“The
only thing more certain than Death and Taxes is that when anyone from the
Federal Reserve speaks or writes, it is with the specific purpose of
misguiding the public,”
John
Pugsley, Chairman, The Sovereign Society
Savvy Investors and Traders now have a relatively new Tool to help
them combat the Fed-led Cartel’s* market manipulations (see below), and
especially in the Markets typically targeted by The Cartel – Precious
Metals and Strategic Commodities.
We refer to Exchange Traded Funds (ETFs) in General and
particularly, to the 200% and 300% Leverage ETFs. But by themselves these
ETF’s are only a tool. Thus we also offer a strategy for profiting and
protecting from Cartel Interventions. But first consider the ETF tool.
The 300% leverage ETF’s are Exciting Newcomers to the Exchange Traded Funds Territory in recent
months.
These Funds seek leveraged investment results which are triple that,
on a daily basis, of the underlying benchmark index, in the case of
the ‘Long’ Funds, and triple the Inverse of the underlying
benchmark index in the case of the ‘Short’ funds.
Clearly, a Major Positive
of such Exchange Traded Funds is the substantial avoidance of the Time and
Risk Premium decay inherent in Options. By substantially eliminating that
Premium decay, one barrier to Profit is removed.
Clearly, also, a Major Negative is that the losses which
result from an incorrect (see below) judgment about the direction of a
particular Market Sector are magnified threefold or more with potentially
catastrophic results.
Yet in our view these Triple Funds have their place, and not just
for hedging, but for profit plays as well (cf. our experience below), but for
sophisticated investors only.
A benefit in using these funds is that precise timing becomes
somewhat less important, provided one gets the Direction of the next major
move right.
Another major advantage -- particularly in today’s Markets in
which ‘Buy and Hold’ rarely works anymore -- is that one can
profit whether markets rise or decline. When we last checked there were about
as many 300% leverage inverse (i.e. short) funds, as there are
“long” funds.
Indeed, in considering these Funds it is essential to seriously
digest the Disclaimer introducing the Prospectus of Direxion Funds (the major
provider of these 3x Funds) as well as to read the Prospectus which states,
in pertinent part:
“…each
Fund offered in this Prospectus seeks daily leveraged investment results. The
return of each Fund for periods longer than a single day, especially in
periods of market volatility, may be completely uncorrelated to the return of
the Fund’s benchmark for such longer period…”
The statement that these Funds seek “daily leveraged
investments results” is especially important. In our experience,
holding these ETF’s for longer than a day or two may well result in the
performance not achieving a triple leverage of the benchmark
performance. This is not necessarily a negative, but is a factor which should
be taken into consideration when speculating with these Funds.
Indeed, if the benchmark index moves in the direction one does not
expect; one can be worse off, much worse off, than one might naively
expect.
This is due to the effects of compounding, also known as beta
slippage. Consider a hypothetical ETF that promises twice the return of an
index. Let’s say you buy a share of the ETF for $100 while the
underlying index is at 10,000.
If the index goes up 10% the next day to 11,000, your ETF will go up
20%, to $120. If the index goes from 11,000 back down to 10,000 the next day,
that’s a decline of 9.09%, which means that the EFT will go down twice
this much, or 18.18%.
A decline of 18.18% from the $120 price of the ETF will leave it at
$98.18. So even though the index ended up right back where it started, the
ETF is down 1.82%! i.e. more than one might naively expect.
But, remember, this 1.82% loss happened because the investor
“bet” wrong on direction.
The investor bet the Market would rise when, in fact it whipsawed.
And remember also that if the Index does move in the
direction the Investor expects, then returns can be better than he
might naively expect, also due to compounding. Over time this can compensate
for losses due to moves in the “wrong” direction.
As well, losses from the compounding problem (example above) may
well be less than those one would have suffered had one suffered time and
risk premium erosion inherent in holding options on the same index. Bottom
line: while there is no free lunch, some lunches are better bargains than
others. A speculation is a speculation and leveraged ETF’s are most
definitely speculative vehicles.
Thus, our view is ‘So what if triple leverage results are not
achieved if the triple leverage ETF is held for longer than a day or
two?!’ We recently profitably concluded a speculative experiment of
sorts in our Deepcaster High Potential Speculator Portfolio. About 6 months
ago we recommended a triple leverage long equities fund. And just a few days
ago we recommended it be liquidated for a 43% profit in just over six months,
about an 80% return annualized!
So we repeat: “So what if it did not achieve 300% of the
Index’s gain because it was held for more than a few days?! It did
provide leverage for a juicy return in just a few months.”
Having recounted this we must emphasize that there are risks
associated with these funds which are not explicitly addressed in the
Direxion Disclaimer.
1.) We reiterate our observation that, even on a
daily basis one may, at best, expect to achieve only approximate
triple leverage, which is unsurprising to us.
But the key point is
that to the extent that performance fails to achieve the “triple”
leverage goal, those “failures” can be magnified if one of these
ETF’s is held for multi-day periods as demonstrated above.
This experience does
not necessarily argue against using these Funds, or against holding them for
multi-day or even multi-week periods, but rather is an important factor to be
considered.
2.)
As
research regarding the Funds confirmed, some of the planned Triple Funds are
not even operational yet, and others have been operational only a short time.
They
thus lack a Track Record on which to base an informed judgment.
3.) Some of the Funds, and especially those which
have only recently become operational, are thinly traded. That suggests they
could experience impaired liquidity and impaired performance.
4.) Any investor or Trader who has an aversion to
great volatility should not use these Funds. They are extremely
volatile, with their price jumping up and down like a jackrabbit in a
hailstorm. Indeed, the profitable triple leveraged long position we referred
to above was substantially underwater for several days during the six months
in which it was in the portfolio. One must have nerves of steel to hold such
funds.
Nonetheless
for sophisticated, adequately capitalized, speculators (the only
persons who should use these funds) the Funds can be a profitable, albeit a
highly Risky, Tool.
5.) These Funds, as de facto ‘Market
Basket’ Surrogates for Sectors, allow one to minimize the (recently
greatly increased) risk in investing in any one particular company. Who
knows which companies have massive exposure to Toxic Derivatives which can
Rapidly result in dramatically reduced share values or even in their demise. Two
years ago who would have thought the Derivatives Toxin would have caused
Lehman Brothers to collapse?
A list of these 300% Leverage Long and Short Funds, as well as their
symbols, is contained in Deepcaster’s June, 2009 Letter available in
the ‘Latest Letter’ cache at www.deepcaster.com.
II. Background and Guidelines for The Profit Strategy.
The advent of 200% and 300% Funds with the aforementioned advantages
(and risks!) puts sophisticated investors and traders in a better position to
benefit from the following Strategy:
1. Taking advantage of
Proliferating Paper. Thus far, the Lion’s Share of the benefits of
the Bailouts and Stimulus legislation and actions of the Federal Reserve and
Treasury, has unfortunately gone directly or indirectly to the Mega Banks,
much to the detriment of the regional and smaller bankers and to typical
Tax-payers/Consumers/Investors.
But A Key Fact is Ordinary Investors/Taxpayers/Consumers are 70% of
the U.S. GDP. Until that massive Sector is significantly helped, there can be
no long term sustainable economic recovery or market rally. We need a
“Bottom Up” Recovery Strategy, because the “Trickle
Down” one is doomed to fail (see “The Financial Crisis
Solution” (11/26/08) in the ‘Articles by Deepcaster’ cache
at www.deepcaster.com.
In this regard, consider that the Bailout Schemes
and Stimulus/Spending Bills are all “funded” primarily through
borrowing (by U.S. Taxpayers, from the private for-profit U.S. Federal
Reserve); but it was excessive borrowing and the accompanying Toxic OTC
Derivatives Creation which (and especially the employment of inadequately
secured Credit Default Swaps, all encouraged by the private for-profit Fed
whose policies) were the prime cause of our current crises in the first
place. Yet this proliferating paper is already finding its way into the
equities markets, serving as fuel for the spring and early summer Rally. Deepcaster
forecasts which Sectors should be most helped by this capital infusion in his
latest Letter and Alert at www.deepcaster.com.
2. Crises caused by the
excessive borrowing and spending can not be cured by more borrowing and
spending!
Yet,
the U.S. Taxpayer is repeatedly asked to borrow, at interest, even more Trillions
(which the private for-profit Fed prints for free out of thin air or with a
few keystrokes) from the private for-profit Fed to fund bailouts of (mere
congressmen and Taxpayers are not told which) private financial institutions.
Several of these have gone on to award tens of millions in bonuses to their
employees.
Perhaps
the most important dangerous consequence of these Trillions in borrowing is
the fact that this debt can never be repaid without destroying the U.S.
Dollar in the long run, a consideration which must be addressed to achieve
protection and profit. Consider the following Realities:
3.
The
Debt Burden of the U.S. Government (and therefore the U.S.
Taxpayer) burgeoned in 2008 and even more in 2009, and is still burgeoning if
one counts the borrowing required to fund the government (Taxpayer) Bailouts,
Guarantees, Loans and Authorizations. That Debt Burden was caused
primarily by deleterious U.S. Fed policies, as we explain below and elsewhere;
In
fact, the U.S. Government’s (Taxpayer’s) Debt Burden has grown
far beyond its capacity ever to repay without a dramatic degradation
in the purchasing power of the World’s Reserve Currency, the U.S.
Dollar. That is because trillions more U.S. Dollars must be printed and
borrowed by the U.S. Taxpayer from the private-for-profit U.S. Fed to meet
ongoing obligations.
Of
course, U.S. Taxpayers must pay “interest” to the
private-for-profit U.S. Federal Reserve on those borrowings, thus further
increasing the impossibly high debt burden.
Indeed, given that
the present value of all the downstream-unfunded U.S. Government liabilities
was (at the end of 2008) well in excess of $60 trillion, a further dramatic
destruction of the purchasing power of the U.S. Dollar is “baked into
the cake over the next very few years.” One of the several
negative consequences of the ensuing crises will be the further
impoverishment of those reliant on U.S. Dollar income - - mainly the U.S.
Taxpayer/Consumer, and many investors around the world.
Thus one consequence
of these Fed-facilitated credit and monetary excesses is that the economic
and investment landscape has now been seriously damaged for many years to
come.
4. The Generator of 70%
of U.S. GDP, the U.S. Taxpayer/Consumer/Debtor, is increasingly Financially
Imperiled, as are small businesses Neither has been helped much
by the Bailouts and Stimulus/Spending Bills.
In
fact, no Lasting Remedy for the Financial and Economic Crises can be achieved
unless small businesses and the typical U.S. Consumer/Taxpayer/Debtor is
restored to at least some degree of economic health and is thus able to
continue paying mortgage and other credit obligations. But no
significant help has yet been provided to the typical
Consumer/Taxpayer/Debtor or small business by the Obama Administration or The
Fed and their situation is worsening daily.
Of
course, as the ongoing Crises indicate, believing the claim that “The
System has been saved” by the 2008 bailouts of Favored Financial
Institutions is Delusional. In fact, the Bailouts have done no such
thing, but have mainly served to “Save the Bacon” and/or line the
pockets of the Reckless and Greedy Wealthy in certain Fed-Favored Financial
Institutions.
Thus, given the continuing deteriorating health of the economy and
the consumer, coupled with 20% (and increasing) Real U.S. Unemployment (see below), more defaults and a continuation of the ongoing economic and
financial crises are sure to come.
Specifically, the aforementioned will continue to cause defaults in
the vast ($592 Trillion see (www.bis.org) dark OTC Derivatives Markets
and increasing weakness in the Economy and Equities Markets. (see below)
In sum, the deterioration of the Economy and Markets has only just
begun and will likely take three to four years to bottom.
The
aggregate effect is that we will be tortured by the threat of Systemic
Collapse for years. Thus, the Assumption that the Strategy of
investing-as-usual to “Buy and Hold” for the long-term, will
generate profit will, in many cases, be an utterly false and profitless
Fantasy.
5. The True State of the Economy is much worse than the Official Figures suggest.
As the
Real Numbers mentioned below demonstrate, our ongoing economic and financial
crisis is not merely a “normal” business cycle
Recession, but a System-Threatening Crisis. Indeed, we have entered
into a Depression. (see below)
It is
thus another Naïve and False Assumption that the Official Figures
accurately reflect the state of the Economy and Markets - - for example,
that the current Recession is merely a normal “business cycle”
phenomenon.
Making
matters worse, Investors and citizens-at-large are misled by Official
Statistics which have been gimmicked, as shadowstats.com demonstrates. All
of the following Genuine Numbers are calculated by shadowstats.com, which
calculates them according to traditional methods used in the 1980s, and early
1990s, before The Political Adjustments currently being utilized began.
Consider
the following Real Numbers from shadowstats:
U.S. Consumer Price
Inflation (CPI) actually averaged about 11% annualized for much of
2008, rather than the 5% to 6% figures, which have been reported as Official
Statistics. Thus, the consumer must cope with diminished purchasing
power and the threat or reality of job loss.
Though
Official Figures show CPI dropping to 0% in early 2009, the July 2009 report
reveals that Real CPI was still about 6% annualized.
U.S.
Unemployment has (according to Official Numbers) been ranging 4% to 6% from 1995
to 2007, spiking “only” to about just under 7% in late 2008 and
9.4% in mid 2009. In fact, Real U.S. Unemployment in 2009 is now about
20.6% and is still increasing. Thus the consumer (70% of
U.S. GDP, we reiterate) is increasingly unemployed, under-employed, and
indebted.
Indeed,
regarding the gimmicked Official Unemployment numbers released August 27, 2009
“Underlying
economic series, shy of the related seasonal distortions in new claims for
unemployment and the ISM manufacturing index, are consistent with a monthly
July jobs loss in excess of 600,000, and a further increase in the
unemployment rate…
The July 2009
seasonally-adjusted U.3 unemployment rate showed a statistically-insignificant
decrease, to 9.36% +/- 0.23% (95% confidence interval), from 9.51% in
June. Unadjusted U.3 held at 9.7% in July. The broader June U.6
unemployment rate eased to an adjusted 16.3% (16.8% unadjusted), from 16.5%
(16.8% unadjusted) in June.
During the Clinton
Administration, "discouraged workers" — those who had given
up looking for a job because there were no jobs to be had — were
redefined so as to be counted only if they had been "discouraged"
for less than a year. This time qualification defined away the long-term
discouraged workers. Adding them back into the total unemployed, unemployment
in line with common experience — as estimated by the SGS-Alternate
Unemployment Measure — held at about 20.6% in July.”
John Williams’
Shadow Government Statistics, Flash Update, August 7, 2009
As well, the Delusion
of Economic Growth claimed by Official Statistics is just that - - a
Delusion. Real GDP growth has been negative since 2004.
Indeed, in mid 2009 GDP “growth” is a negative 5.9% according
to the August 1, 2009. (shadowstats.com) Thus the consumer is faced
with a deteriorating economy, as well as diminishing job prospects and
purchasing power.
As well, the 2008
U.S, Federal Deficit, rather than being about $1 trillion as reported
officially, is over $5 trillion if one includes Social Security and
Medicare. And, if downstream-unfunded U.S. obligations are included,
the U.S. National Debt is nearly $70 trillion and rising!
In
sum, Deepcaster agrees with Shadowstats conclusion that ‘the U.S.
Economy is in a Multiple-Dip Depression.”
But
knowing the Real Numbers is essential to profiting and protection.
Knowing
these Real Numbers facilitated Deepcaster’s recommending
“Opportunities in the Impending Perfect Storm” - - the title of
his early September, 2008 (pre-Crash) Article warning of the impending Crash
(available in the Articles Cache at www.deepcaster.com) and his making five
short (and subsequently quite profitable) recommendations to subscribers at
about that time.
6.
Bailout/Stimulus
Realities
In the
meantime however, the paper infusion of hundreds of billions of Taxpayer
Funds mainly into the Globalist Mega Banks (several of whom are likely shareholders
of the private for-profit Federal Reserve) can provide substantial profit
opportunities for Investors.
Considering
the overall situation, the trillions of U.S. Dollars in total commitments and
guarantees provided by the U.S. and United Kingdom are equivalent to 90% of
their GDPs. This staggering number primary reflects the magnitude of the
paper provided mainly to the mega financial institutions. The trillions
provided by U.S. and United Kingdom Central Banks has been widely reported.
But the
fact that these Trillions have benefited primarily the Mega Financial
Institutions, to the detriment of the smaller banks, Investors and Consumers
who are paying for it all has been less well reported. Professor
Morici’s recent article entitled “Taxing Granny to Pay Goldman
Sachs” says it all.
But
this Monetary and Credit Expansion Deluge does provide the Profit Opportunity
we describe below. First, though we address another “Elephant in the
Room.” Reality essential to understand in order to implement a
successful Profit and Protection Strategy. -- OTC Dark Derivatives.
7.
OTC
Dark Derivatives
As Deepcaster has pointed out on
several occasions, the explosion of over-the-counter (i.e. not exchange
traded and therefore “dark”) derivatives, now total $592 Trillion,
according to the last publicized accounting by the Bank for International
Settlements (The Central Bankers Bank). This dwarfs the nearly $60 trillion
in current notional value of Exchange Traded (i.e. publicly traded)
derivatives. Taken together there are nearly three-quarters of a quadrillion
in Derivatives outstanding. Note also that this “Dark” Market
is ten Times larger than the public Market!
That
is over ten times the amount of the entire Annual Global Product. Yet
OTC Derivatives are not publicly traded. Therefore, if a substantial
number of parties to those derivatives default as they began to do in 2008,
we have increasing Systematic Risk.
Yet as
Deepcaster pointed out in his January, 2009 Letter available at www.deepcaster.com, these derivatives
and infusion of money and credit provide two significant opportunities for
profit, provided one can reduce the inherent risks:
a) A chunk of the massive infusion
of tremendous amount of paper into the market via the stimulus and Bailouts
is available to purchase equities (witness the ongoing Bear Market Rally) and
other goods (albeit not without risk). Investors can make substantial profits
if their timing and Sector choices are right, and provided they take profits
when they have them. This is essential given the hyperinflationary effect of
the vast expansion of Money and Credit.
b) The ever-increasing notional
value ($592 trillion plus as of December, 2008) of Dark Derivatives (coupled
with two other interventional vehicles noted below) has for several years
allowed massive ongoing Overt and Covert Market Interventions in Most
Major Markets by the Fed-led Cartel* of key Central Bankers and favored
financial institutions and allies. These Interventions leave
“Tracks” which allows the generation of
“Interventionals”. Analyzing these Interventionals’
“Tracks” is essential to successful investing and trading in
today’s markets, notwithstanding a traditional reliance (still
justified, except when The Interventionals override them) on
fundamentals and technicals.
*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, 2008 Letter
containing a summary overview of Intervention entitled “A Strategy
for Profiting from the Cartel’s Dark Interventions & Evolving
Techniques” and Deepcaster’s July, 2009 Letter entitled "A Strategy
For Profiting From The Cartel’s Dark Interventions & Evolving
Techniques - II" in the “Latest Letter” Cache at
www.deepcaster.com. Also consider the substantial evidence collected by the
Gold AntiTrust Action Committee at www.gata.org
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.”
Thus
it is appropriate to review the profit Potential inherent in monitoring the
interventionals and in the massive infusion of paper into the economy.
8. Overt and Covert Market Intervention
and Data Manipulation by a Fed-led Cartel* of key Central Bankers and
their Allies and Factota serve to hide key negative market, financial and
economic realities from investors around the world much to their detriment.
The
Fed-led Cartel’s Covert Interventions work to periodically take
down Precious Metals prices, control the levels of Equities Markets and
manipulate the price of Crude Oil and other Strategic Assets. The
Cartel apparently employs at least three vehicles to conduct their Covert Market
Interventions.
a) A substantial portion of the
About $592 trillion in Dark OTC Derivatives positions (as of December,
2008 as reported by the BIS (www.bis.org Path:
Statistics>Derivatives>Table 19)
b) The Repurchase Agreement
(REPO and POMO) Pool
c)
The TLSF
Pool
For details on each
of these three Vehicles and on this Interventional Regime in general, see
Deepcaster’s December, 2008 Letter and July, 2008 Letter referred above
at www.deepcaster.com.
Three
(of several) key negative consequences of this Overt and Covert
Interventional Regime are that:
a) It prevents genuine market
forces from operating
b) It makes the financial and
economic systems reliant on, and, simultaneously, vulnerable to
the Cartel’s Market Intervention Regime and on gimmicked, and quite
inaccurate, Official Statistics.
c) It presents a false picture of
Economic and Financial Realities and prevents the Market from purging
unsuccessful businesses, lightening debt burdens, and generally making wise
business, financial, and political decisions, thus postponing any possible
recovery for years.
However
if one regularly tracks The Interventionals, as Deepcaster does, it provides
one an edge in investment and Trading decisions. See Deepcaster’s
Front Page (www.deepcaster.com) for details.
III. The Strategy – Guidelines for Identifying
Opportunities for Profit and Protection
1.
Get
the Real Data. As many Investors suspect, Crucial Official Government and
Agency Economic and Financial Data are of questionable validity. The
Data set forth above from shadowstats.com is a good starting point.
Educate yourself about the realities of the marketplace
using Alternative Data Sources such as Deepcaster, Gold Anti-Trust Committee
(www.gata.org), and shadowstats.com. Gathering and staying attuned to
authentic information regarding the marketplace can save one much financial
grief as well as positioning one for profit.
2. Take Account of both
Overt and Covert Cartel Intervention. Many of these same
investors who suspect Official Statistics also rightly suspect that the
private-for-profit U.S. Federal Reserve and/or Central Banks overtly and
covertly manipulates Major Markets. But they might not be aware that covert
Market Interventions and Data Manipulation are likely far more pervasive than
generally believed, as detailed in Deepcaster’s articles mentioned
above.
As well, such investors may not have thought systematically about
how one copes with and profits from such Intervention and Data Manipulation.
Consider one example of Cartel Intervention: the Traditional and
Legitimate Safe Haven from inflation, deflation, and risk, is Gold. Yet,
Gold has, during the recent periods of extreme financial market turmoil, been
taken down in price from its highs of over $1000/oz down to around the
mid-$700 level (e.g. 2008) when it should have skyrocketed.
In early March, 2008 Gold was over $1000/oz. when the
Bear Stearns Crisis revealed the fragility of the Financial System. Gold
should surely have skyrocketed then. Instead, it was brutally taken
down. Were its price not manipulated, Deepcaster’s view is that
its price would be over $3,000.00 per ounce today.
Deepcaster and others, including the Gold AntiTrust
Action Committee, have offered considerable evidence that the Cartel* of
Central Bankers and Favored Financial Institutions are the culprits behind
these dramatic and devastating Takedowns. See Deepcaster’s Alert of
12/25/07 “A Strategy for Profiting from Cartel Intervention in Gold,
Silver, Crude Oil and Other Tangible Assets Markets” in the Alerts
Cache at www.deepcaster.com.
But there is a Profitable Refuge from Market Intervention and Data
Manipulation. That Profitable Refuge lies in the Strategy described in the
aforementioned Alert, certain characteristics of which we outline here:
3. Recognize that the
“Buy and Hold” strategy rarely succeeds anymore. The
Eminence Grise of Newsletter writers, Harry Schultz perhaps put it the best
when he stated that “buy and hold no longer works anymore, even with
Gold.” Recent Market Developments should suffice to demonstrate
this principle!
4. Track the Covert
Interventionals as well as the Technicals and Fundamentals and Overt
Interventionals. Tracking the Footprints, as it were, of the Covert
Interventionals (e.g. the Repo and TSLF Pools) daily can often, but not
always, give one excellent clues about The Cartel’s next likely
Interventional Move - - such clues are essential to preserving wealth and
making profits. Deepcaster’s tracking of The Interventionals, for
example, allowed him to recommend five short positions going into
September, 2008, (i.e. before the Market Crash) all of which he has
subsequently recommended be profitably liquidated.
5. Perhaps most
important, be prepared to go both long and short Major Market Sectors - - long near the
bottoms of Interim Takedowns and short near Sector Tops. The Interventionals
are essential to helping identify these tops and bottoms. In
Deepcaster’s view, it will be increasingly difficult to achieve a net
profit for one’s portfolio if one is unwilling and/or unable to
“go short” as well as “long”.
The
Blossoming of the 200% 300% (and other) leveraged ‘short’ and
‘long’ ETF’s described above provide a superb opportunity
to go short and long with ease, but not, as we explain above, without risk.
6. Be aware of the
overall Geopolitical Landscape in order to gain an adequate understanding of
how that Landscape might affect the present and future direction of the
Markets. It is essential that one understand the motivations of the major
players in the market and the resources at their disposal.
For example, a Major Motivation of the U.S. Federal
Reserve and other key Central Banks is the protection and enhancement of the
legitimacy of their Treasury Securities and Fiat Currencies as Measures and
Stores of Value. Therefore, one can understand that one of their Major Goals
will be to attempt de-legitimize Gold, Silver and the Strategic Commodities,
including especially Crude Oil, as Stores and Measures of Value. With this in
mind, the periodic takedowns of Gold and Silver and, since July, 2008, of
Crude Oil, become understandable. Moreover, such an insight applied daily to
the market can result in a tremendous edge in understanding market
performance, present and future.
Moreover, regarding the assets at The Cartel’s
disposal, if one tracks the Repurchase Agreement and TSLF Pools regularly, as
Deepcaster does, and is aware of the other Interventional tools that The
Cartel has at its disposal, then one gains a considerable edge.
Conclusion:
The Rampant Monetary Inflation reflected in M3 and in the various
bailouts and loans is measured in the trillions of Dollars. And this
tremendously increased monetary base is available to temporarily
inflate the paper value of the Equities and other Markets, when money
managers first think the markets have a chance for a sustained (for a few
months only) Rally, and, when The Cartel Interventional Regime
“agrees” with them.
Thus, given that the financial system and key heavyweight investors
are awash with printed and borrowed money, after a brief correction, certain
Key Sectors should again explode upward until the long-term negative Economic
and Financial Fundamentals drag them down again. Of course, this will
not happen in one fell swoop, it will happen in Spurts, the forecast timing
of which we set forth in our Latest Letter and Alerts available at
www.deepcaster.com.
Caveat and Conclusion: Until demonstrated otherwise, a
continuation of the recent rally is nonetheless a ‘Bear Market
Rally’. Such Bear Market Rallies are treacherous and often
rapidly reverse themselves, turning gains into losses. Thus, it is
especially important to monitor the Interventionals, as well as the
Fundamentals and Technicals, very closely!
"Note: Deepcaster provides a list of 'Frontier' ETFs, and
identifies one with especially great potential, in his latest Alert, posted
in the 'Alerts Cache' at www.deepcaster.com."
Source: Bank for International
Settlements
www.bis.org, Path: Statistics
> Derivatives > Table 19
Best
regards,
Deepcaster LLC
Deepcaster.com
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