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Profit from a Dangerously Fat Left Tail

Posted by: Deepcaster

Tagged in: Untagged 

Deepcaster

“Both stock and blond valuations today are actually explicitly a matter of government policy.”

Brett Arends, Wall Street Journal, 09/23/2013

“This looks to me like 2007 all over again, but even worse. All the previous imbalances are still there. Total public and private debt levels are 30% higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets.”

William White, former BIS chief economist, 09/20/2013


“’Dangerously Fat Left Tail Risk’: the probability that an Investment will incur losses more than three Standard Deviations from the Mean Loss Probability.”


One Recent Most Important Development is Quite Ominous indeed. This Development has created an increasingly Dangerous Fat Left Tail.

Specifically, that Ominous Development indicates that the Probabilities of another Financial Crisis, with concomitant Negative Consequences, are Increasing.

But although that Crisis would greatly increase the Danger to Bank Deposits, Pensions and Investments (see Deepcaster’s recent article – “Our Deposits, Pension Funds, etc. Vulnerable to Immediate Looting ??!! – Antidotes” ) it also creates Opportunities. As the Chinese proverb says: Crisis = Opportunity or in this Case Multiple Opportunities for Wealth Protection and Profit, Opportunities which have generated two recent Deepcaster Buy Recommendations.

The Ominous Development to which we refer is The Fed’s No-Tapering Decision.

Consider that The Fed chose not to taper its $85 Billion Monthly Bond Purchases by even a little bit, not even a $5 Billion or $10 Billion Reduction!!

First and Foremost, this means that The Fed knows what we and other independent commentators have been claiming, and documenting, for many months – that the economy is not recovering (indeed there has been virtually zero Wage Growth in the U.S. in the last five years, despite Trillions in Fed Stimulus) and…

Furthermore, that the Economy and Markets are so fragile that even a small Taper might cause another Financial Crisis. Indeed, The Fed’s No-Taper Decision likely signals that such a Crisis is Impending.

Worse yet, it signals that The Fed (and other Key Central Banks) is trapped into continuing to Print Money -- i.e. QE to Infinity – as we and other Independent Commentators have been correctly forecasting for Months.

And the Ongoing Central Bank QE to Infinity is already leading to Threshold Hyperinflation (9.17% in the USA per shadowstats.com), if one looks at the Real Numbers (Note 1) and not the Bogus Official Ones.

Remember that one Primary Function of Bogus Official Numbers, whether in the U.S., China or elsewhere, is to cover up Politically Damaging Economic Realities, such as the fact that ongoing QE (Money Printing) by Major Central Banks is already Creating Price Inflation despite an increasingly Sluggish Economy. In other words, to cover the Reality that we are increasingly in a Period of Stagflation.

Indeed with Increasing Inflation we are now in a period of StagFLATION.

But this Intensifying StagFLATION creates several Opportunities for both Profit and Wealth Protection.

In order to surmount Impending Crises, we offer three Necessary, but not necessarily sufficient, Essential Criteria which must be met in order to Profit and Protect in the next few Months.

  1. The Prospective Investment must be one which Profits and Protects from ongoing Monetary and therefore, Price Inflation (when one considers The Real Numbers and not the Bogus Official Ones) and

  2. The Prospective Investment must be one for which there is a Real, and Relatively Inelastic (regardless of Economic Conditions) Demand.
  3. Typically, such investments involve Real Assets such as Basic Foodstuffs and Energy, and Productive (as in Agricultural land) Real Estate, but not always.

    Typically, such investments are not to be found e.g. in The Tech Sector. Indeed, we would argue that businesses such as Facebook are riding for a Fall, for many of the Same Reasons the Internet Bubble Burst in 2002.

    For example, people do not have to use Facebook, there are Privacy Concerns (its business model relies on making personal information available to advertisers), there are low Barriers to entry, and there are Alternative Similar (and better in our opinion) Social Media businesses. Thus Facebook fits in what we would call the “Fad Business” Category, subject to a Big Fall, like Many in the Tech Category. Consider the Fate of former Tech Market Leaders like Blackberry and Nokia for example.

    Of course, there are a Few Tech businesses which have Sustainable Business Models, one of which is Google. People, rich or poor, in Good times and Bad, need Information and Goods and Services, and Google delivers all with a few clicks.

  4. A significant Portion of Assets should be held outside of the Banking and Financial System. See our latest Article – “Our Deposits, Pension Funds, etc. Vulnerable to Immediate Looting??!! – Antidotes” – at www.deepcaster.com and our recent Alerts.

And consider a Mega-Reality regarding the USA, the issues of the World’s Reserve Currency.

“…the nation’s debt is compounding into a monster that defies financial description.”

Richard Russell, 9/20/2013

Thus, the Dangerously Fat Left Tail Risk that arises (and given the USA’s unsolved Serious Structural Problems, especially since The Fed will have to continue QE or restart it even IF there eventually is modest tapering), is that ongoing Fiat Money Creation will eventually bring about the Major degradation of the U.S. Dollar, vis a vis the Yuan, Major Commodities Currencies (e.g. OZ$, Canuck Buck) and Inflation Assets such as Key Commodities in relatively Inelastic demand. (Crude Oil)

In sum, we expect The Force of Hyperinflation to help impel serious $US Dumping to begin sooner rather than later (see our Forecasts for probable Timing).

As well, longer-term, long dated U.S. Treasuries are arguably the Greatest Bubble in Economic History, and are doomed to Burst if for no other reason that the Fed has become by far the Major, and nearly only, purchaser, and with ever-more printed Fiat money yet.

This Hot Fiat Money Game cannot in principle, continue indefinitely, which is why our analysis has targeted a 10 yr. U.S. Treasury Note interest rate level which would likely signal the Bubble Burst is launching.

So far as Profit and Protection from much Dangerous Fat Tail Risk is concerned, consider Gold and Silver.

Continuing diminished tensions over Syria and the Mideast, Apparent Eurozone Recovery and Stability supported by the German reelection of Angela Merkel, and Cartel (see Notes) Price Capping all have, and are, contributing to the apparent diminishment of the Rationale for owning Gold and Silver as Safe Havens, short term and thus to a reduction in their Paper Price..

However, though Indian tariffs continue to retard legal imports, demand for Physical from India and China especially is rising, making the Price Prospects, mid to long term, Bright Indeed.

But, above all, the Price Prospects are bright because of the ongoing Fiat Money Printing By Key Central Banks around the World.

It will however likely take a Catalyst to get Gold and Silver moving decisively into an Uptrend.

But there are plenty of Potential Catalysts out there – Another Fed No Tapering Decision, in October (likely) an eruption of an intensified Mideast Crisis, a widely publicized move up in Inflation. One or more of these is sure to come, and we think one of these is likely in the next few weeks according to our timing Projections.

So last week’s No-Tapering Launch up of Gold and Silver was the first Harbinger of The Coming Bull Trend and another (likely) No-Tapering Decision by The Fed in October would strongly impel these Precious Metals higher.

In sum, Buy Physical Now while it is cheap.

It is important to reiterate that while the U.S. Equities Markets continue to be bullish, they continue to be levitating almost solely on Fed provided QE and the prospect of its Continuation – witness the Bullish Action after the Fed’s No Tapering Decision.

And if the USA’s Budget Problems are resolved (not solved) by raising the Debt Ceiling (i.e. printing more money) as is probable, Equities and the Precious Metals should launch up again (absent Major Negative Geopolitical Events) eventually to hit their all-time highs.

The only difference will likely be that Equities will eventually crash (because the artificial levitation cannot last for much longer), while the Precious Metals will likely continue to dramatically increase in value. The Main Catalysts will probably be a major sell-off of both U.S. Treasury Bonds and the U.S. Dollar.

In sum, though The Primary Trend is currently still somewhat Bullish (but with the Bull Trend weakening), Equities Markets are fundamentally very fragile. The S&P dropped 3% in August and has recently broken below, but is now back above, its 50 day MA. And, though the Dow is still above its 200 day MA, we still have several “live” Hindenburg Omen Observations.

Given the aforementioned, now is an excellent time to acquire Assets which should perform well as Dangerously Fat Left Tail Risks are Realized.

 

Best regards,

Deepcaster
September 26, 2013


 

“Increased regulation and low interest rates are driving lending from the regulated commercial banking system into the unregulated shadow banking system. The shadow banks, although free of government regulation, are propped up by a hidden government guarantee in the form of safe harbor status under the 2005 Bankruptcy Reform Act pushed through by Wall Street. The result is to create perverse incentives for the financial system to self-destruct….

“Also called bankruptcy privileges, this ensures lenders secured on financial collateral immediate access to their pledged securities. . . .

“Safe harbor lenders, which at present include repos and derivative margins, can immediately repossess and resell pledged collateral.

“This gives repos and derivatives extraordinary super-priority over all other claims, including tax and wage claims, deposits (emphasis added), real secured credit and insurance claims. Critically, it ensures immediacy (liquidity) for their holders. Unfortunately, it does so by undermining orderly liquidation….”

“Armageddon Looting Machine: The Looming Mass Destruction from Derivatives,” Ellen Brown, webofdebt.com, lemetropolecafe.com, maxkeiser.com, 09/18/2013

Massive and Increasing Public and Private Debt, $700 Trillion or perhaps as high as $1.2 Quadrillion in Derivatives (see bis.org) and the 2005 Bankruptcy Reform Act, appear to put our Bank Deposits, Pension Fund Assets and many other financial “Assets” at Greater Risk than ever before.

And for those U.S. Bank Depositors who think, for example, that FDIC Insurance will protect their Deposits consider that the FDIC’s Reserve Fund holds only $37.9 Billion, but the Total Insurable Deposits are $5.25 Trillion. And, as Ellen Brown points out, the “Bail-Ins” (i.e., Bank Deposit Confiscation) which Cyprus (and now it appears Polish) Depositors suffer, are arguably applicable worldwide via the Financial Stability Board’s “Bail-In Templates.”

And The Fed’s refusal to even begin Tapering is ominous and indicates that Financial Armageddon may be closer than we think. And, worst of All, that Destruction could, at any time, be only hours, or minutes, away – read on.

Here, with Kudos to Ellen Brown for her excellent expose, we suggest possible Personal, and National, Antidotes for Wealth Protection and Profit.

Consider the following …

“Shadow banking comes in many forms, but the big money today is in repos and derivatives. The notional (or hypothetical) value of the derivatives market has been estimated to be as high as $1.2 quadrillion, or twenty times the GDP of all the countries of the world combined.”

Ibid .

It is this Massive, Largely Uncollateralized (except by other Paper “Assets”) $1.2 Quadrillion that would be immediately affected in the next financial crisis. The Counter-Parties to these Derivatives would be Immediately called upon to perform, but many would be unable to (as in the 2008 crisis) creating a ripple effect of Defaults.

Consider further what documentary Film-Maker, David Malone writes,

“…this (SuperPriority – ed.) allows the biggest banks …to profit from a bankruptcy which might otherwise have killed them…

Ibid.

There is a profit incentive, in other words, to create another financial crisis.

“Safe harbor status creates the sort of perverse incentives that make derivatives ‘financial weapons of mass destruction,’ as Warren Buffett famously branded them…

“All other creditors – bond holders – risk losing some of their money in a bankruptcy. So they have a reason to want to avoid bankruptcy of a trading partner. Not so the repo and derivatives partners. They would now be best served by looting the company – perfectly legally – as soon as trouble seemed likely….

“The global credit collapse was triggered, it seems, not by wild subprime lending but by the rush to grab collateral by players with congressionally-approved safe harbor status for their repos and derivatives….

“When MF Global went down it did so because its repo, derivative and hypothecation partners essentially foreclosed on it…. And because of the co-mingling of clients’ money in the hypothecation deals the ‘looters’ also seized clients’ money as well. . .”

Ibid.

The Solution/Antidote for Individuals and Institutional Investors is to place a significant Portion of the Assets outside of the Reach of the Current Fiat Money-based Banking System.

And of course Timing is Crucial. The U.S. Fed’s recent Decision Not to begin Tapering was yet another Signal that another such Crisis is all-too-close and it is not in the self-interest of the Private For-Profit Fed’s Mega Bank Owners and Allies to allow the System to Implode just now. However, given the $Trillions in QE (Fiat Money) The Fed and other Central Banks have already put into the financial system they cannot prevent an Implosion at some point in the not-too-distant future.

Thus Deepcaster pays heightened attention to Timing “Signals” and reports them in his Alerts.

As to Antidotes, i.e., Protection and Profit, we reiterate that Physical Gold and Silver held in one’s personal Possession, Productive Farm land, Essential Foodstuffs and other Assets held outside the “Financial Asset” System provide some (see our Analyses) greater measure of Protection.

The Risk to “Assets” (including Fiat Currencies, Bonds, Stocks) held within the System is already substantial, and had already proven lethal to the in-system “Assets” of some Investors, via legally sanctioned “Bail-Ins” Worldwide!

“MF Global was followed by the Cyprus “bail-in” – the confiscation of depositor funds to recapitalize the country’s failed banks. This was followed by the coordinated appearance of bail-in templates worldwide, mandated by the Financial Stability Board, the global banking regulator in Switzerland….

“Bail-in policies are being necessitated by the fact that governments are balking at further bank bailouts. In the US, the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivative activities. That means the next time we have a Lehman-style event, the banking system could simply collapse into a black hole of derivative looting. Malone writes:

“. . . The bankruptcy laws allow a mechanism for banks to disembowel each other. The strongest lend to the weaker and loot them when the moment of crisis approaches….

“All that is required is to know the import of the bankruptcy law and do as much repo, hypothecation and derivative trading with the weaker banks as you can.”

Ibid.

And we note that it appears a Major Polish Bank is already implement ting “Bail-Ins.”

Ellen Brown also offers two Systemic Solutions for Nations and Citizens of Nations.

“We should be directing where the credit goes and collecting the interest. Banking and the creation of money-as-credit need to be made public utilities, owned by the public and having a mandate to serve the public. Public banks do not engage in derivatives.

“Today, virtually the entire circulating money supply (M1, M2 and M3) consists of privately-created “bank credit” – money created on the books of banks in the form of loans. If this private credit system implodes, we will be without a money supply. One option would be to return to the system of government-issued money that was devised by the American colonists, revived by Abraham Lincoln during the Civil War, and used by other countries at various times and places around the world. Another option would be a system of publicly-owned state banks on the model of the Bank of North Dakota…”

Ibid.

Of course, the latter of these would involve abolishing The Fed as we know it.

Another possible approach was implemented by President John F. Kennedy, R.I.P., a few months before his assassination. He issued an Executive Order that U.S. Notes (as competition to Federal Reserve Notes) be issued. Some were actually issued and were backed by the Full Faith and Credit of the USA including its Gold Reserves. Most of these U.S. Notes were removed from circulation shortly after his death.

So what is likely to be one Trigger (of several possible ones) for the next Financial Collapse. John Williams explains:

“The United States faces a likely hyperinflationary depression before the end of 2014.  That forecast has been in place for years, and still remains.  The ultimate, complete debasement of the U.S. dollar became inevitable in recent decades, when those controlling the U.S. government—both sides of the aisle—deliberately took on federal debt and obligations that never could be satisfied through normal fiscal operations….

“The U.S. banking system remains under severe financial stress, as would appear to have been confirmed, yesterday, by the Federal Reserve’s decision not to cut back on its quantitative-easing program….

“Where the proximal trigger for the looming sharp increase in inflation and eventual hyperinflation likely will be massive selling of the U.S. dollar in the currency markets, two major illusionary props for the dollar are evaporating. …In combination, these factors suggest a rapidly approaching day-of-reckoning for the dollar.

“The first big the myth was that the Federal Reserve would extricate itself from its quantitative easing, due to the improving economy.  That story appears now to have been confirmed as nothing more than jawboning, aimed at propping the dollar, depressing gold and silver prices and temporarily appeasing critics of Federal Reserve policies.

“The Fed has shown itself to be locked in now for the end game. …

“The Fed’s quantitative easing always has been about maintaining banking-system liquidity and solvency, not boosting the economy.  Fed Chairman Bernanke has admitted that there is little the Fed can do to stimulate business activity.  The Fed simply uses the weak economy as political cover for propping the banking system….

“The second big myth is that federal deficit is improving and no longer is a problem.  While the cash-based deficit for fiscal 2013 will be lower than in 2012, thanks to some one-time factors and accounting gimmicks, that will not be true for the generally accepted accounting principles (GAAP)-based deficit that ran at an uncontrollable annual pace of $6.6 trillion in 2012. 

“Long-term U.S. sovereign-solvency and fiscal issues, which the global currency markets have held in abeyance for two years, with waning patience, are about to explode anew.  Washington is within weeks of having to deal with all the unresolved fiscal and debt-ceiling issues that have been pushed repeatedly into the future.  Whatever actions are taken—even attempts at further delayed action—should have negative impact on the dollar.  There is no chance of action that would resolve the fiscal crisis.

“Separately, the U.S. economy is turning down anew, noticeably, and the Presidential approval rating already is at low level that usually would be a negative for the dollar….”

“THE END GAME NEARS,” John Williams, shadowstats.com, 09/19/2013

Fortunately for us Gold Partisans, it appears that the Banking Cartel’s (Note 1) ongoing Paper Price suppression of Gold and Silver is becoming ever more difficult to sustain.

“Since China (which reopens on Monday after a 2 day break) was a respectable buyer in the upper $1,300s a week ago (and a very strong buyer on Tuesday and Wednesday around $1,300) the Bears seem to be overplaying their paw. Especially when the respectable Indian premiums of the past couple of days are also taken into account.”

“Bears Misjudge Asia?,” John Brimelow, JBGJ, LLC

We agree that it is likely the bears are “overplaying their paw.”

Best regards,

Deepcaster September 20, 2013

Note 1: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.


 

Collective belief can create its own reality, and at least for the past few years, collective belief is that Fed actions simply make stocks go up, and so they have. The problem is that this outcome is based almost wholly on perception and confidence bordering on superstition – not on any analytical or mechanistic link that closely relates the quantity of monetary base created by the Fed to the equity prices (despite the correlation-presumed-to-be-causation between the two when one measures precisely from the 2009 market low). Some of the deepest market losses in history have occurred in environments of aggressive Fed easing.

John Hussman, Hussman Funds, September 2013

One of the Crucially Important Lessons of the Housing Bubble Burst of 2008, the Internet Bubble Burst of 2002, the Market Crash of 2008-2009, and Most Crashes and Bursts before these, is that Certain Assets which were widely believed to be Safe,were not.

And given today’s Uncertainty and Impending Crises, that Truth remains – Many ostensibly “Safe” Assets are Not.

Thus, here we identify certain of these Risky “Safe” Asset classes (and those not so Risky), and indicate how one can best Profit and Protect through Self-Reliance Investing. Deepcaster identifies specific Investments which actually provide Opportunities for Profit and Wealth Protection in his recent Letter and Alerts.

Also here, we identify Major Risks to these Ostensibly Safe Assets.

Identifying Major Risks to Ostensibly Safe Assets is the First Essential step to Effective Self-Reliance Investing.


Counter-Party Risks

As the Geopolitical, Economic, and Financial Risks Mount, so too do the Risks of Major Counter-Party Failure.

The Housing Collapse, Financial Collapse as manifested in the AIG Collapse, and MF Global Debacle are but three recent examples of three Asset classes thought by many to be Safe (respectively, Mortgage-backed Securities, Insurance “products” provided via AIG, and Investments in MF Global) which were not. All three are examples of Counter-Party Risks which were realized.

And there are Counter-Party Risks Aplenty in today’s International Financial System. And many of them are in the same Sectors in which Counter-Party Failure occurred in the last Crash!

The Primary (but not sole) Cause is over-leverage. One need only consider that there are nearly $700 Trillion in OTC Derivatives currently Outstanding, but annual Global GDP is only approximately $70 Trillion. (www.bis.org, Path: Statistics, Derivatives, Table 19) to realize that the Systemic Risk is Arguably Greater Now than before the 2008-2009 Financial Crisis.

In sum, many of the Asset Classes and Institutions which proved risky in 2008-2009 are at least as Risky Now as they were then. It is critical that investors valuate Counter-Party risks before investing.


Bail-ins

“Bail-ins” in which Bank Depositors’ Deposits! are confiscated by a failing or Bankrupt Bank (and often “compensated” for by Stock in the failing or Failed Banks) are not limited to Cyprus.

A Bank in Poland, for example, is implementing a Bail-in as we write.

Even more threatening are the Operative Rules under which many Banks in Europe and North America conduct Business, which also allow Bail-ins.

Conclusions: Self-Reliant Investors should take account of the fact that Deposits in such Banks are Vulnerable and thus are for Transactions not for Savings or for Assets held for the long-term.


OTC Derivatives

As indicated above, the Risk reflected in the nearly $700 Trillion of OTC Derivatives is Orders of Magnitude greater than the collateral available to secure them.

Therefore , when (not if) there is another Major Market Takedown, certain Counter-Parties will be called upon to perform and will likely be unable to do so (cf. AIG in the last Market Crash) And such Failures will likely create a Ripple Effect via the OTC Derivatives Parties and Counter-Parties as they did in 2008.

Self-Reliant Investors should give priority to investments which are not encumbered by such risks.


Domestic vs Foreign Production Reliance

Reliance on Goods and Services produced abroad (regardless of where one lives) can be extremely Risky as all Crude Oil-importing Nations know.

But it is not just the Citizens of Oil importing Nations that are subject to Such Risks.

The Citizens of any countries which cannot feed themselves (e.g., Egypt and arguably, China) and which rely on Extra-territorial supplies are at Great Risk – as Participants in Nations with an Arab Spring know.

And National-Security-Sensitive Goods and Services produced abroad are another significant Risk Category as well.


Markets Manipulation

As Precious Metals Investors know all too well, Gold and Silver Investments are subject to Price Suppression by a Cartel (Note 1) of Central and Allied Mega-Banks (See Deepcaster’s Archives for Deepcaster’s Letters and Alerts for an extensive Treatment).

These Price Suppression Attacks have been primarily Responsible for the Takedowns in the Paper Gold and Silver Prices in the last two years.

But given universal and Increasing Demand for delivery of Physical metal and the High Risk Market Environments, prospects for these Metals are Bright.

Consider two recent Reports re Gold and Silver respectively:

“…overnight just before 3 am Eastern, a block of just 200 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz…whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed: following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!

“To summarize: a humble black of 2000 gold futs (GC) taking out the bid stack, and slamming the price of gold, managed to halt the gold market: one of the largest “asset” markets in the world in terms of total national, for 20 seconds.”

“Vicious Gold Slamdown Breaks Gold Market For 20 Seconds,” John Brimelow, JBGJ, LLC

But notwithstanding ongoing Cartel Takedowns, increased demand for Physical makes the Precious Metals price prospects bright indeed.

“From its low-close on June 27 of $18.59 (Comex front-month basis) through its high-close on August 27 of $24.70, silver jumped 32.8% in just 42 trading days. Using today's Comex close of $23.12, silver is up 24.4% from its June bottom. Many investors are wondering if this has been a dead-cat bounce off an oversold bottom or if a new bull trend has begun. Based on all of the fundamental and technical data that I monitor, it would appear to me as if silver put in a definitive bottom in late June and is poised to resume its long-term bull market trend. I would further opine that it is likely that we'll see silver (and gold) hit a new all-time high in price before we get another big correction like the one the metals just went through.

The inflation-adjusted all-time high for silver is $140/oz. This number is derived by compounding silver's high of $50 in 1980 using the Government-reported CPI rate. While I don't expect silver to reach that inflation-adjusted high on this next bull-cycle move, I would not be surprised if silver hit $100/oz before the next major price correction. I see both technical and fundamental factors which will drive this type of move in price…

“First is the sheer size of global demand for physical silver. 1 billion ounces of silver is produced annually from mine production and recycling. Of that, roughly 900 million is consumed in industrial use (Silver Institute data). That leaves roughly 100 million ounces for investors.

“But what about China and India? Because of the restrictions put on gold imports by the Indian Government for most of 2013, Indian imports of silver have soared vs. 2012. In just the 1st half of 2013 (for which I have a data source), India imported 3,000 tonnes of silver, which translates into about 103 million ounces. It's safe to say based on the trend in India that India will import over 200 million ounces this year….

“As you can see, just counting the U.S. and Canadian mints plus India and China imports, well over 251 million ounces of silver demand are accounted for. To be sure, part of the silver imported into India and China is for industrial use. But in total, just for the those four countries, investors will likely buy significantly more than the 100 million ounces of silver produced by mines in 2013 that does not go to industrial users. ...”

“Silver is Getting Ready to Make a Big Move Higher,” Dave Kranzler lemetropolecafe.com, 09/12/2013

Caveat: one should expect continued Cartel Takedown attempts.

In that connection, Grant Williams, portfolio manager of the Vulpes Precious Metals Fund recently noted that at the COMEX warehouse, there are 55 paper claims for every ounce of Gold in that warehouse, and that a recent demand by shareholders of GLD ETF for Physical Gold in exchange for shares, was refused by the COMEX.


Independent Information Sources

Having accurate information about one’s Investment Interests, such as Deepcaster and other Independent Commentators aim to provide is essential for successful Self-Reliant Investing.

Best regards,

Deepcaster September 13, 2013

Note 1: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.

 


US Government Has Been Overthrown: The Silent Coup

Posted by: EpluribusUNO

Tagged in: Untagged 

EpluribusUNO

While the world and the American public focused on a potential military escalation in Syria, the Government of the US experienced a silent Coup d'état.

Obama is “now determined to put more emphasis on the ‘degrade’ part of what the administration has said is the goal of a military strike against Syria—to ‘deter and degrade’ Mr. Assad’s ability to use chemical weapons,” the New York Times reported Friday, citing unnamed Pentagon officials.

There is something classically interesting about this wording. Pure, sinister propaganda in its most insidious form.

The New York Times. Trial balloon center of the world. Unnamed PENTAGON officials, not White House.

I am convinced more than ever that every word is now important in the public persuasion / manipulation / deception agenda, and collaboration of mainstream media. Instead of the public's watch dog, media is now the Elitists' lap dog.

"Obama is NOW determined" ---NOW? DETERMINED?  This was the Pentagon gameplan all along. Obama is definitely NOT determined. His reluctance to follow the clearly dubious Mid East military 'solution' is palpable. He knows it will make the situation worse, but he is getting narrow selective advice that he "MUST" do it or weaken "the Presidency."

Anyone with doubts, read or watch the movie "Thirteen Days". You will understand perfectly.  This is deja vu all over again.

This is the inevitable conclusion that has been eating at me during this whole Syria episode.

There has been a COUP of the United States Government. Obama being the amateur that TPTB have been looking for to manipulate - The profiteers, militarists, CIA and NSA - have usurped the Government of the United States. They have not yet told Obama or the American People. The media simply reports the reality, in code-speak.

Brennan at CIA, and Clapper, the unindicted perjurer at NSA, along with some (possibly sub- ?)  JCOS military, under the guise of giving "PLAUSIBLE DENIABILITY" to the CinC, have so filtered Obama's information, that he is making decisions against his core beliefs, and his better judgement. He may even believe that the evidence he is provided, in terms of "government conclusions" (not intelligence agency-verifiable evidence) has not been dog-wagged.It is obvious to me that he is making all these warmongering decisions reluctantly. Regardless of what your prior impressions of the man were, this is not his standard operating procedure.

He is mouthing what his "advisors" are telling him must be done as President. Unfortunately, since he has NO experience for the position he holds, he has so far conceded decision authority to underlings. His true self came out, when right before announcing  the original limited strike, he decided to get Congressional approval, indicating he still has a conscience, and hopefully, an internal BS/fraud detector.

HIS MINIONS... KERRY and Co., FIRST said he would go ahead and bomb anyhow, again forcing narrow options. Susan Rice did something similar last night. She was belligerent, after Obama had already indicated receptivity to negotiating international control of the CW. Next, Kerry AGAIN comes out and says Assad has ONE WEEK to DELIVER the weapons, an impossible requirement. Putin, meanwhile, says, the military option must first be off the table for negotiations to work. A new RED LINE, locking Obama into either admitting his representatives don't speak for him (weakness) or forcing the options back to attack, now with a wider mission (for them the same mission as always.) Multiple mouthpieces shows conclusively Obama's loss of control and inability to lead from the front.

Elements within the administration and the Pentagon are pushing a reluctant Obama into a war he doesn't want. Even when he accidentally bumps into a non-war solution, courtesy of Vladimir Putin, the military or his aides maneuver him back into a narrow, military option corner, now better described as "the WAR option".

NOW, the LIMITED 'punishment' scenario is off the table, according to the NYT. No doubt Obama's personal, irrelevant purposeless military strategy, it was characterized by JCOS Chairman as available anytime (in Senate testimony) and then repeated by Obama, as a justification for his Congressional option. The military has also advised AGAINST a limited attack because it has no definable military objective. It had zero military or strategic logic, and therefore was probably Obama's means of halfway buying into the concept.

OF COURSE the plan is to widen the war. For those that wanted it, it always was.

If Obama hasn't yet figured out via his OTJ training this past week, that he is being maneuvered, he doesn't deserve the job. He is the only person in the room who is President of the United States. His test is not whether he can go to war and/or not show himself to be indecisive internationally.

His challenge is whether he can recognize his weakness within his own administration, and find it within himself to become THE President. In this I wish him well, because if he can't, the country is in grave danger for the next 3 years without a real leader. Putin sees Obama's dilemma clearly and decisively. At this moment he is probably the ONLY one telling truth to power. The world isn't just watching what happens in Syria. It is watching the internal politics at the White House.

If circumstances allow a diplomatic accommodation, what will be the next false flag concocted? Where will it be, and how much more serious the threshold of carnage to "force Obama to do the 'right' (sic) thing" - in the minds of the financial/military industrial cabal?  It is also about time to acknowledge, and openly discuss, the role of Israel in every dubious requirement for American credibility and military involvement in the Mid East. Their fingerprints are all over this event, as the SOLE beneficiaries, other than the cabalists.  They, too, have NOT ratified the Chemical Weapons Convention after 20 years. If Syria now signs, they will be the ONLY Mideast country NOT to.  Unequivocal support for Israel and their illegal actions, occupations, and their own unpublicized atrocities, are a burden the US should reconsider, if there is ever to be any solutions in the area. Our self-image as egalitarian, fair and just does not stand the test of truth, when it includes "Israel, right or wrong".

Perhaps at risk of his Presidency, or frankly, even potentially his life, if he challenges this cabal, or Israel, Obama needs to clean house, and take control.  It is HIS Presidency. He alone is the man elected. He must identify and eliminate advisors who serve their own interests, not his nor America's. These financiers, oil oligarchs, and militarists will not stop if they fail here. Another, more heinous event is already being planned if this fails, and the evidence for it is being manufactured in video studios. Obama needs to expose them as the liars, traitors and manipulators they are. Otherwise, the failure to do so will be recognized as his greatest failure of all, both internationally and domestically - the failure of a leader of a great power to adequately lead, on his vision, not the succumbing to the greed and perfidy of the shadow elite.

Obama must look inside himself and determine whether he can say to his Cabinet, as did Abraham Lincoln, "Twelve in opposition; one in favor. The Ayes have it!"  Godspeed, Mr. President.

~Epluribus

http://www.EpluribusUNO.wordpress.com                                          http://wp.me/p3Ertk-ay


Why buy Apogee Silver

Posted by: kingscorpion

Tagged in: Untagged 

kingscorpion

Many of you investors know that Apogee Silver currently has 115 mil ounces of high grade silver. Close to 1 billion pounds of lead and about 600million pounds of zinc in a country that for now is considered risky. Risky because it does not yet have a comprehensive mining law. This however is changing. Recently a mining draft that's been in the works for few years has been presented to the ministry of mining for approval. From the recent articles i've read  suggests that the government of Bolivia is working hard to bring it out before the year end. This will bode well for Apogee in many fronts. 1) Apogee can become a take out candidate. The mining law if approved will allow foreign mining companies to stake land without extensive hassle. However why stake land when you have Apogee with established reserves and resources!! Ceour d'Lane a silver mining company also operating in Bolivia has Apogee as an strategic investment with 30 million shares of the company.
2) Apogee can go it alone and build the mine that will produce between 1 to 2 million ounce of silver per annum The mining law when approved will allow Apogee to get the necessary financing to continue and expand operations in Bolivia. 3)Investors sitting on the side line waiting for the mining law to come out will be able to participate without fear of owning shares of Apogee Silver. 4)The recently released Feasibility study puts a price on Apogee's Pulacayo property at over $70 million on POSilver of $29 This means if the company was to be sold It's share price would be worth around .16c to about .20c again on POSilver of $29.00 This means if POSilver goes beyond $29.00 it's NPV(Net Present Value)will also increase and therefore it's share price will also be higher.
Apogee Silver has huge institutional backing Sprott Asst Mgment Ceour d' Lane Forbes and Manhattan and few others are large holders of Apogee shares. 

The risk here are POSilver staying below the $29.00 Apogee not getting the necessary financing and Bolivia not coming out with their mining law. Apogee from risk reward ratio is considered to be the cheapest stock on all metrics that could offer the biggest upside going forward.   

It is my opinion that institutions who are waiting to lend money to miners including Apogee Silver could be waiting for the POSilver to move beyond the $30.00 and in Apogees case could also be waiting for the mining law to come out. 


DRAFT RESOLUTION: Operation B.O.N.E.H.E.A.D.

Posted by: EpluribusUNO

Tagged in: Untagged 

EpluribusUNO

Barack Obama Now Expects His Ego to Avoid Disaster

Unfortunately, the same incredible determination that allowed John McCain to survive NVN captivity, is not serving him well now. As a former pilot, he still thinks he can solve ANY international problem with bombing people in countries who are mere pawns in superpower geo-politics. He is as "certain" as Kerry about the good democratic intentions of a few paid Qatari mercenaries who think they can run a country better than Assad. They can't.

"I know these people" McCain says... HOW? After a nice arranged chat one weekend where people with ulterior motives tell you stuff you want to hear? Show you how they can raise their arms and shoot AK-47s over a wall at a target they can’t see? Does he know that these “nationalist patriots” are paid by Qatar and Saudi Arabia to CREATE this phony civil war? Was that not in the briefing memo? HOW and WHY and FROM WHOM do a band of rebels get access to major military weaponry? The Idaho Militia can't get that much weaponry.

According to Kerry, “WE KNOW Assad did it” and “We have no subsequent role.” Really? You REALLY think the American people, and the world are that gullible? Even McCain and armchair warrior Lindsey Graham say we HAVE TO remove Assad. So, Mr. Secretary, Which is it? Plan A or, you're LYING about the plan? They are either blatant liars, or senile if they believe it themselves. Either way, enough is enough of their useless posturing “humanitarian strategy.”

Obama is either the biggest Trojan Horse in American history, or the biggest patsy. His lack of experience, qualifications for the job, and leadership become more apparent each month, and, finally, may make America question how he really ever got to be amateur President, and who arranged it?

[This is being written PRIOR to the congressional vote on authorization to use military force in Syria.]

At this moment, Obama and Kerry are promoting passage of the resolution. There is still time for Obama to hold true to the “principles” he espoused while a Senator and a candidate. So far, he has repudiated them so completely, it appears either he HAS no principles, or he lied about them to get elected. Maybe he has made an incredibly astute political maneuver to AVOID the shadow government’s manipulation of him. However, whether Pawn or Provocateur doesn’t really matter now. McCain and Kerry are selling; whether Obama buys, against his stated better judgement, will determine the balance of America’s 21st century.

Will that future include expecting the following ‘specific limited objectives’? (subject to future DOS, DOD, OMB revision)

The 2013 America’s Humanitarian Crusade & Military Tour – Syria Venue

RESOLVED:

Step 1: “We will bomb pre-announced CW-capable targets with cruise missiles, without civilian casualties, economic ruin or refugee displacement. There will be no regional consequences, nor risk of escalation or expansion outside Syria. We will then go back to business as usual, and focus on national priorities,  like increasing our debt. Regarding replacement of the cruise missiles we will have launched, we have exempted from the sequestration restrictions any expenses we may indefinitely incur during this operation, because Qatar and Saudi Arabia have graciously offered to reimburse the US for all expenses related to the overthrow of Assad (which may inadvertently occur during the execution of our humanitarian mission.) Their altruistic and eleemosynary participation in this crusade effort is admirable.

Step 2: “We intend to leave Assad in power with 250,000 kg of randomly dispersed CW, to which we are committed to deny access by the regime, and/or discourage Assad from using again.... in order to be accessible to and protected by one or more of the rebel groups.... Al Queda??? The "nationalist rebels" from Turkey, Hezbollah, Iran, Iraq, Pakistan, & Afghanistan??? We have not yet decided which rebel leader we will install as the new democratically elected president of the free Syrian Hezbollah Islamic Triumvirate (S.H.I.T.) government. We will study that and report back to Congress, in executive seSSion within the 90 day non-war schedule.”

Step 3: (with appropriate bewildered reluctance and humility)
“Well, we better go in with boots on the ground after all... WE COULDN"T (Didn't? Refused to?) ANTICIPATE that our arrogant morality policing could make matters worse, because after all, WE'RE AMERICA, and I'M OBAMA . ‘I said, once we started this we would need to finish it, so America and our troops need to back me up so ‘the presidency’ doesn’t lose face.’

Unfortunately, some of our naval ships used in our cruise missile non-war punishment exercise have been attacked WITHOUT PROVOCATION, which obviously demands a measured, augmented retaliatory response, or we will look weak. We have not been able to confirm the identity of the perpetrators as either Syrian regime or one of the rebel groups we have been supplying weapons to, but have HIGH CONFIDENCE that WE KNOW from RELIABLE INTELLIGENCE provided from NSA sigintel intercepted from a cell phone in a regime-supported brothel in a suburb of Damascus, that it was Assad. That we know that we know is certain, and we will bring them to justice... when we know what and who.

We have NO doubt that this will CONTINUE to be a limited engagement, no matter how long it takes, and that the American people will always SUPPORT THE TROOPS.”
[Proceed to MSNBC Photo Op and private pre-set Q & A, with Reading-Head-of-the-Month]

Step 4:
“Since our ONLY objective has always been protecting the Syrian PEOPLE from more gas attacks, our original NON-EXISTENT PLAN B has now evolved, based on conditions on the ground. Therefore, acting within the authority of the War Powers Act and Congressional authorization, we have put an additional 75,000 of our soldiers, on leave from Afghanistan and Pakistan, into selected Green Zones inside Syria, so THEY will be exposed to the CW rocket attacks, instead of Syrian women and children (depending on the wind), regardless of which rebel faction is currently in possession of these horrific weapons, which we expect to determine soon.

In fact, we can assure the American People that, by identifying from which direction our troops are attacked with these munitions, we will be in a better position to find and confiscate them. This accomplishes the main objectives we originally set forth in seeking Congressional approval for this historic humanitarian crusade, seventeen years ago.

We have also ensured the provisional government that dollar-denominated IMF loans will be made available for economic revitalization projects, including construction of a new regional LNG pipeline, in cooperation with our Saudi and Qatari partners. Several of our most experienced engineering firms, like Halliburton, will be dedicated to rebuilding a vibrant Syria, especially for those few remaining native Syrians still alive, who have been living in refugee camps in so many other countries. We owe it to them to build the best pipeline in the world. Under joint American/UK /JPM/Goldman-Sachs supervision, we will guarantee that.”

…These are venal politicians with an agenda. The enthusiasm they are bringing to their false moral crusade is scary, and MORE THAN a little mentally unbalanced. I don't see that same enthusiasm from the Chairman of the Joint Chiefs. Maybe he can convince these amateurs to stand down, from an ill-advised suicide mission for the military and the American People. If the government ( I Do not use the word ‘we’ or ‘America’ here) …If the government proceeds further, then it is time to review the impeachment clauses in the Constitution.

Any member of Congress who votes yes.

Certainly Obama, Biden, Boehner, Pelosi AND Kerry, especially if Obama goes AGAINST the will of Congress (an issue unto itself).

Avoiding the frightening potential for misuse of the Presidential Succession with a sliding scale of available mediocrity is essential for any hope of restoration of rational American foreign policy.

So…. who is Secretary of Agriculture?

~Epluribus

Permission to reprint, with attribution. http://wp.me/p3Ertk-ao www.EpluribusUNO.wordpress.com


Mega Market Movers & Moves Impending

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

The next very few months present an extraordinary number of Mega-Market Movers and Moves Impending.

Here we identify Key ones and indicate how Investors may best Profit and Protect.

The Most Obvious is Syria. President Obama has said that any Strike would be Surgical and Limited in Scope. But little consideration has apparently been given to probable Retaliation by the variety of U.S. Opponents including most likely by the Proxies of Major opponents – Proxies provide “Plausible Deniability”. Consider that Russia, for example, is not only an Ally of the Assad Regime, but also has its sole Major Mediterranean Naval Base in Syria. And, as we predicted in our Alert earlier this week, President Putin has now said Russia would assist Syria if the U.S. attacks Syria. And, while not likely to retaliate, China and the U.K. and others have declared a policy of Non Support of the U.S.

But some Major Retaliation is likely, highly likely as are dramatically increased Tensions Arising from the other impending Crises facing World Markets. All of the Following Market Movers have Market Moving Hookers which we address in our Forecasts in our latest Alert.

  • The U.S. Debt Ceiling Crisis (a Mover because the U.S. is believed by many to be the World’s strongest Economy today – an unsubstantiated belief)

Unfortunately, if the USA does not raise the Debt Ceiling, the Markets and Economy will likely Crash. But more Debt means more money printing which will accelerate Inflation. Even if The Fed does begin a modest tapering tis Fall, it will not last. The wise will buy Inflation Protective Assets, Now.

  • The U.S. Budget Crises, (same analysis, and consider that the USA has $17 Trillion in unpayable Debt and over $100 Trillion in unfunded downstream liabilities)

Unfortunately, the USA will likely continue spending beyond its means. Buy inflation Protective Assets.

  • The Post-German Election Eurozone Crises

It is likely that the European Economy and the Euro’s decline will accelerate after the German election (because the Eurozone Powers strongly favor Chancellor Merkel’s re-election) since virtually all of the Serious Unsolved Structural Problems of the Eurozone remain.

Specifically, Insolvency in several Peripheral Countries, and overwhelming indebtedness in others like France – come to the fore once more. No recovery in sight. Generally, stay short Europe.

  • The Dwindling Physical Gold Supply vs. Demand “Crises” and those related to it

Gold’s recent Bull Launch has been temporarily interrupted by the Indian Rupee’sWeakness (causing diminished Purchasing Power for Gold hungry Indians) and Tariffs and the perception (probably false) that Syria and other Major Challenges are being handled, so there is less need (it is claimed) for a Safe Haven. And, of course, The Cartel (Note 2) is quite happy to use the foregoing as Catalyst to implement another Precious Metals Takedown. Nonetheless, the dwindling supplies of Available Physical Gold (vis à vis demand) virtually ensures the Bull Trend will continue.

  • Fiat Currency “War” i.e. Price Hyperinflation Risk Crises

Many countries are now degrading the Purchasing Power of their Currencies including especially the U.S., Japan and Eurozone. Result: the Real Numbers show Key Nations' Economies are already Threshold Hyperinflationary. (e.g., the U.S. at 9.62% see Note 1 – Shadowstats.) As to the $U.S., significantly, Egon von Greyerz of Matterhorn Asset Management contends that the United States’ “falsification” of GDP, Inflation, and employment numbers is a sign that the U.S. Dollar is beginning to lose its World’s Reserve Currency status. (See Shadowstats.com for the Real Numbers Note 1.)

We agree. If all were healthy with the Economy, Markets, and U.S. Dollar, what need would there be to falsify the numbers?! And these lead to the …

  • U.S. Treasury Bond Bubble Bursting Crisis

As the perception that the U.S. Economy is recovering continues to bemuse Investors who rely solely on the Mainstream Financial News Media for their “News”. Long-dated U.S. Treasuries continue to weaken for the 4 th Month in a row as we earlier forecast, due to increasing Inflation generated by Massive Central Bank Money Printing.

Indeed, when (not if) continuing QE  (i.e. Bond Buying) no longer serves to support Treasuries, i.e. to suppress Interest Rates i.e. to keep the 10-Yr. yield below or at 3%, that will also be a signal that Financial Collapse is impending, because that will signal The Fed has lost control of the Bond Market. Such has not happened yet but we expect it will. N.B. We have already seen the beginning, with the 10-year yield rocketing up from 1.7% to nearly 3% recently. We already saw counterparty defaults on Paper Assets in the 2008-09 Crash, and we will see them again, as The Bond Market Crashes beginning in 2014, or perhaps earlier.

  • Worsening Fukushima Crises (400 Tons of Radioactive H2O created daily registering up to 1800 Millisieverts – lethal to humans in 4 hours) threatens Fisheries and Japan’s economy – third largest in the World

After over two years, the Intensifying Radiation Disaster at Fukushima has not been solved. This could have a catastrophic effect on World Fisheries and Japan’s economy, third largest in the World. One Consequence: A Negative Effect on Global Economic Growth.

  • The Unemployment Crisis

Not just in the Western World, where Real Unemployment in the U.S. is 23.3% and over 25% in Spain, Greece, and Italy, but also elsewhere increasing Unemployment Promises more Social Chaos. The native-born Labor Participation Rate is 62.8% in the USA, the lowest in 35 years, while the Foreign-Born Participation Rate is up to 66.9%, as Employers seek Cheap Foreign-Born Labor.

  • And The Big One is that there are nearly $700 Trillion Notional Value of OTC Derivatives outstanding in the Global Financial System. But annual World GDP is only about $70 Trillion. This excessive leverage virtually ensures another Financial Crisis and Mega-Bank Failures and consequent Depositor Bail-ins, (i.e., confiscation of depositor funds) according to Existing Law in many jurisdictions. (See 9/3/13 Posting and Video at www.jsmineset.com)

The Big One of Nearly $700 Trillion OTC Derivatives indicates the International Financial System is still overleveraged to the Hilt. As U.S. long-dated Treasury Securities Weaken (see Deepcaster Forecasts re Timing) Interest Rates Rise. Eventual Result: Counterparty Failures and a Financial Crisis Worse than 2008-2009. The Failed Mega-Banks in many jurisdictions are entitled to and will implement Bail-ins, i.e., Confiscation of Depositors Money (Yours and Mine) a la Cyprus.

Profit and Protect by Removing Significant Deposits from Mega-Banks and Buying Quality Miners Stocks and Buying and taking Personal Delivery of Real Money -- Physical Gold and Silver.

Best regards,

Deepcaster September 6, 2013

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 August 15, 2013
1.36%     /     9.62%

U.S. Unemployment reported September 6, 2013
7.3%     /     23.3%

U.S. GDP Annual Growth/Decline reported August 29, 2013
1.62%        /     -1.75%

U.S. M3 reported August 20, 2013 (Month of July, Y.O.Y.)
No Official Report     /     4.55% (i.e, total M3 Now at $15.304 Trillion!)

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.

 


Opportunity Knocks via Market Realities

Posted by: Deepcaster

Tagged in: myblog

Deepcaster

 

“Gold/US$ has had a material seller stopping its advances each day, and yesterday that seller was strongly evident at the $1430-1435 level.

“We suspect that after a day or two of correction following that selling, the bulls will again gather their forces and trump the seller at $1430-1435. It may have to wait until next week, however, when the gold dealing desks are back at fuller staff.”

The Gartman Letter 08/29/2013

Even Dennis Gartman, not known to be a Gold Partisan, can recognize Investment-Significant Market Realities when he sees them:

1. Gold is now launching into a Bull Trend, but a

2. “material seller” has been “stopping its advances each day”

While he has not been so candid in identifying that “Material Seller” as The Cartel (Note 2) as Deepcaster and others have long ago, he does usefully make the point that:

3. Gold, even though launching into a Bull Ttend is still vulnerable to Takedown by that “Material Seller”

But the Takeaway Market Reality from all this is that it provides an Opportunity – we know Gold is going higher, so use the Takedowns as a Buying Opportunity.

But John Brimelow notes another Key Reality – that Gold surges UP are Driven by Investors Buying and Taking Delivery of Physical.

“Considering the disruption in the Asian physical markets this will take Western leadership if it is to happen so soon.”

 JBGI, 08/29/2013

Therefore, it is essential to Monitor Physical Buying as Deepcaster does in order to Buy at Opportune times.

And that Physical Buying may well not begin to surge again as early as next week (1 st week of September) because the Asian Markets – the prime source of demand for physical – have been temporarily disrupted by weak currency and tariffs in India and temporarily weakening demand in China. Bottom line Reality: We may expect a few down days in early September which should be regarded as an excellent Buying Opportunity.

Another most important Market Reality and Opportunity has been identified many weeks ago by Deepcaster and several other independent commentators --- interest rates have begun to Trend Higher with the interest rate on the US 10 year shooting up over 100 basic points recently. Consider Astute Trader Dan Norcini’s comments on the consequences of this Trend:

“Here is all one needs to know to explain why gold did what it did today:

The new home sales number showed the steepest drop in three years! Any questions?

What that translated to is very simple - Death to the Tapering! Long Live the QE Kings!

If that rotten July number was not bad enough, the insult to injury was the downward revision to the June number.

My view on this is simple - I have been posting charts of the Ten Year Treasury Note yield for some time now and have been remarking that it keeps pushing higher and higher and is closing in on that 3% mark. There is no way that rising interest rates in an environment in which salaries/wages are stagnant and job creation consists mainly of part time jobs is NOT GOING TO IMPACT HOUSING SALES.

I feel like I have been beating a dead horse but I repeat - the FED cannot be pleased with what has been going on in the Treasury markets because this entire phony "recovery" is predicated on one thing and one thing alone - CHEAP MONEY. Take that away and there is nothing else to support it.

The other side note to this is that these rising rates are going to significantly impact the US Federal Governments borrowing costs. When the national debt is over $17 trillion-gazillion-bazillion-whatever, and rising, even small rises in interest rates will have a significant impact to the nation's bottom line.

Bottom line - rising interest rates are a pox on the nation and on the economy and the Fed knows it.”

“Weak Housing Number Propels Gold Higher” Dan Norcini, traderdannorcini.blogspot.com, 8/23/13

Much of The Mainstream Financial Media has long encouraged a disconnect between underlying Economic, Financial and Market Realities and their Reportage and Forecasts.

Such a Policy of Disinformation and Spin was again undercut last week when the Release of a very Weak “New Home Sales” number gave the lie to the Fiction Propagated by the Mainstream Financial Media that “The Housing Market is Recovering”. And it was undercut again this week by a horrible July Durable Goods number which fell 7.3%.

Dan Norcini’s comment about why Gold launched up on 8/23 is Spot-on. [Since then Gold’s upward momentum has been bolstered by the USA’s publicized intention of attacking Syria but then reduced by the Realization that such an attack might not happen after all.] But the Mainstream Financial News Media Spin has been that the Economy is recovering and this Fiction has been supported by Bogus Official Statistics, (Note 1) while QE has, until now, boosted the Equities Markets artificially.

In order to protect Investors and provide Profit Opportunities, Deepcaster’s Goal always is to make its Forecasts and Investment Recommendation based on such underlying Realities as the foregoing rather than Mainstream Financial Media-Spin/Fictions.

Regarding Equities, for example, the Plain Truth is that while The Fed (and other Central Banks’) QE can artificially levitate Equities for a while (as they have been for most of 2013) the underlying Fundamentals eventually Trump the Levitation.

And so the lousy Fundamentals – e.g. stagnant wages, and persistent high unemployment and Negative GDP “Growth” per Shadowstats.com (Note 1) and recent lousy numbers out of the Housing Market – are now beginning to Trump the Fiction that The Economy is Recovering. But at some point (see our Forecasts) QE becomes ineffective in suppressing Interest Rates or Boosting the Equities Markets … and Equities Crash and The Bond Bubble Bursts.

It is important to reiterate that the Equities Market has been levitating solely on Fed provided QE. Trailing four-quarter earnings for the S&P 500 is $99.60 Y.O.Y. an increase of just 1%! But during that time the S&P Index is up 25% with a trailing P.E. of 16.9, 10% above the historical average. Earnings clearly do not support these Equities Indices levels, and the “Sell” signals now dominating the Technicals reflect that Reality.

Similarly, the prospects for a Great Launch Up in Gold and Silver and the Quality Miners Prices improve every week. Gold has convincingly closed above the $1400/oz. level and Silver has convincingly cleared $24/oz.

Gold’s bust out above the upper Boundary of its Bullish declining Expanding Wedge, is a Bullish Signal.

However, other Key Technicals indicate that Gold will not be in a confirmed bull market until it decisively clears $1500 and Silver $28/oz. Repeated closes above the 38.2% Fibonacci retracement at 1414 and then the 61.8% Retracement at $1510ish would add Momentum as well. And although they are looking peppy, the Miners need to clear 280 basis the HUI to clearly signal “Bull”.

So while now is still an excellent time to purchase Physical Gold and Silver and Quality Miners, we do still expect temporarily successful Cartel Takedown Attempts.

The Reality is the increasing demand for Physical is squeezing the shorts, and Paper Precious Metal Prices, and The Cartel.

As well, the decreasing likelihood of Tapering any time soon (or the continuation Tapering if once begun) due to lousy Real Economic Numbers (e.g. the recent drop in Home Sales) and the Mideast and the Upcoming Budget and Debt Ceiling Battles in the U.S. Congress. Means that Inflationary Money printing is likely to continue, thus futher bolstering Gold and Silver Prices.

All this explains the spikes up in price we are seeing and will increasingly see. It is a war between the Big Cartel Banks (to protect their Fiat Currencies and Treasury Securities) and Savvy Investors of all stripes who know Gold and Silver are Real Money.

In sum, though increasingly it looks as if the bottom is in and the Great Launch up for Gold and Silver and the Miners has begun, do expect Great Price Volatility and more Cartel Price Takedown attempts.

As well (considering the 10 yr. yield was bouncing around 100 basis Points lower just a few months ago) the Weakening of long-dated U.S. Treasuries has began and should continue for months as it eventually Morphs into a Bursting.

As this happens interest rates for all loan transactions should rise dramatically which will greatly constrain lending. And that will likely be one Catalyst for our Forecast Equities Crash (see our Forecast Timing). This is but one reason The Fed has no choice but to continue QE in some form (or to reinstate it, if temporary reduced) and to continue it until Price Hyperinflation and/or other factors are reflected in the collapse of the $US… Thus, when continuing QE (i.e. Bond Buying) no longer serves to support Treasuries, i.e. to suppress Interest Rates, that will also be a signal that a Financial Collapse is impending, because that will signal The Fed has lost control of the Bond Market. Such has not happened yet but we expect it will. N.B. We have already seen the beginning, with the 10-year yield rocketing up from 1.7% to 2.9%ish recently.

Significantly, Egon von Greyerz of Matterhorn Asset Management contends that the United States’ “falsification” of GDP, Inflation, and employment numbers is a sign that the U.S. Dollar is beginning to lose its World’s Reserve Currency status. (See Shadowstats.com for the Real Numbers. Note 1)

We agree. If all were healthy with the Economy, Markets, and U.S. Dollar, what need would there be to falsify the numbers?!

Finally consider Crude Oil.

War in the Mideast and continued Central Bank Money Printing and Crude Oil’s Status as Safe Haven Asset is not only keeping a floor under the Oil Price, but also boosting it.

While The Civil War in Syria is Tragically Quite Serious, it does not Threaten Oil Supplies much unless it widens.

The Civil War in Egypt has the Potential to Disrupt Oil Supplies and thus Spike prices, if it Threatens the Suez Canal.

Nonetheless, absent a Market Crash or other Major Deflationary Event, we can expect QE generated Monetary Inflation to keep WTI Crude Prices at or above $100 bbl.

As the yields on long-dated U.S. Treasuries (and thus interest rates in general) increase, this will signal increasing Price Inflation resulting from the past and ongoing QE Price Inflation. And of course this will mean (and has already meant) increasing Crude Oil Price Inflation, a sure Killer for Economic Health. In sum, Crude Oil trading above $100/bbl is not solely a result of Mideast Conflict. Indeed, given the Tightness of Crude Supplies Worldwide, the Primary Cause is arguably tight supplies.

In addition to tight supply, the recent elevated (over $100/bbl) Oil Price can be explained by considering the following as well as the Wider Mideast War Threat: that Equities and Bonds are artificially elevated, Fiat Currencies are losing Purchasing Power due to ongoing QE, and many Commodities Prices are depressed until just nowdue primarily to China’s slowdown, and Paper Gold & Silver Prices are temporarily depressed by The Cartel (Note 2), and long-term rates are headed up.

Therefore, only Crude Oil has been recently seen as a reliable store of value to many sophisticated Investors. Thus it is not surprising to us that WTI Crude has approached the $110 level recently notwithstanding the Economic slowdown. Part of this strength is due also to QE-generated Real Price Inflation, and to recently reported above-ground supply drawdowns.

Because Crude is essential, with relatively high inelasticity of demand, and because it gets used up, it is not as easily subject to price manipulation though, for sure, its Price is manipulated. Thus a spiking Crude Price provides yet another Signal that Hyperinflation is impending and thus that a Financial Crash is likely to be coming within 18 months or so, and likely sooner than later.

Consideration of the foregoing Market Realities provides Opportunities for Profit and Wealth Protection for Savvy Investors.

Best regards,

Deepcaster August 30, 2013

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 August 15, 2013
1.36%     /     9.62%

U.S. Unemployment reported August 2, 2013
7.6%     /     23.3%

U.S. GDP Annual Growth/Decline reported August 29, 2013
1.62%        /     -1.75%

U.S. M3 reported August 20, 2013 (Month of July, Y.O.Y.)
No Official Report     /     4.55% (i.e, total M3 Now at $15.304 Trillion!)

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.

 


Obama's Moment of Truth: World Statesman or 1st American Dictator?

Posted by: EpluribusUNO

Tagged in: Untagged 

EpluribusUNO

Senator Barack Obama (D-Il), then an Illinois state senator, delivered these remarks in Chicago, October 2002

I don't oppose all wars. What I am opposed to is a dumb war. What I am opposed to is a rash war. What I am opposed to is the cynical attempt by Richard Perle and Paul Wolfowitz and other armchair, weekend warriors in this administration to shove their own ideological agendas down our throats, irrespective of the costs in lives lost and in hardships borne.

What I am opposed to is the attempt by political hacks like Karl Rove to distract us from a rise in the uninsured, a rise in the poverty rate, a drop in the median income, to distract us from corporate scandals and a stock market that has just gone through the worst month since the Great Depression.

That's what I'm opposed to. A dumb war. A rash war. A war based not on reason but on passion, not on principle but on politics......

You want a fight, President Bush? Let's fight to make sure our so-called allies in the Middle East, the Saudis and the Egyptians, stop oppressing their own people, and suppressing dissent, and tolerating corruption and inequality, and mismanaging their economies so that their youth grow up without education, without prospects, without hope, the ready recruits of terrorist cells.

I also know that Saddam poses no imminent and direct threat to the United States, or to his neighbors...and that in concert with the international community he can be contained until, in the way of all petty dictators, he falls away into the dustbin of history.

I know that even a successful war against Iraq will require a U.S. occupation of undetermined length, at undetermined cost, with undetermined consequences......

I know that an invasion of Iraq without a clear rationale and without strong international support will only fan the flames of the Middle East, and encourage the worst, rather than best, impulses of the Arab world, and strengthen the recruitment arm of al-Qaeda.

Obama hasn't sent troops to Libya. He hasn't sent troops to Egypt. He didn't act on the Green Movement in Iran. He had to be persuaded 3 times to go after Bin Laden. He campaigned on bringing troops home from Afghanistan and Iraq, and did so. He opposed the surge in Iraq.

Obama is big on his belief that whatever he "says" will be enough to make it actually happen. Hence his "red line". He REALLY expected that would be all that was needed. He is, I believe, genuinely NOT in favor of putting US troops into foreign countries. That was one of his goals for "change".

He also knows that he has no chance of passing any domestic agenda if he commits troops to another country. He also probably figures that Israel is manipulating the pro-Israel normalcy bias, trying to force his hand, which he has had a continuing tendency to resist, from the beginning, despite attempts to smooth over. That stripe hasn't changed since his day one in office.

He does not want his legacy to be expanding wars against Muslim countries. In this, his gut feeling has been correct from the beginning. His naiveté in thinking his 'pronouncements' would have a real effect against entrenched US policy may be all he has left -- hope against hope.  Unfortunately, such blunders have consequences. He has put himself in a corner, and he will either have to play along or show America's incredible foreign policy hypocrisy.  He has been manipulated into this due to his lack of real experience. Conversely, he has the opportunity to show his personal integrity, if any. Who is Obama? What is he made of? What are his core beliefs? Until now, we do not know.

He is at THE critical stage of his presidency. How he handles this will determine many things:

    how many people die in Syria,
    how many American ground troops will die from gas in pre-Armageddon,
    the future of Arab Spring/ convergence of critical mass for emergence of Caliphate, the future of big-power resource wars in Century 21

He wanted the job. Now the world will see if he can handle it, and whether he can now legitimately earn his Nobel Peace Prize, or give it back.  It is at such moments that world leaders either become great or forgettable.  If they fail to rise to their moment in history, there are usually disastrous consequences for the world.

As for Vladimir Putin, who has repeatedly made his position extremely clear, he will act aggressively in response to any overt move by America. Otherwise, HE will look like a paper tiger. He prefers to avoid such a move, because he holds yet-to-be-played financial "hole cards" he does not yet wish to reveal. He would prefer to act decisively when he has created a Machiavellian advantage WITHOUT conflict. I also believe that he wants Russia to act like the grown up, according to international law, rather than according to whatever the US wants.

His is not the blustering bravado of Soviet Russia, but his determination should not be underestimated. Russia has as much at stake in the Middle East as the West, and he will require that to be acknowledged before all the smoke settles. He will not be ignored without significant long-term consequences.

Well, Mr. Obama? Show us who you REALLY are. The stage is yours.  "You want a fight, Mr. President?"

~Epluribus

http://www.EpluribusUNO.wordpress.com                                       http://wp.me/p3Ertk-a4


Meltdown Coming?!

Posted by: Deepcaster

Tagged in: myblog

Deepcaster


“Our estimates of prospective risk are surging…

“At present, we have what might best be characterized as a broken speculative peak, in that market internals (particularly interest-sensitive groups), breadth and leadership have broken down uniformly following an extreme overvalued, overbought, overbullish syndrome.

“If you recall, the market also recovered to new highs in October 2007, weeks after the initial, decisive break in market internals at that time. Presently, we’re looking at the same set of circumstances. On some event related to tapering or the Fed Chair nomination, we may even see another push higher. It isn't simply short-term risk, but deep cyclical risk that is of concern.”

John Hussman, Hussman Fund

There is increasing evidence that another Financial and Economic Meltdown is coming and that it will be worse than the one in 2008-2009. And even respected Financial Establishment Figures like John Hussman are beginning to go public with their concerns.

Indeed, perhaps The Main Indicator – The Greatest Bubble Asset – that a Great Meltdown is coming is already signaling it is launching.

Specifically, Savvy Investors, large and small, around the world, are already rushing to get out of the Greatest Bubble Asset ahead of the Bursting to Protect their Wealth. And those so-inclined are betting on the Bursting in order to Profit; thus Deepcaster’s recent Investment Recommendations have been made in anticipation of the likelihood of such a Meltdown.

But this impending Bubble Bursting is beginning to have a concatenating Ripple Effect throughout other major Markets. And eventually, sooner rather than later, the effect on virtually all markets, economies, and indeed, governments will be profound. Jim Willie explains what to expect.

“$$$Karen Hudes (formerly of World Bank) Refers to a Return to Order, and a Methodical Clean-up of the Criminal Bank Sector Being Tidy. It will not be Neat and Clean. Instead, Disorder will come by Storm. Escape Hatches Will Be Taken. External Force Will Soon Begin to Be Exerted from the East in More Obvious Ways.$$$

“…Her implication of a return to order in the next several years has no chance whatsoever of happening. Disorder has taken root and is spreading like wildfire, not the least factor of which is the rampant food price inflation in the rest of the world. Most emerging market nations have seen roughly a 30% food price inflation effect in the last six months from the USFed monetary policy action, seen as meted out in unilateral manner. The USGovt continues to make policy in foreign lands, to control SWIFT codes for banks, to block the pipelines, to permit drone aircraft to attack sites in Pakistan, to apply sanctions in trade, to urge governments like India to restrict gold sales, and to permit the big banks to operate with criminal impunity, while they continue to interfere with every conceivable financial market…. Be sure to know that the utmost respect is given Hudes for courage and forthright actions. But her views on a return to order are childlike….

“…So the West serves the bankers with welfare and toxic bond redemption, while the rest of the world suffers high cost to feed themselves and families. The stress within the system is unspeakable, and has already reached critical levels of stress for fractures, breakdowns, and collapse…. The East is scurrying to resist inflation, to install the USD alternative, to replace key portions of the financial structures…”

Hat Trick Letter, Jim Willie Goldenjackass.com, 08/21/2013

Regarding The Main Indicator that a Meltdown is coming, we are speaking of course of the Greatest Bubble in World Economic History, the multi-Trillion Dollar U.S. Treasury Bond Bubble. Consider the catalysts.

With a balance sheet of over $3 Trillion, The Fed cannot continue QE forever without risking Hyperinflation. Indeed, the U.S.A. is Threshold Hyperinflationary already with Real CPI at 9.4% per shadowstats.com (Note 1) mainly as a result of QE. But, given that the Equities and several other Markets are levitating mainly because of QE, The Fed’s mere talk of tapering is increasingly causing a Mass Exodus of private and Sovereign Investors from the U.S. Treasury Bond Market.

The recent Treasury TIC Data Release shows foreign holders dumped $40.8 Billion in June. And June was the third month of dumping in the last four, for a total of $79 Billion. China alone dumped $21.5 Billion and U.S. Ally Japan dumped $20.3 Billion. And Billions in FNMA and Freddie Mac Securities were dumped as well.

The Consequence has been that, over the past few weeks, long-dated U.S. Treasuries tanked, with yield on the 10-year shooting up over a hundred basis points to 2.9%ish.

And ominously earlier this week, the President had a meeting with the Heads of Key Agencies focusing on the Economy and the Markets.

Last time that happened, the Gold Prices were subsequently taken down by over $200 in a couple of days. (Was the Bank of England’s recent revelation of a huge discrepancy in Gold Custody Reports evidence that 1,300 Tonnes of English Gold were used in the April price Takedown? What other explanation is credible?!) Intensifying Cartel (Note 2) attempts at Gold and Silver Price Suppression is evidence of increasing concern a Meltdown is approaching.

Knowledgeable commentators, including John Embry of the Wealthy Sprott Group, speculate (unfortunately, because their speculations are likely more Probability than Speculation) that:

  • an Historic Collapse and Meltdown, may be Imminent, likely because, inter alia,
  • Rising Interest Rates are Devastating in this highly over-levered economy, because, inter alia,
  • $Trillions in Interest Rates Derivatives could implode, sending
  • Real Interest Rates and Oil Prices Sky High, causing
  • a Meltdown which seriously Wounds the Economy, and generates counter party defaults.

Consider what is already happening with the U.S. Dollar and long-dated U.S. Treasury Securities.

Normally, rising rates generate strength for a currency since relative Interest Rates and Purchasing Power (via e.g., the Big Mac Burger price comparison) Parity are two key determinants of a currency’s strength. But increasing Foreign Dumping of U.S. Treasury Paper signals the beginning of a move away from the U.S. Dollar and signals increased dumping of U.S. Dollar dominated Assets is to come soon also. Only the Depreciation of other Fiat Currencies and Fed QE has, thus far, prevented the $US dumping from becoming a Rout.

As the dumping increases, ever higher rates will be generated to justify the increased risk of holding U.S. Treasuries. And, mid-to-long term, the $US will move ever lower and then catastrophically lower.

Short-term, however, since the USA is still (but not for long) perceived as the strongest economy vis-à-vis both the Eurozone and Emerging Markets, the $US should remain in the 80-84ish trading range basis USDX.

And U.S. Treasuries, per the 10-year, should continue to trade, short-term, somewhat higher in the 2.6% to 3% yield range, short-term. It is highly likely the Fed will continue QE into 2014 with little or no tapering (though they have and will likely continue to talk tapering on occasion) and that should (but not certainly) support Treasuries in this range for a few more weeks or very few months. But the long-term Trend for the U.S. Dollar and U.S. Treasuries is down, as U.S. Treasuries are a Most Massive “Asset” Bubble ever. Thus Deepcaster has and will continue to forecast when The Takedown of the U.S. Dollar and U.S. Treasury Securities will begin to accelerate.

It is very important to Note that continuing Fed-generated QE will likely become relatively ineffective as we approach and move into 2014. And, as Embry points out, there are already signals that it is already becoming less effective in supporting U.S. Treasuries. Non-U.S. Central Banks and Big Investors are already dumping U.S. Treasuries by the carload. Thus, at some week or month soon even The Fed will be unable to save U.S. Treasuries, which will then really tank (Rates Spike).

“What’s the “deep cyclical risk” Hussman is talking about?

“It’s the risk of a market that has been bubbled up due too much cheap credit. Like any bubble, it floats around until it finds its pin….

“Ordinary people have come to think that Wall Street is there to help them make money. Progress, prosperity and rising asset prices – now and everlasting. Amen. …

“These beliefs are tested. There are setbacks. Shocks. And brief corrections.

“But if these are overcome quickly enough, say by Fed policy, a kind of blind faith takes hold. Investors begin to believe the impossible.

“Now, for example, investors think the Fed “will not allow” a serious correction.

“It should be pointed out, tout de suite , that the Fed can influence the markets. But it does not control them. And the more it influences them, the harder they are to control.

“Why?

“Investors trust the Fed to protect their money... just as the Fed makes their investments less trustworthy! Because the more influence the Fed exerts over prices, the farther they move away from where they ought to be.(emphasis added)

“If the Fed offers makes credit too cheap for too long, for example, stock prices adjust…and soon become higher than they should be. At some point, they are so high – and so far removed from solid values – that the proud tower wobbles, and then collapses, regardless of what the Fed is doing .

And based on what’s happening in the bond market, it appears as though the Fed has already lost control….” (emphasis added)

“CRASH ALERT!” Bill Bonner
Diary of a Rogue Economist, 08/22/2013

Important Warning! : If (when) the Yield on the U.S. 10-year T-Note closes decisively above 3%, the Crash of the U.S. Treasuries Market will likely have begun.

In that event, interest rates for all loan transactions will rise dramatically which will greatly constrain lending. And that will likely be one Catalyst for our Forecast Equities Crash. This is but one reason The Fed has no choice but to continue QE in some form and to continue it until PriceHyperinflation and/or other factors are reflected in the collapse of the $US… Thus, when continuing QE (i.e. Bond Buying) no longer serves to support Treasuries, i.e. to suppress Interest Rates, that will be another signal that Financial Collapse is impending, because that will signal The Fed has lost control of the Bond Market. Such has not definitely happened just yet but we expect it will. N.B. We have already seen the beginning, with the 10-year yield rocketing up from 1.7% to 2.9%ish recently. (Some, including Rob Kirby, whom we respect, think The Fed can control the whole curve indefinitely through OTC Swaps and Forward Rate Agreements. We disagree, because this omits Real World Developments, e.g. QE generated Price Inflation of Real Assets.) We already saw counterparty defaults on Paper Assets in the 2006-09 Crash, and we will see them again, as The Bond Market and the Multi-Hundred Trillion Dollar Derivatives Superstructure Crashes in 2014, or earlier.

Also important to note is that Bogus Official Statistical Data has been used to Conceal Signals of an Impending Meltdown.

Significantly, Egon von Greyerz of Matterhorn Asset Management contends that the United States’ “falsification” of GDP, Inflation, and employment numbers is a sign that the U.S. Dollar is beginning to lose its World’s Reserve Currency status. (See Shadowstats.com for the Real Numbers. Note 1)

We agree. If all were healthy with the Economy, Markets, and U.S. Dollar, what need would there be to falsify the numbers?!

As the yields on long-dated U.S. Treasuries (and thus interest rates in general) increase, this will signal increasing Price Inflation resulting from the past and ongoing QE Price Inflation. And of course this will mean (and has already meant) increasing Crude Oil Price Inflation, a sure Killer for Economic Health. Crude Oil trading above $100/bbl is not solely a result of Mideast Conflict concerns.

Interestingly, Key Technicals are showing a short to mid-term price target for WTI. Crude of $150/bbl or more! This is consistent with an Equities blow-off top which we forecast and then an Equities and Bond Market collapse.

We reiterate, the recent elevated (over $100/bbl) Oil Price can be explained by considering the following: that Equities and Bonds are artificially elevated, Fiat Currencies are losing Purchasing Power due to ongoing QE, and many Commodities Prices are depressed until just now due primarily to China’s slowdown, and Paper Gold & Silver Prices are depressed by The Cartel, and long-term rates are headed up.

Therefore, only Crude Oil has been recently seen as a reliable store of value to many sophisticated Investors. Thus it is not surprising to us that WTI Crude has approached the $110 level recently notwithstanding the Economic slowdown. Part of this strength is due also to QE-generated Real Price Inflation, and to recently reported above-ground supply drawdowns.

Because Crude is essential, with relatively high inelasticity of demand, and because it gets used up, it is not as easily subject to price manipulation though, for sure, its Price is manipulated. Thus a spiking Crude Price provides yet another Signal that Hyperinflation is impending and thus that a Financial Crash is likely to be coming within 18 months or so, and likely sooner than later.

Seeing more Inflation and Financial Crises on the horizon, plus a diminishing of the Purchasing Power of the $US and other Fiat Currencies, the truly “smart” money – sophisticated investors and some Mega-Banks – are intensifying their buying and taking delivery of Physical Gold and Silver. Despite the Cartel Banks’ ongoing attempts to suppress Gold and Silver prices (e.g. via the repeatedly increased tariffs imposed by the Indians) the increasing demand for Physical is squeezing the shorts, and Paper Prices, and The Cartel.

This explains the spikes up in price we are seeing and will increasingly see. It is a war between the Big Cartel Banks (to protect the decreasing Legitimacy of their Fiat Currencies and Treasury Securities), and Savvy Investors of all stripes.

Regarding Equities, The Fed’s tapering (even if somewhat reduced in September – possible, but not likely to be sustained) should continue to buoy the Equities Markets up for a few weeks or very few months more until The Great Crash. (Cf. Deepcaster’s forecasts.)

In sum, though increasingly it looks as if the bottom is nearly in for Gold, Silver, and the Miners, do expect Great Price Volatility and more Cartel Price Takedown attempts.

Physical Gold and Silver held in your personal possession, and Quality Miners stocks are Investors’ best Assets to hold for Protection and Profit to prepare for The Coming Meltdown.

“In times of universal deceit, telling the truth is a revolutionary act.”  

George Orwell

Best regards,

Deepcaster
August 23, 2013

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 August 15, 2013
1.36%     /     9.62%

U.S. Unemployment reported August 2, 2013
7.6%     /     23.3%

U.S. GDP Annual Growth/Decline reported July 31, 2013
1.62%        /     -1.75%

U.S. M3 reported August 20, 2013 (Month of July, Y.O.Y.)
No Official Report     /     4.55% (i.e, total M3 Now at $15.304 Trillion!)

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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