The Fundamentals
for Gold and Silver have rarely been more bullish.
Peace has not
“broken out” in many places in the world.
The Economy and
Markets are awash with Fiat Currencies and Debt. And the continuing increase
in Money Supply (M3 still increasing at about 5% -- see below) and Debt shows
no sign of abating.
13.54% of U.S.
Home Mortgages are now delinquent or in foreclosure, according to the
Mortgage Bankers Association.
Thus Systemic
Risks reflected in the fragility of the Financial System continue to
increase. The Cascade of small and medium size Bank failures continues, but
the protection offered depositors by the FDIC has just become more tenuous.
As of August 14, 2009 the FDIC was de facto Bankrupt according to a Sovereign
Society Offshore A-letter report.
Henceforward the
FDIC will have to use the $100 billion in back-up funding authorized by the
U.S. Congress.
Moreover, 70% of
the U.S. Economy – the U.S.
Taxpayer/Consumer/and, often, mortgage holder – is no better off after
the Bailouts and Stimulus Bill. These have helped primarily the
Mega-Financial Institutions to continue making extraordinary profits. Indeed,
The U.S. Taxpayer-financed Bailouts allowed these Mega-financial institutions
to commonize costs, risks and losses, but to privatize profits.
Thus Gold and
Silver would be the unquestioned Ultimate Stores and Measures of
Value, and their prices would have already exceeded the 1980 inflation
– adjusted highs ($2,300+ for Gold), if their prices were not
periodically capped by Cartel* intervention (see below).
And the list of
Gold and Silver – bullish Fundamentals is much longer than just
the aforementioned.
Similarly the
intermediate and long-term Technicals for Gold and Silver are
extremely bullish.
Notably, the HUI
price pattern for 2008 and 2009 reflects a beautiful confirmed Reverse
Head and Shoulders targeting 500+.
Similarly the
Gold Technicals also reflect a nearly confirmed (and similarly beautiful, for
TA aficionados) reverse Head and Shoulders with a price Target over $1,300/oz
for Gold.
As well, metals
analyst Peter Grant notes a bullish “symmetrical triangle” AKA a
“coil” like a “spring being compressed as it coils in an
increasingly narrow range.” Such Patterns in Gold have proceeded upward
breakouts, Grant notes.
One could argue
that over the last hundred years the Precious Metals Fundamentals and
Technicals have never been more bullish, with the possible exception of the Weimar
Republic era in Germany
in the 1920s.
But, given this
observation, one can ask why Gold (and Silver) have not already
considerably exceeded their 1980 high, which, adjusted for inflation, would
be at least $2,300/oz, basis Gold.
The answer lies
in The continuing overt and covert interventions by a Fed-led Cartel*
of Central Bankers and favored Mega-Financial Institutions to cap Precious
Metals prices, and, indeed, to manipulate other Key markets, especially
Equities and Key Strategic commodities.
*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.”
The Motivations
for these continuing Interventions is clear. The Cartel does not want the
Precious Metals and Strategic Commodities to be seen as what they are –
the Ultimate Stores and Measures of Value.
Instead, The
Cartel wants their Paper – Fiat Currencies and Treasury Securities
– to be seen as The Ultimate Stores and Measures. In that way they
maintain and enhance their power and profits. See “Coping with the
Superpower-Cartel Threat!” (01/30/2009) in the ‘Articles by
Deepcaster’ cache at www.deepcaster.com.
As well, another
Precious-Metals-Bullish Factor is “The Realities” regarding the
Economy and The Markets, as reflected in the Real Statistics.
Indeed, a
Substantial Cartel advantage is the ability to manipulate and/or
manufacture (e.g. by using the classic technique of ‘Painting the
Charts’) Key Market Price Patterns and Statistics. Thus Key Official
Statistics are often far removed from the Realities of the economy and market
place. For example, consider the latest Real Numbers versus the Official
Versions, thanks to Shadow Government Statistics.
Official Numbers vs. Real
Numbers
Annual Consumer
Price Inflation reported August 14, 2009
-3% 5.5%
(annualized August Rate)
U.S. Unemployment
reported August 7, 2009
9.5% 20.5%
U.S.
GDP Annual Growth/Decline reported July 31, 2009
-4% -6%
All the above
Real Numbers are calculated by Shadow Government Statistics the old-fashioned
way i.e. with the methods used before the official gimmicking of these
numbers began in the 1980’s and 1990’s. See www.shadowstats.com and
click on ‘Alternate Data’.
So it is clear
that now, in August, 2009, we have a set-up for a Showdown at the Precious
Metals Corral. The Fundamentals and Technicals are ragingly Bullish, but the
Interventionals indicate another Cartel Takedown attempt is impending.
Will the
unprecedentedly bullish Fundamentals and Technicals prevail, and launch Gold
and Silver to New highs? Or will Cartel Interventions prevail once more and
again succeed in taking down Precious Metals prices. Deepcaster’s
latest Forecast regarding the likely Outcome of the impending Showdown at the
Precious Metals Corral is available in his latest Alert posted in the
‘Alerts Cache’ at www.deepcaster.com.
In light of the
foregoing, Deepcaster offers the following Guidelines to aid in profiting
from (and protecting against) such a Showdown, whatever the Outcome.
A Strategy for Profit and Protection
Normally, (that
is to say in a Genuine Free Market situation) the go-to “Safe Haven”
Assets in times of Financial Crisis would be the Precious Monetary Metals
Gold and Silver, as well as other tangible assets such as Strategic
Commodities.
We say
“normally” because nearly every time another Financial Market
and/or Economic Crisis has come prominently into the public eye in recent
years The Cartel* has successfully taken down the price of what would
normally be the Safe Haven Assets - - the Precious Monetary Metals.
A prime example
occurred during the much-publicized demise of Bear Stearns in March, 2008,
which was accompanied by a vicious Takedown of Gold and Silver. In a
non-manipulated Market, given the fact that Bear Stearns reflected great and
increasing weaknesses in the Financial System, Gold and Silver should
have skyrocketed. But instead they were dramatically taken down.
Similarly, during
the Fall, 2009 Market Crash Gold was taken down from $900/oz. during
September, 2008, down to the low $700s, when it should have exploded upward.
Yet, it launched
again toward $900 in December, 2008 and has actually traded above $900 for
most of 2009.
So the question
now, near end-Summer, 2009, is it different this time around? Have Gold
and Silver finally thrust off the shackles of Cartel
Intervention? Or will The Cartel be able once again to cap and
take down the prices of these Precious Monetary Metals and Strategic
Commodities?
One thing is
certain: The Cartel will certainly attempt again to take down
Gold, Silver and Strategic Commodities at the earliest opportunity because
the Strategic Commodities and Precious Monetary Metals are Competitors as
Stores and Measures of Value with the Central Bankers’ Treasury
Securities and Fiat Currencies.
Thus Deepcaster
has developed is a Strategy which accommodates Cartel Interventional attempts
and at the same time provides excellent Profit Opportunities, whether the
Interventional attempts are successful or not.
A major premise
of The Strategy is that one can certainly remain a Hard Assets Partisan
(as Deepcaster is) while at the same time insulating oneself from future
Takedowns. The following points provide an outline of The Strategy
(particularly as applied to the Gold and Silver Markets) and are designed to
help avoid Portfolio unpleasantness, or even possible financial ruin, in the
future, as well as to profit along the way:
1)
Recognize
that The Cartel is still Potent, as difficult as that may be psychologically
for Deepcaster and other Hard Assets Partisans to acknowledge. The
Cartel is still the Biggest Player in many markets and, if the timing
and market context are propitious, the Biggest Player makes Market
Price. In addition, The Cartel has the advantage of de facto
controlling the structure and regulation of various marketplaces and that is
a tremendous advantage; just as the Hunt Brothers years ago discovered much
to their dismay and misfortune, when they tried to corner the Silver Market.
2)
Accumulate
Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
3)
In
order to know when one is near the bottom of a Cartel-generated takedown, it
is essential to take account of the Interventionals as well as the Technicals
and Fundamentals. Paying attention to the
Interventionals facilitated Deepcaster recommending five short equities
positions as of early September 2008 (just before the Fall Crash) all of
which we subsequentially recommended be liquidated quite profitably.
4)
For
example, regarding Gold & Silver, near such Interim Bottoms, accumulate a
combination of the Physical Commodity (Deepcaster prefers “low premium
to melt” bullion coins) and well-managed Juniors with large
reserves. (Deepcaster provides a list of such Junior Candidates in our
December 20, 2007 Alert “A Strategy for Profiting from Cartel
Intervention” available in the Alerts Cache at www.deepcaster.com.)
The “Physical” and “Juniors” are for holding for
the long-term as a Core Position.
5)
Then,
to the extent one wishes to speculate on the next “long” move,
one should buy the major producers or long-term call options on them.
These latter positions are for ultimate liquidation at the next Interim Top
and are not for holding for the long-term.
6)
However,
there will be a time when The Cartel price capping is ineffective and Gold
& Silver make record moves upward. The benefit of this Strategy is
that one will likely be long in one’s speculative positions when this
happens.
7)
Near
the next Interim Top, liquidate the long options and majors. Again, in
order to know when we are close to the next Interim Top, it is essential to
monitor the Interventionals, as well as Fundamentals and Technicals.
8)
Near
that Top, sell short or buy puts on Majors. We re-emphasize the Majors
as preferred vehicles for trading positions because such positions are more
liquid and tend to be quite responsive to Cartel moves.
9)
At
the next Interim Bottom, cover your shorts and liquidate your puts and go
long again to begin the process all over again. We emphasize that it is
essential to consider the Interventionals as well as the Fundamentals and
Technicals in order to determine the approximate Interim Tops and Bottoms.
10)
Finally,
Hard Assets Partisans have the opportunity to become involved in Political
Action to diminish the power of The Cartel. It is truly outrageous that
the average unsuspecting citizen, and prospective retiree, can and does put
his hard won assets in Tangible Assets only to have those assets effectively
de-valued by Cartel Hard Assets Takedowns and Taxpayer-funded Bailouts of
Cartel Members and favored financial Institutions. This is extremely
injurious to many average citizens in many countries who are saving for the
rainy day or retirement and have their retirement and/or reserves effectively
taken from them. In order to help prevent this and similar outrages, we
recommend three possibilities:
a)
Become
involved in the movement (first to audit and then) to abolish the
private-for-profit U.S. Federal Reserve as Deepcaster,
ex-Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers,
all have advocated. Rep. Paul has introduced the ‘Audit the
Fed’ Bill H.R.1207 (which already has a large majority of U.S. House of
Representatives Members as co-sponsors), as well as the Federal Reserve
Abolition Act, H.R.2755. The non-Profit activist organization www.carryingcapacity.org
strongly supports these bills.
b)
Join
the Gold AntiTrust Action Committee, which works to
eliminate the manipulation of the Gold and Silver markets
(www.gata.org). GATA is a non-profit organization, which makes a great
contribution by gathering evidence regarding the suppression of prices of
Gold, Silver and other commodities.
c)
Work
to defeat The Cartel ‘End Game.’
Deepcaster has laid out the evidence regarding the Ominous Cartel “End
Game.” See “Coping with Power Moves in the Cartel's ‘End
Game’” (04/24/2009) in the ‘Articles by Deepcaster’
cache at www.deepcaster.com. Clearly The Cartel is sacrificing the U.S.
Dollar and the “Main
Street” Taxpayer/Investor to prop up Favored
International Financial Institutions and to maintain its Power and Profits.
But this sacrifice cannot continue forever. (For an expose of the details
regarding $13 Trillion in Cartel Profits Made in the Fall, 2008 when Equities
Markets were crashing see “Opportunities & Threats in Derivatives
Shocker” (05/29/2009) in the ‘Articles by Deepcaster’ cache
at www.deepcaster.com.)
If this
aforementioned Strategy is employed effectively, it can result both in an
increasing Core Position in Gold and Silver, and in considerable profit along
the way.
Additional
insights and details regarding this Strategy which are essential to profiting
from the private for-profit Fed’s Policies, are laid out in
Deepcaster’s article of 9/26/08 entitled “Protection and Profit
from Bailouts Failed to Doom” and 6/30/06 “Profiting from Cartel
Intervention”, in the ‘Articles by Deepcaster’ Cache at
www.deepcaster.com.
Protection and
profit require Proactivity and attention to the Interventionals, Fundamentals
and Technicals, not “Buy and Hold.” “Buy and
Hold” rarely succeeds anymore as current market conditions attest.
Indeed, the Key
Point of the Strategy for Protection and Profit is careful attention not only
to the Fundamentals and Technicals but also to the Interventionals.
These Overt and Covert Cartel-generated Interventions have the power
to move markets as those who study the matter can attest.
Thus, the Key to Profit and Protection is
a Strategy: Successful Investors must become Long-Term Position
Traders, with their trading choices informed by the Interventionals, as well
as the Fundamentals and Technicals. Moreover engaging in the Actions
suggested above can help prevent The Cartel’s solidifying its
Superpower status.
Best regards,
Deepcaster
LLC
Deepcaster.com
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