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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Impending Gold and Stock Market Moves and Banking Cartel Interventions

Stock-Markets / Financial Markets 2010 Jan 22, 2010 - 12:26 PM GMT

By: DeepCaster_LLC


Best Financial Markets Analysis Article“What would happen if a country tried to leave (the European) Monetary Union…

Half a century of ever-closer union has created a ‘new legal order’ that transcends a ‘largely obsolete concept of sovereignty’ and imposes a ‘permanent limitation’ on the states' rights

…the author argues that eurozone exit entails expulsion from the European Union as well…” (emphasis added)

Withdrawal and Expulsion from the EU and EMU: Some Reflections.” European Central Bank quoted in “ECB prepares legal grounds for euro rupture as Greece festersAmbrose Evans-Pritchard, The Telegraph, London, January 17, 2010


“…the profits and remuneration policies of the banks are more than a fleeting problem...

The next stage must be scrutiny of the structural distortions that allow these institutions to rack up such huge profits. Broadly speaking, the leading players in at least three areas of investment banking – wholesale markets, underwriting and mergers and acquisitions – have been operating natural oligopolies.

Their profits have been in significant part a reflection of the absence of robust competition. There are different reasons for this in the different areas of business… But as long as they are not addressed, the banks will make profits – or more accurately, extract rents – out of all proportion to any contribution they make to the wider economy.” (emphasis added)

How the big banks rigged the marketPhilip Stephens, Financial Times, January 18, 2010 Quoted in “The Banking Oligarchy Must Be Restrained For a Recovery to Be Sustained” from Jesse’s Café Americain,


“…in every major US financial panic since at least the Panic of 1835, the titans of Wall Street – most especially until 1929, the House of JP Morgan – have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking.  The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry…They are, in short, old hands at such financial warfare to increase their power.

Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.             That process of using panics to centralize their private power created an extremely powerful concentration of financial and economic power in a few private hands…”

“Behind the panic:  financial warfare over future of global bank power” F. William Engdahl, October 10, 2008

Those who disbelieve the claims that the International Mega-Bank Elite – The Cartel* as we call them – are aiming for World Domination and World Government, are advised to carefully consider the bolded quotes in the Ambrose Evans-Pritchard article above.

These quotes are from the European Central Bank, which is brazen enough to extend the ambit of its policy far beyond banking to opine that (National) “Sovereignty” (is a) “largely obsolete Concept.”

Not only does European Contingent of The Cartel* arrogate to itself the right to claim Nations’ Sovereignty, is “obsolete”, but this private for-profit U.S. Fed-led Cartel* is overtly and covertly regularly involved in manipulating Most Major Markets, and profiting handsomely in doing so.

*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, 2009 Letter entitled  "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the “Alerts” and “Latest Letter” Cache at Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at 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 have been facilitated by attention to these “Interventionals.”

Thus we consider here one aspect of (what the evidence justifies our calling) The Cartel’s “Global Domination Policy”. Specifically, the Aspect of the policy which we consider here is how The Cartel’s Market Intervention Regime affects Market Forecasting and Market performance. (For more details regarding The Cartel’s “Global Domination Policy” see Deepcaster’s “Coping with the Superpower-Cartel Threat!” (01/30/2009) in the ‘Articles by Deepcaster’ cache at

As a basis for Quality Forecasting it is important to consider how Cartel Interventions affect, and are affected by, Market Moves and Economic Conditions.

When one Monitors the Relationships among the Moves in Major Market Sectors with an eye to detecting Cartel Intervention, one often finds the Moves have a Rhythm and create Patterns.

Observing those Patterns often, but not always, provides the basis for Accurate Forecasts about the Movements in those Sectors.

Developed in this way, accurate Forecasts lead to the probability of Investment and Trading Profits, and Protection against losses.

Consider for example recent Gold Price Movements and Patterns.

As of the end of November, 2009 Gold prices were in a relentless (apparently), multi-month Uptrend, breaching $1200/oz.  Gold’s Fundamentals were (as they still are) extremely Bullish. And at that time (as Gold passed $1200/oz) the next Technical Target for a Gold Price Appreciation Level (Pause) was $1325ish.

At that time there was a Very Real Question about the capacity of The Cartel to implement another Takedown of Precious Metals prices. Deepcaster was then on record as saying that The Cartel still had the firepower to implement at least one more Takedown and possibly more, and would likely do so.

The Question of Cartel Takedown Capacity was brutally resolved in early December when the Cartel ripped down the Gold price some $50 in one day, a prelude to the ongoing Takedown leg (which we earlier forecast) to just below $1100/oz., where we are today. (For our latest Forecast regarding Gold prices, see our February, 2010 letter posted in the ‘Latest Letter’ cache at

But when one reviews the price action of the long-dated U.S. Treasury Securities Market in that same time period one immediately sees a Correlation with considerable Interventional Significance.

Long-dated (10 and 30 years) U.S. Treasury Securities had also reached a peak (high price, low-yield) at the end of November, 2009.

But that uptrend in long-dated Treasuries abruptly reversed in early December to begin a six week or so downtrend (lower prices, higher yields).

But according to the Classical (i.e. in a Non-Interventional Universe) understanding of Gold prices, that Correlation (lowering Gold prices through December and lowering Bond prices through December) should NOT have happened.


Gold is traditionally (and in our view is legitimately) seen as the ultimate “go-to” Safe Haven Asset in times of:

  1. Crisis, and/or
  2. Excessive Borrowing and Spending and/or
  3. Excessive Fiat Money Creation.

Surely, the Fall, 2009 period “qualified on all these counts.

On that Classical theory, Gold should have continued its rise throughout December as U.S. Treasury paper was progressively devalued in the market place (due to 1, 2 and 3 above) thus commanding higher yields.

But, Gold did not continue its rise. Why not?

Clearly, it was taken down by The Cartel for the one simple reason which Deepcaster has repeatedly stated.

The Cartel cannot allow increasingly wide acknowledgement of Gold and Silver as the Ultimate Stores and Measures of Value. Rather they must do everything they can to have their Treasury Securities (and Fiat Currencies) so regarded. Otherwise the private for-profit Cartel loses Power and Profit.

Thus, from The Cartel’s perspective, during any period (e.g. December, 2009) when U.S. Treasury securities are being devalued (lower prices, higher yields) or are under pressure to be devalued in the Market Place, Gold (and Silver) must be taken down also.

As well, when long-dated U.S. Treasuries are being strengthened (lower yields, higher prices) The Cartel in that case also has an incentive to take down Gold and Silver prices to underscore the message they wish to send repeatedly: U.S. Treasury Securities and Fiat Currency are the Real Safe Haven Assets, Not Gold and Silver.

And so it was during December, 2009.

And today, Technically, although the Daily Full Stochastics are on a Sell, the weeklies and monthlies are on a ‘Buy’. And the Bullish Head and Shoulders with an upside Target of $1325/oz. is still operative.

Fundamentally, given the increasing Sovereign Debts bubble, and the Corporate and Consumer Credit bubbles and for many other reasons, Gold’s (and Silver’s) Fundamentals could not be more Bullish.

If it were not for Cartel Interventions, Gold should move to $1325, or more in a heartbeat.

Ah, there’s the rub (to quote the great Hamlet): Cartel Intervention. (To consider Deepcaster’s Strategy designed for Profiting in Precious Metals despite Cartel Intervention, see “Defeating the Cartel... With Profit, Part 2” (6/19/2009) in the ‘Articles by Deepcaster’ cache at Monitoring The Interventionals allowed Deepcaster to have recommended five Short Positions as of early September, 2008 just prior to the Fall, 2008 Market Crash. These Position were subsequently liquidated profitably.)

General Conclusion: If one forecasts an impending Major Move in one Sector, and that Sector is linked, via Intervention, to another Sector, it is likely but not certain that other Sector will be moved (by The Cartel) “in Harmony” as indicated here.

With this background we can now address certain other relationships among key Market Sectors.

Gold and the Equities Markets

From an Interventional perspective (that is, from The Cartel’s Perspective) the relationship between the Gold prices and the Equities Markets is somewhat more complicated, but not much.

The Cartel’s Fundamental Corollary Principle (to the one just stated above) is that Gold (and Silver) must not be increasingly widely acknowledged as the Ultimate Stores and Measure of Value vis-à-vis (i.e. in competition with) the Equity (paper!) Markets.

Thus during the Equities Markets run-up from the early March 2009 bottom, the Gold price was permitted to run up too, at least until the beginning of December, 2009.

Regarding the Equities Markets, for weeks now Key Signals have been warning us of an impending drop in the Equities Markets.

For example, the impending MACD Rollover and higher highs on progressively lower volume, both have been signaling decline for weeks now.

Until just this week, however, with its drop below 20, the VIX (Volatility Index) has been reflecting extreme complacency about the markets. A VIX at 15 or so is often a sign stocks are going to fall soon. Moreover, this past Monday the VIX closed below the bottom boundary of its two Standard deviation Bollinger Bands. This is (and was) an Immediate Prelude to a “Sell” Signal.

As well, the Transports just dropped down from a recent extremely overbought 95 reading on the Bullish Percent Index. Another Bearish Warning.

But The Cartel has been bulling the Equities Markets higher since March.

Indeed, recent Negative Price Action of the Gold and Equities Markets earlier this week testifies to the Truth of the Corollary stated above. That is, on days when there have been major Equities Takedown this week (e.g. January 20, 21, 22, 2010) Gold has been taken down as well.

In sum as we earlier forecast, the Takedown of Gold and Silver prices is well underway.

For Forecasting purposes, the foregoing considerations have allowed Deepcaster to make Forecasts (which are thus far being fulfilled) regarding the Equities Markets, Gold, Silver, Crude Oil, U.S. Dollar and T-Notes and Bonds, which can be found in Deepcaster’s February letter in the ‘Latest Letter’ cache at

Crude Oil

Similarly, it is not in The Cartel’s interest to have Crude Oil seen as a “Go-to” Safe Haven Asset which is an alternative to The Cartel’s Treasury Securities and Fiat Currencies.

Of course, manipulating the Large Cap Crude Oil Market is relatively much more difficult than manipulation of the (relatively small cap) Gold Market.

Crude is after all, an actively used commodity, and, unlike Gold, it gets used up!

Nonetheless, from The Cartel’s Perspective, we can expect that an Equities Market Price Takedown would be accompanied by a Crude Oil Price Takedown too.

That too, is borne out by recent price action.

U.S. Dollar

On one level, the relationship between U.S. Dollar strength or weakness and the prices of Gold, other commodities, and Equities is easy to understand.

When the Purchasing Power of the U.S. Dollar strengthens (vis-à-vis other currencies as measured by, e.g. the USDX) it takes fewer Dollar to purchase anything. Thus, ceteris paribus, lower U.S. Dollar prices. Conversely, also ceteris paribus, a weaker dollar means higher U.S. Dollar prices.

Thus when considering the Relationships among Sectors, it is essential to consider to what extent moves within a Sector are a function of Dollar Strength or Weakness. Once that is factored in, it is possible to determine to what extent Moves are “Real”, or “merely” a result of Dollar Strength or weakness.

Slowly, fitfully, and painfully the U.S. Dollar is “bouncing” as we earlier correctly Forecast.

Indeed it has taken about seven weeks to progress from about 75, basis the USDX, to just above 78, as we write.

Given this background we have issued and Updated Forecasts for The U.S. Dollar as well as Gold, Silver, Equities, Crude Oil, and T-Notes and Bonds in the February 2010 Letter in the “Latest Letter” cache at

Official Statistics Gimmicking

One other essential factor to consider in determining the effect of Cartel Intervention on the markets is Bogus Official Statistics.

Consider the following Real Numbers from which calculates the Real Numbers the way they were calculated in the 1980’s and 1990’s before Official Data Manipulation began in earnest.

Official Numbers      vs.      Real Numbers

Annual Consumer Price Inflation reported January 15, 2010

2.72%                                      9.68% (annualized January Rate)

U.S. Unemployment reported January 8, 2010

10%                                21.9%

U.S. GDP Annual Growth/Decline reported December 22, 2009

-2.64%                            -5.71%

As any honest observer can see, both the Economic Contraction and Consumer Price Inflation are far worse than the Official Media would have us believe.

The foregoing considerations can help Investors and Traders Profit, and Protect Wealth, in spite of Cartel Interventions.

Best Regards,

Wealth Preservation         Wealth Enhancement

© 2010 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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