Get Physical with Gold, Strategy for Protection and Profit
Commodities / Gold & Silver 2009 Oct 11, 2009 - 05:48 AMBy: DeepCaster_LLC
(In a meeting allegedly held by the Gulf States, China, Russia, Japan and France it was decided--) “to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese Yen, the Chinese Yuan, the EUR, and a new unified currency planned for nations in the Gulf Cooperation Council.” - Report in The Independent by Robert Fisk October 6, 2009
As a consequence in part of this unconfirmed report the U.S. Dollar took a real battering earlier this week.
Yet in spite of that and all the other market, economic and other uncertainties the U.S. Equities markets bounced blithely higher.
Indeed, anyone who thinks the U.S. Equities and other Major Markets are not rigged should seriously consider the report last week on zerohedge.com. Zerohedge reported that both the S&P and the DJIA returned exactly 14.98% in Q3 to the hundredth of a percent. The odds of that happening as a result of Free Market Action in two stock Universes containing a total of 530 stocks are, to say the least, infinitesimal.
And the policies of the private for-profit U.S. Federal Reserve are no cause for comfort either. Contrarian luminary Marc Faber joins Deepcaster and others who see that The Fed is and has been the Primary Cause of the Asset bubble creation, (and the suffering caused by Asset Bubble bursting) in the past few years
“You have to give credit to Ben Bernanke and Alan Greenspan,” contrarian guru Marc Faber said at the CLSA Asia Pacific Markets investor conference in Hong Kong.
"They have achieved something no central bankers have achieved in history. They created a bubble in everything... The only asset that went down from 2002 to 2007 was the U.S. dollar."
And the only place that didn't grow in the final years of the latest bubble was Zimbabwe, which suffered hyperinflation and economic collapse and was "run by a money printer, Mr. Mugabe, a mentor of Mr. Bernanke," Faber said.
As for the stock market rally: Faber believes money printing is to blame.
“You can’t find anyone more negative about the world than I am,” Faber said.
“But stocks can still go up,” thanks to continued printing of money.
Faber said he actually expects stock markets overall will rise around 7 percent a year over the next decade. In the United States, however, he expects that much of that return will be eroded by inflation driven by an increasing money supply.”
Faber: Bernanke No Better Than Mugabe
Julia Crawshaw, Newsmax.com
October 1, 2009
“They created a bubble in everything” has got it just about right.
We reiterate, the private for-profit Fed is primarily responsible for creating the asset bubbles which have burst, or are now bursting, causing much loss and pain around the world.
There is no need to recapitulate the dismal fundamental (and several key technical) indicators and prospects for the markets, and the economy. (Those who wish to do so can read Deepcaster’s article published on 10/2/09 “Warning Signals Flashing! -- Prepare to Protect and Profit” in the ‘Articles by Deepcaster’ cache at www.deepcaster.com)
What good is it, if the Equities Markets rise 7(or whatever)% per year, if that return is obliterated by an increasing money supply and consequent price inflation?
In other words, what good is an increase in the nominal dollar value of equities if the purchasing power of those U.S. dollars continues to erode as it has considerably (basis the USDX) since 2002?
But, fortunately, Gold and Silver provide not only Safe Havens, as they have for thousands of years, but also are Profit Vehicles, but with certain Caveats described below. Fortunately too, Deepcaster has developed a Strategy to surmount these Caveats, also outlined below.
The first Caveat has to do with the fact that a Fed-led Cartel* of Central Bankers and Favored Financial Institutions overtly and covertly regularly intervenes in the Gold, Silver, Equities, Crude Oil and other markets. Since Gold and Silver are Real Money, they threaten the legitimacy of the Bankers’ Fiat Currencies and Treasury Securities. Thus, The Cartel* regularly intervenes to drive down their prices.
*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 Cartel typically intervenes massively to take down Gold and Silver prices when developments, like the collapse of Bear Stearns, should make them launch higher.
Moreover, there is considerable evidence that The Cartel uses it Interventional arsenal to manipulate other markets as well, as the Zerohedge report cited above supports.
Unfortunately, many of the negative consequences of these Market Interventions are hidden from investors by the gimmicking of official statistics.
Shadowstats.com calculates the numbers the old-fashioned way they were calculated before the era of “Political Statistics” began in earnest in the 1980’s and 1990’s.
Consider, for example, the Official Statistics versus the Real Statistics courtesy of Shadowstats.com
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported September 16, 2009
-3% 5.5% (annualized September Rate)
U.S. Unemployment reported October 2, 2009
9.8% 21.4%
U.S. GDP Annual Growth/Decline reported September 30, 2009
-3.9% -6%
One Pillar of our Strategy for using precious Metals for protection and profit despite Cartel Takedowns, is to recommend acquiring (mainly) Physical Gold and Silver to be held personally, but preferably only under certain conditions.
One excellent reason for developing a Strategy for acquiring Gold and Silver and (with only a few exceptions e.g. well managed Juniors with substantial reserves) only physical Gold and Silver, is revealed in the following Silver Market Analysis, courtesy of Silver Market Aficionado, Jason Hommel.
“I compared the following statistics:
World annual silver investment demand ($1 billion)
World annual gold demand ($80 billion)
Federal Budget ($3,000 billion)
China's foreign exchange reserves ($2130 billion)
China wants to diversify $80 billion into gold.
BIS reports "other precious metals" over the counter derivatives worth $111 billion.
Very few people understood the importance of the last item from the BIS, which will be explained in this report. The BIS is the "Bank of International Settlements". (Ed. The BIS is the Central Banker’s Bank)
The Bank of International Settlements reports there are $111 billion in "Other Precious Metals (IE, Silver) over the counter derivatives, as of Dec. 2008. (We await June 2009 stats.)
http://www.bis.org/statistics/otcder/dt21c22a.pdf
from
http://www.bis.org/statistics/derstats.htm
The BIS keeps track of statistics of most of the banks of the world. This number, the "other precious metals" over the counter derivatives is very important…
How can there be $110 billion of silver investments when the annual silver investment demand is $1 billion?
Think about that.
I think it shows that the $110 billion is all a scam, fraud, nothing but fractional reserve silver accounts!
This over the counter BIS-revealed fraud is the biggest silver fraud in the silver market place.
It is much bigger than the COMEX silver fraud, which is only up to 160,000 contracts of 5000 oz. each, or 800 million oz. of silver by comparison, which is only $13 billion by comparison. The $110 billion is much, much bigger and more important.
The large size alone proves that it's too big to be real silver, because the real silver market is tiny. So, what is that $110 billion, exactly?
It's mostly all silver derivatives, or silver obligations of some sort, and I think it's usually "silver bullion accounts". The other two possible categories are platinum and palladium, but investors only buy about 1% of those two markets, which are also very tiny themselves, so tiny they can be excluded from consideration.
Most of the time, investors who go to buy silver, end up buying paper silver on account with a major bank who does not go out to buy that silver in the marketplace. That's the fraud.
The major brokers first try to discourage any and all such investments into silver. But if the client persists, the client will be persuaded to buy allocated or unallocated silver on account with any of the major banks of the world, usually LBMA member banks…
Check to see if your "silver bank" is on that list!
If you have silver on account with any of those banks, you should carefully think about how all those banks can have $110 billion worth of silver "on account" for all their clients, and let their own number vary by up to $80 billion, as it was $190 billion in the previous period, and yet, the annual silver investment market is only $1 billion.
And the total annual mine supply of silver is only 600 million oz., at $16/oz., is only $9.6 billion.
I would think that banks who owe up to 10 to 20 times worth of annual silver production of silver must be fraud. What do you think?
How many people who own that kind of silver "bullion on account" would be capable of getting real silver, before the silver banking fraud collapses? I'd estimate only about 1-2%, because if even that many converted their silver, it could cause a collapse of the entire system!
How can the silver banking fraud collapse? In many ways. Silver accounts could be mandatorily converted into dollars, or ameros, or pesos. Remember, just a few years ago in Argentina, Americans in Argentina, who held American Dollars in American bank accounts had their accounts frozen, and converted into Argentinean pesos, at a 75% loss, "because of the law".
I'm continually asked if I trust this bank or that bank, or this institution or that institution to hold your silver for you. NO! I don't trust any of them. Look at the size of the fraud. Do the math!”
The Tiny Silver Market, II
(Over the Counter Silver Derivatives, Exposed!)
Silver Stock Report
by Jason Hommel, October 1, 2009
Deepcaster has made the case that those huge OTC Derivative positions are but one aspect of the Massive Interventional Machinery of The Cartel.
Deepcaster has also pointed out that that The Cartel’s control of that Interventional Machinery is very profitable.
“With Key Mega-Financial Institutions around the World claiming in 2008 that they risked collapse if they were not bailed out, one must ask which ones benefited from the $13 Trillion plus Increase in Gross Market Value of their OTC Derivatives in the six months between June, 2008 and December, 2008 when the Equities Markets were crashing and Investors around the World were losing Trillions? A logical Conclusion: Key Central Bankers and Favored Financial Institutions of The Fed-led Cartel*, quite possibly including the shareholders of the private for-profit U.S. Federal Reserve.” (See OTC Derivatives report at The Central Bankers Bank, the Bank for International Settlements (www.bis.org, path: Statistics > Derivatives > Table 19).
Deepcaster, May 29, 2009
We trust that the foregoing has made you skeptical of holding certain forms of paper Gold and Paper Silver (e.g. shares in certain major “Gold” and “Silver” ETF’s) for the long haul. We think that skeptism is warranted in general, with the exception of special situations.
Therefore, we offer a Strategy for protection and profit in Gold and Silver, despite Cartel intervention! In presenting this Strategy we emphasize that Timing of Acquisitions of Gold and Silver is very important. And decisions about timing are facilitated by attention to the Interventionals. (Deepcaster’s current view regarding likely Timing of Moves in Gold and Silver prices are contained in his latest Alert available in the ‘Alerts Cache’ at www.deepcaster.com.)
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 assets such as Strategic Commodities.
We say “normally” because nearly every time yet another Financial Market 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.
Yet, the late 2008 and 2009 Crises appear to be different. Gold launched from the mid $700s/oz. to around $900/oz. during September, 2008, fell back to the low $700s and then launched again toward $900 in December, 2008, has actually exceeded $900 several times in 2009 and has now, in October, 2009 has risen above $1050/oz.
So the question now, in early-September, 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? Deepcaster has very recently addressed this question in a Forecast he issued for the likely fate of Gold, Silver, Crude Oil & the U.S. Dollar in his latest Alert in the ‘Alerts Cache’ at www.deepcaster.com.
One thing is certain: The Cartel will certainly attempt again to take down Gold, Silver and Crude Oil 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.
Yet there is a Strategy which accommodates Cartel Interventional attempts and at the same time provides excellent Profit Opportunities, whether the Cartel 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 somewhat 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 Asset 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 manipulating public opinion via its “Communications Policy” and those are tremendous advantages; 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- engineered Takedowns.
- 3) In order to know when one is likely 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 (just before the Fall 2008 Crash) all of which we subsequent recommended be liquidated 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) Near 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 and/or Retirement Accounts only to have those assets effectively de-valued by Cartel Takedowns U.S. Dollar Devaluation and other Cartel actions. 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 taking three steps:
- a) Become involved in the movement to Audit and then abolish the private-for-profit U.S. Federal Reserve as Deepcaster, former Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. The ‘Audit The Fed’ Bill is H.R. 1207 (and has over 250 co-sponsors); and The Abolish The Fed Bill is H.R. 2755. www.carryingcapacity.org is a nonprofit organization which actively 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 nonprofit 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” in “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 to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever. See Deepcaster’s July 2008 Letter in the ‘Latest Letter’ Archives at www.deepcaster.com.
Additional insights and details regarding this Strategy, which are essential to profiting from The Cartel’s Policies, are laid out in Deepcaster’s article of 3/06/09 entitled “Investor Advantage: Revisiting The Cartel’s ‘End Game’ ” 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.” We reiterate, “Buying and Holding” for the long term rarely succeed 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. Of course, timing is Critical, and the Interventionals are very helpful in determining probable timing of Spikes and Takedowns. See Deepcaster’s latest Alert “INFLECTION POINTS! FORECASTS: Gold, Silver, Equities, Crude Oil, U.S. Dollar and U.S. T-Notes” in the ‘Alerts Cache’ at www.deepcaster.com.
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 obtaining Superpower status, and aid in achieving wealth protection and profits as well.
Best Regards,
By DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
© 2009 Copyright DeepCaster LLC - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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