system, with a crash in the money supply as well as in consumer and asset prices, effectively a 1930s-style depression and deflation. A large number of banks failed in the early-1930s, depositors lost their assets, the money supply crashed, consumer and prices collapsed along with the economy. In 2008, all deposits were guaranteed and extraordinary efforts were undertaken to prop both the U.S. and global banking systems.

— Although many of the 2008 concerns, economic and financial instabilities persist, (indeed the Monetary Inflation Bubble now being created by The Fed and other Central Banks is Great Cause for Concern) much of that current Asset Deflation concerns stem from the fact that Major Economies — China, the Eurozone, the U.S. — are slowing, i.e., experiencing Economic Deflation as it were.

For another thing, in the realm of Monetary Inflation, the Velocity of Money (the annual turnover the money supply in the broad economy) is at record lows — indeed, at Pre-Depression levels.

In a related area, the Mega Banks are not lending much to “Main Street” preferring to keep Reserves overnight at The Fed, where they can earn 25 BPS worth of Easy Money for doing Nothing.

But The Main Reason for concern about the Deflation in Economic Activity is that Major Economies, the U.S. included, have never come out of Recession, and indeed are slowing and in some cases contracting. And this Economic Malaise is Worsening in all Major Economies notwithstanding the Main Stream Media Hype that the U.S. is recovering. This is the Deflation about which the Central Banks and Economists worry.

— In a word, what we now have is Worsening STAGFLATION. Stagnant and Worsening (i.e., Deflating) Economies and Inflating Prices of many Essential Goods and Services to the Consumer. There is little the Central Banks can do to stimulate economy activity, but they can create unhealthy inflation and increasingly unstable financial markets—the worst of all worlds, and that is what they are doing in their attempt to prop up the Banks, above all.

— Where Central Banks talk of creating inflation with their massive easings, it is first, not an consumer inflation created by a sudden new burst of economic activity, which would be a relatively positive development (there is little the Central Banks can do to stimulate economic demand). Rather it creates a cost-push commodity-based inflation from a weakened domestic currency. Until recently, a deliberately debased U.S. dollar had triggered higher oil and gasoline prices, spiking domestic consumer prices in energy and other categories. In sum, even official U.S. consumer inflation numbers would begin to soar, if the current $US strength should reverse into a tumble.

Second, continued Central Bank pumping up of money stocks is a very deliberate effort to fuel a continuing rise in the value of equity assets, and support Bank Profits.

— By comparison, consider the coincident and deteriorating Stagflation conditions — look at the U.S., for example, where the recent lousy Consumer Confidence Numbers reflect this Reality on “Main Street.”

Also in the U.S., New Home Sales Figures were revised Lower in the third Quarter, consistent with Historical Recessions and Durable Goods Orders are on track for Flat-to-Down Activity for Fourth Quarter 2014. (cf. Shadowstats.com)

Couple that with the fact that Western Europe and the U.S. are in the process of inundating themselves with Masses of largely Dependent Immigrants; thus the U.S. and Eurozone’s Economic Future is Darkening.

For example, consider the Employment Environment for Millions of Unemployed and underemployed Americans — just since July 2014 foreign-born employment increased by 1,028,000, while native-born employment decreased by 780,000 (Rubenstein, VDare.com).

Harvard Prof. George Borjas estimates that the U.S.A.’s CURRENT high immigration — legal (over One Million per Year) and illegal — results in a $402 Billion Wage Loss for competing American Workers, annually! Mass immigration depresses Wages and Displaces Americans.

And consider that Legal and Illegal Immigrant families account for 42% of the growth in Medicaid Costs since 2011. (cis.org) And that is no wonder because recent Migrants are bringing a whole panoply of Disease as Dr. Marc Siegel describes

“... Since illegal immigrants who enter the US are not prescreened in any way, many carry disease... ten to twenty-five percent of the immigrants (in Texas and Arizona) have Scabies, a highly contagious intensely itchy rash.... Already drug-resistant tuberculosis is spreading in Texas... Dengue Fever... is now spreading from the Illegal Immigrants into Texas and Arizona... Measles and Chickenpox are now emerging among the unvaccinated immigrants... now Swine Flu has appeared....”

Marc Siegel MD, Fox News, June, 2014

And we might add that the Medical Evidence indicates that the Enterovirus which has killed seven and sickened thousands of American children is being brought in by these Immigrants.

Given the promise of Free Medical Care and Education and other free (i.e., taxpayer funded) Benefits. It is no wonder that over 36% of all legal (over one Million per year) and illegal immigrants to the U.S. use one or more welfare programs (cis.org).

And the Complaints from some High-Tech Firms that there are not enough H(1b) Visas available for STEM (Science, Technology, Engineering, Math) Workers rings hollow when High-Tech has(is) laid off tens of thousands of American High-Tech Workers (cf. Microsoft & HP layoffs, e.g.).

And the Complaints from some High-Tech Firms that there are not enough H(1b) Visas available for STEM (Science, Technology, Engineering, Math) Workers rings hollow when High-Tech has(is) laid off tens of thousands of American High-Tech Workers (cf. Microsoft & HP layoffs, e.g.).

Thus it is no surprise that the Basic Reality of the Relationship between Population Growth and GDP is that Population Growth typically increases Aggregate GDP but reduces Per Capita GDP.

Couple the Foregoing with ongoing Central Bank Interventions to artificially boost Equity Prices, Support the Mega-Banks (in The private for-profit Fed’s case, including its own shareholders!) and suppress the Prices of Gold and Silver and you have Dangerous Interventions — the Bubbles that Deepcaster and other independent Analysts have been complaining about for years. Indeed, more recently, even Main Stream Investment Managers have recognized the Dangers.

“The investment recommendations made by many financial commentators are now dominated by cross-asset class relative valuation rather than the fundamentals of the investment itself….

“This is an understandable approach as unusual central bank activism has artificially elevated certain asset prices. Yet the dominance of this increasingly popular advice comes with potential risks that need to be well understood and well managed. [Note El-Erian’s reference to “certain” asset classes. — Ed.]

Several asset classes now have highly manipulated prices due to experimental central bank activities, both actual and signaled. The more this happens, the more investors come under pressure to migrate to higher risk investments in search of returns….

“Just a few weeks ago the Federal Reserve announced it is targeting a further $1 trillion in asset purchases in 2013, representing a third of its existing balance sheet. Other central banks -- particularly the Bank of England, the Bank of Japan, and the European Central Bank -- are also expected to expand their balance sheets again in the months ahead….

“There is a limit to how far central banks can divorce prices from fundamentals….at some point, and it is hard to tell when exactly, the private sector will increasingly refuse to engage in situations deemed excessively artificial and overly rigged….

“Have no doubt: Central banks are both referees and players in today's markets. With 2013 starting with so many liquidity-induced deviations, investors would be well advised to take greater care when pursuing opportunities that rely mainly on the ‘central bank put.’” (emphasis added)

“Beware the ‘Central Bank Put’,” Mohamed El-Erian, 01/07/13 Chief Executive and co-Chief Investment Officer of PIMCO

El-Erian is Spot-On correct about the Risks Associated with Investment in “Highly Manipulated Asset Classes, which is why Deepcaster’s portfolio Recommendations aim both to Minimize Risk from and to Profit from, these and others by forecasting Timing and providing Interventional Analyses. (See Notes 2, 3, 4 and 5)

Thus the Interventions make certain Assets Classes even more attractive going forward and others more Treacherous.

Thus, it is no surprise that, the Smart Money is responding accordingly, moving Money into Physical (to avoid the Banking System Bubble) Gold and Silver (and Quality Miners), and certain other commodities.

And Hyperstagflation Resistant Agricultural Land and Essential Food Products Companies are seeing Capital Infusions also. No surprise there either.

The Bottom Line: When considering the Inflation/Deflation Puzzle it is Essential to Evaluate these on a Sector by Sector Basis, and to accurately forecast changes in Inflation/Deflation (as the case may be) Realities and Prospects in each Sector over time. And thus this is The Main Project in which Deepcaster is engaged in order to facilitate Profiting and Protecting Wealth.

Best regards,

Deepcaster December 4, 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 November 20, 2014
1.66%     /    9.38%

U.S. Unemployment reported November 7, 2014
5.8%     /     23.0%

U.S. GDP Annual Growth/Decline reported November 25, 2014
2.43%        /     -1.73%

U.S. M3 reported November 15, 2014 (Month of October, Y.O.Y.)
No Official Report     /   4.22% (i.e., total M3 Now at $16.085 Trillion!)

Note 2: 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*

  • 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
  • 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
  • 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
  • 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)

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

Note 3: A launching Mega-Trend began to Reveal itself last week.

Investors who ignore it do so at their Peril.

Those who Ride with it have Tremendous Opportunities for Profit and Wealth Protection.

Consider its Impact on our Forecasts in Deepcaster’s recent Alert, “Hot Money Opportunities; Forecasts: Equities; U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates; Gold & Silver; Crude Oil & Copper,” posted in ‘Alerts Cache’ on Deepcaster.com.

Note 4: “Kuroda is a certified madman running the Bank of Japan.” — David Stockman, 11/13/14, former Head US OMB & U.S. Representative

The Accelerator is Running Full Bore and is creating Major Opportunities and Serious Threats.

Though we would not have put it quite that way, Stockman’s comment correctly reflects an underlying Important Reality.

Indeed, the Accelerator is Accelerating.

To consider The Accelerator and the Opportunities and Threats it is generating review our Forecasts in Deepcaster’s recent Alert, “ Accelerator Opportunities & Threats; BUY RECO!; Forecasts: Equities; U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates; Gold & Silver; Crude Oil & Copper,” posted in ‘Alerts Cache’ on Deepcaster.com.

And for an opportunity to Profit and Protect Wealth in light of What is coming, see our Buy Recommendation aimed at profiting from an impending Major Move. And for a recent Buy Recommendation, see Note 3.

Note 5: Fundamentals, Technicals and Interventionals, are all signaling a Mega-Move is impending in a Key Sector.

And our Timing Forecast is that this move is likely soon, very soon.

Of course other Key Sectors will be affected by this Mega-Move as well.

To consider the Fundamentals, Technicals and Interventionals, read Deepcaster’s Forecasts for Key Sectors in our recent Alert, “Key Sector Mega-Move Impending; BUY RECO!; Forecasts: Equities; U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates; Gold & Silver; Crude Oil & Copper,” posted in ‘Alerts Cache’ on Deepcaster.com.

 

 


Rob Kirby - This Is Where The Whole Financial Crisis Originated

Posted by: The Daily Coin

Tagged in: Untagged 

The Daily Coin

Spikes & Opportunities Impending

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

(Thus they will tank too … ending in – Ed.) “a very bad way.”

Julian Robertson

Major Geopolitical, Economic and Financial Events will occur beginning this November. And certain of these will generate Mega-Moves in Key Sectors.

And Legendary Investor Julian Robertson has correctly identified one of them — The Great Bubble Event which will end in “a very bad way”.

Indeed, the Jaws of Death and Hindenberg Omen Technical Signals are forecasting these Events and their impact on the Markets.

These events will cause some Key Markets to spike much Higher and others Much Lower. In this Article, Deepcaster identifies Key likely events and forecasts likely consequences for Markets and the Economy.

Consider the Events and Forecasts:

1) the Swiss Gold Vote to withhold Swiss Gold from Sale and accumulate more

Forecast:If the Swiss Referendum passes, which is likely but not certain, it could serve as the Catalyst for Gold to finally make its Great Launch Upward.

2) The November 4, U.S. Elections will help determine the prospects for effective government going forward.

Forecast: Whether or not the Republicans win the U.S. Senate, the prospects for Dysfunctional U.S. Leadership (and thus continued Economic Weakness and Market Volatility) will continue throughout the remainder of the failing Obama Presidency.

3) the Dramatic Effects of the Saudis pushing the Crude Oil Price down to $80/bbl and thus Crude Oil Price Prospects going forward.

Forecast: For a number of reasons, the Saudis will not be able to sustain this Price Suppression. There are a Number of Factors working to elevate and other to Depress Oil Prices going forward, so our Forecast is for higher Volatility going forward. (For a detailed analysis and Specific Price Forecasts see Deepcaster’s November Letter just posted.)

4) U.S. President Obama’s Pledge to Order an (probably Unconstitutional) Amnesty of up to 34 Million (Bids for printing up to 34 Million Green Cards have been solicited by the Obama Administration) Illegal Aliens now living in the U.S. after U.S. Elections, despite evidence that a number of those to be Amnestied carry Active Tuberculosis, Enterovirus, (which is now sickening and killing American Kids) Chagas and other Diseases, and/or are Gang Members or convicted Criminals (cf. carryingcapacity.org).

Forecast: Assuming Obama Orders an Unconstitutional Amnesty of 12 to 34 Million Illegals and gives Many of them Work Permits, it will further depress American Wages, and raise Unemployment of Americans thus diminishing Consumer Demand and intensifying pressure on Budgets via taxpayer-funded Health and Education Facilities. (Net Costs [after subtracting Taxes Immigrants pay] would be over $6 Trillion [Heritage Fdn – Rector et al]) Also, those Legal and Illegal Immigrants not working are likely to go on Welfare and Food Stamps, as over one-third already are (cf. cis.org). The Amnesty would also serve as an incentive for Millions more to come illegally. Important to note is that while a large Workforce may increase aggregate GDP, it almost always depresses per capita GDP especially if many added to the workforce are low skilled.

5) The Brazilian election

Forecast: a Roussef win has greatly strengthened the BRICS Coalition (given Brazil’s prominence in the BRICS and its Resource Base), and will ultimately serve to weaken the U.S. and European Economic Hegemony and the $US. The BRICS Nations have already established a “Development” Bank to compete with the Western Nations’ IMF and a Chinese or Chinese-BRICS World Reserve Currency is coming to replace the $US.

6) the reinstitution of publically visible QE by The Fed (which is likely already continuing via Covert QE via Belgium)

Forecast: We expect publically visible QE to be revived in the next few months and that would signal that Hyper Monetary Inflation has launched and is here to stay and would thus launch Hyper Price Inflation. The Equities Market Takedown of a couple weeks ago was a Harbinger of these coming developments. Deepcaster’s Forecasts thus facilitated three significant Profit Takings in early October (Note 2).

7) the further Economic weakening of the Eurozone, including the likely collapse of one or more Eurozone Peripheral countries’ Banks, and/or French bank/s, and/or even Economic collapse of certain of the aforementioned countries. Recent Eurozone Bank Stress Tests were a (Bad) Joke.

Forecast: A Major Bank or Country Collapse would Signal European Central Bank QE is not Working and the Eurozone is not recovering. This would Crash Eurozone and other Markets. A likely but not certain Prospect.

8) Russia (and with close cooperation of China) finally seriously retaliates against Ukraine and the rest of the West, by increasing Physical Gold purchases, selling U.S. Treasuries, and taking further $US weakening steps. This would further facilitate the Chinese Yuan’s progress toward becoming the World’s Reserve Currency.

Forecast: U.S. and Eurozone Sanctions will have Backfired, further hurting their Economies, and therefore Markets, because Russia has Resources (Gas, Gold and Oil, e.g.) andthe cooperation of China.

9) US Debt balloons toward $18 Trillion and Downstream Unfunded Liabilities toward $125 Trillion

Forecast: As the $18 Trillion Mark is passed this will put another Nail in the Coffin of the U.S. Dollar as World Reserve Currency.

10) World Population continues to increase by 80 million per year moving through 8 and then 9 Billion.

We reiterate that while growing populations may increase aggregate GDP, they almost always reduce per capita GDP, thus impoverishing the citizenry. Key resource base components (e.g., topsoil and potable water) are limited and their expansion is severely constrained.

Forecast: Population Growth increases demand for resources (e.g., Energy, Food and Other Commodities) on a limited Resource Base and thus increases Resource Nationalism. Resource Nationalism (such as China’s exhibiting increasing Force in the South China Sea including claiming Oil and Gas Drilling Rights which Vietnam and Japan claim as theirs also) and Migrant Pressure on Borders of the U.S., Eurozone and the Developed World continue to increase, with eventual Disastrous results for Economic and Social Stability.

11) The Currency Wars continue with the Major Central Banks conducting Serial Devaluation of the Purchasing Power of their Currencies. This serves, of course, to enrich their Banker and Mega-Business Owners/Clients and impoverish their Middle Classes.

Forecast: This Process is Creating a Great Credit Bubble based on Borrowed Liquidity not Earned Liquidity – a very Dangerous Situation as former Deutsche Bank CEO, Kurt Richebacher (RIP), pointed out. Indeed, it is a set-up for a Weimar Republic Scenario.

Financial Guru, Bill Bonner, explains How and Why and Cui Bono (i.e., Who Benefits)

“…On Thursday, the Dow rose 221 points.

“This is good news for Janet Yellen. She must think she has made a clean getaway. She has fled the scene of the biggest financial heist in history with no cops in sight. …

“This grand larceny involved $3.6 trillion. Counterfeit – every dollar of it. Not a penny of it was ever honestly earned or earnestly saved... or dug out of the dirt and turned into coins.

“…But hardly a single soul understood what was going on….

“Next question: Who has the money? We don't know that either. But the Fed fabricated $3.6 trillion over the last five years... and every penny ended up in someone's hands. Follow the money. You will find out what happened….

“On our desk are two great books. One is David Stockman's The Great Deformation. …

“Stockman was present at the creation, so to speak. … when the Republican Party ran off the rails and veered sharply toward deficits and activism.

“Stockman fought hard to stop it, battling Dick Cheney and the neocons, and he lost. …

“Politics won out over sound fiscal principles. "Deficits don't matter," said Cheney. Which means debt doesn't matter. …

“But thenceforth, neither Republican nor Democratic administrations stood in the way of the great credit bubble.

“With an almost infinite amount of credit to work with, Wall Street quickly rose to the challenge. It peddled debt to everyone – governments, corporations and households.

“Americans took the bait….”

“The Biggest Financial Heist in History,” Bill Bonner, 10/31/2014

Of course, the foregoing are factored into Deepcaster’s weekly forecasts.

In sum, the ongoing Currency Wars are generating a “Race to the Bottom,” overall Slowing Major Economies, generally, and a still increasingly economically depressed Middle Class and high Unemployment in the U.S. and other developed Countries (Note 1). The foregoing will not support much Stronger Economic Growth and much Higher Equities Markets going forward.

These facts have already and will increasingly provide Opportunities for Wealth Protection and Profit going forward for those who are able to surmount Main Stream media spin and News Blackouts. Those who ignore them do so at their Financial Peril.

Best regards,

Deepcaster
October 31, 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 October 22, 2014
1.70%     /    9.38%

U.S. Unemployment reported October 3, 2014
5.9%     /     23.1%

U.S. GDP Annual Growth/Decline reported September 26, 2014
2.59%        /     -1.66%

U.S. M3 reported October 21, 2014 (Month of September, Y.O.Y.)
No Official Report     /   4.25% (i.e., total M3 Now at $16.018 Trillion!)

Note 2: 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*

  • 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
  • 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
  • 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
  • 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)

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


Profitable Investing in Essential Resources NOW

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

When considering investing in Essential Resources it is important to determine not only which of these have relatively inelastic Demand but also those which have Relatively inelastic Supply.

Now is a time of Great Opportunity for Investing in certain (but not all!) Key Resources, because certain Key Resources are NOW available at Bargain Basement Prices.

The Key to Picking which ones is to focus on the Big Picture for a particular Resource, an Important Deepcaster Focus.

As well, it is important to Tune Out the Mainstream Media Hype and Spin (or Gloom and Doom, as the Case may be) and look at the Real Fundamentals.

So consider here an overview of the prospects for Four Essential Resources: Potable Water, Gold, Silver and Crude Oil.

There is a Delusion, somewhat widely accepted, that if an Essential Resource is in Short Supply, the Supply Problem can be solved if one applies enough Appropriate Technology and Capital to it.

Realistically, though, for certain Essential Resources, supply shortages, (i.e., Demand “Longages” ) can be Managed, to a point. Yes. Solved No.

This Reality provides both an Opportunity and a Threat — a Profit Opportunity for those who are aware of it, and a Threat for those who are not.

Several such Great Essential Resources Opportunity/Threats face us today. Potable Water, for example provides a Great Profit Opportunity. (Indeed, Deepcaster has already recommended taking Profit on One of our recent Water Sector Recommendations and have a current Recommendation aimed at profiting from another one in the Water Sector also.

Potable Water can be Managed to a Point, but there is no feasible (i.e., Energy and Capital Efficient) technology which can create the Vast Quantities of Potable Water Needed for Agriculture and Huge Urban Areas.

Resource Realists are already learning this Hard Lesson from the Mega-Drought now Threatening California and the rest of the West and Southwest from Texas to Oregon.

Consider excerpts from the following report on Ground water from California; California provides over of 50% by value of the USA’s Agricultural Product plus considerable Agricultural export Income.

“The ongoing disaster that is the drought in the West is leaving wells dry across California - which account for up to 60% of water usage. As WSJ reports, as groundwater levels plunge (100 feet or more lower than norm), wells are being driven further and further into the earth (500 feet in some cases) forcing the state legislature is considering regulating underground water for the first time. ‘We can't continue to pump groundwater at the rates we are and expect it to continue in the future,’ warns one engineer, adding ‘What's scary is we're not fixing anything... It's a race to the bottom.’

“‘Everybody was pumping to their heart's content, until they realized the basin isn't that big.’

“With groundwater levels falling across the Golden State—causing dried-up wells, sinking roadbeds and crumbling infrastructure—the state legislature is considering regulating underground water for the first time.

“Californians have long battled over rights to rivers, lakes and other surface-water supplies, but the drought is finally shifting the focus to groundwater, which accounts for about 40% of water used in normal years—and up to 60% in drought years, as other sources dry up….

“…groundwater tables in some parts of California have dropped 100 feet or more below historic averages. That has resulted in an estimated $1.3 billion in damage to infrastructure, such as cracked highways due to subsidence…

“One California County Supervisor Frank Mecham said the near-doubling of the county's population to 275,000 since 1980 has put pressure on groundwater….”

“Government To Regulate Groundwater For 1st Time As California Drought Becomes ‘Race To The Bottom’,” Tyler Durden, zerohedge.com, 08/29/2014

Of course, the aforementioned Supervisor put his finger on the Primary Cause of the dramatically increased demand for Potable Water from Urban Areas – Population Growth (100% of which for the past decade has been caused by Mass legal and illegal immigration). The Potable Water supply Realities in the West and Southwest demonstrate that there are Carrying Capacity Limits (Note 3 Definition).

So where are the Investment Profit and Wealth Protection Opportunities?

Are Desalination Plants the answer? No, The Capital Expenditures are massive and Energy Requirements Substantial and amounts of Potable Water Produced are quite Small relative to Agricultural and Urban Demand.

And as to Techno-fixes, who after all really wants to drink “Greywater”?

Or consume Food irrigated with “Greywater”?

There are three Key Points here:

1) Groundwater and other Essential Potable Water Resources are de facto quite limited.

2) Essential Water and virtually irreplaceable Topsoil Resources can not support Unlimited Population Growth. See www.carryingcapacity.org.

3) Acknowledging the Reality of the Foregoing Resource Limits allows one to Profit from the Opportunity and avoid the Threats to Assets reliant on Essential Resources. Indeed, Deepcaster (an others with a “Big Picture” Perspective saw this Investing Opportunity months ago, and have already recommended water sector stocks (see Note 1).

So now consider the Fundamentals for three other Essential Resources. Gold and Silver Prices have been in a downtrend for many months and Crude Oil for many weeks.

Gold in Real Money, Silver is Real Money and Essential in High Tech and Medical Applications and Crude Oil is The Essential Portable Energy source for years to come.

Considering “Big Picture” Fundamentals, the Upside Price Potential for all three is Quite Bright. Consider a few Key Big Picture Fundamentals for these three.

Many weeks ago we first Forecast the $US would rise vis à vis the Euro, short-term, and it has and still is, because of the $US and U.S. Economy’s relative perceived (but not Real) strength.

The Eurozone is about to embark on a round of easing (i.e., Currency Devaluation just as Japan has been doing) vis à vis the $US ostensibly to combat its lousy Economy and 11.5% Official Unemployment Rate. And Japan is engaged in QE as well.

Indeed, the Major Economic Powers have been and continue to be in a War of Competitive Fiat Currency Devaluation (i.e., Purchasing Power Devaluation).

And though the USA is ostensibly on track to taper its Bond buying to zero, there is considerable evidence that it continues to purchase U.S. Treasuries (to boost the $US) using Belgium as a “Front.” (See Deepcaster’s earlier Article).

Moreover, the Eurozone Economy is still depressed, and the Chinese economy is slumping somewhat.

Thus, short-term, we can expect money to continue to flow into the $US and U.S. Treasuries, with the U.S. 10Yr. Yield Bouncing in the 2.2% to 2.6% range.

But underneath the Mainstream Media Hype, the U.S. Economy is not recovering either with Real Unemployment at about 23% and Real U.S. GDP a Negative Number per Shadowstats.com. (Note 2)

While the Official Headline Consensus puts U.S. GDP at 4.6%, as Shadowstats’ John Williams says, “The GDP also has been subject to special-purpose (usually election-related) political manipulation…over the last five decades… [resulting in… Ed] … the heavy overstatement of second-quarter GDP Growth … Happy Hype, Fluff and Guesstimates Boosted the GDP Growth Estimate… the Broad Economy … is still turning down anew.” Shadowstats #662, September 26, 2014.

Considering the foregoing, imagine the Economic Catastrophe if The Fed were to try to sell any significant amount of its $4 Trillion-plus Hoard of U.S. Treasuries back into the Market.

So, Key “Big Picture” Fundamentals for Investors are

1) the Real Continuing down turn in the U.S. Economy and

2) the ongoing Competitive Devaluation (i.e., Fiat Currency) War among Major Central Banks—a War which in principle can not continue indefinitely

Thus we forecast: The Fed will have to resume publically visible QE some time in the next 12 months, and Deepcaster aims to more precisely forecast the timing as we move closer to that event.

This will Crash the $US and U.S. Treasuries and usher in Hyperinflation, including Hyperinflation of the Prices of Gold and Silver and Crude.

We are not quite ready to make the Call as to the Specific Month, but we will make it in due course.

Indeed, one Major Geopolitical Event actually scheduled for a very few weeks from now could well touch off a massive Rally in Gold and Silver, the Essential Monetary Metals, i.e., non-Fiat Currencies.

And The Fed’s re-institution of QE which will happen (the only question is timing) will touch off a Massive Rally in these two Monetary Metals and in Crude.

As a result of all the foregoing and other key factors, Deepcaster considers that our following forecasts made a week ago are “Baked into the cake.”

In the next 12 months we forecast (and in our October Letter we identify):

— 2 Key Sectors currently in Multi-Month Downtrends will Reverse and Skyrocket.

— 3 Key Sectors in Multi-Month Uptrends will Reverse and Crash.

— A Dramatic and Sudden Event in one Essential Sector will shake Markets and Economies to the core.

— And, we forecast in October that one Major Sector will Crash

Seeing the “Big” Picture and the Real Fundamentals are essential to profiting and protecting Wealth, via Essential Resources, going forward.

Best regards,

Deepcaster
October 10, 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*

  • 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
  • 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)

*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 September 17, 2014
1.70%     /    9.42%

U.S. Unemployment reported October 3, 2014
5.9%     /     23.1%

U.S. GDP Annual Growth/Decline reported September 26, 2014
2.59%        /     -1.66%

U.S. M3 reported October 7, 2014 (Month of September, Y.O.Y.)
No Official Report     /   4.39% (i.e., total M3 Now at $16.045 Trillion!)

Note 3: “Carrying capacity” refers to the number of individuals who can be supported in a given area within natural resource limits, and without degrading the natural social, cultural and economic environment for present and future generations.


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.

 


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