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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Protecting Profits from The Apparent Economic Recovery

Stock-Markets / Financial Markets 2010 Mar 05, 2010 - 04:55 PM GMT

By: DeepCaster_LLC


Best Financial Markets Analysis Article“Senators Outline Plan to Create New Consumer-Protection Unit Within The Fed.”

“Deal Near on Banking Rules”
Wall Street Journal, 3/2/10

“As Rolfe Winkler noted last September:

For the big have gotten even bigger since the start of the financial crisis. At the end of 2007, the Big Four banks — Citigroup, JPMorgan Chase, Bank of America and Wells Fargo — held 32 percent of all deposits in FDIC-insured institutions. As of June 30th, it was 39 percent.

But Simon Johnson gives an even broader perspective on how big the too big to fails have gotten:

The big four have half of the market for mortgages and two-thirds of the market for credit cards. Five banks have over 95 percent of the market for over-the-counter derivatives. Three U.S. banks have over 40 percent of the global market for stock underwriting.

…the government created the mega-giants (they are not the product of free market competition), and their very size destroys the real economy like a massive black hole destroys the matter around it.

And as Johnson and many others have pointed out, the very size of the giant banks enables them to easily capture politicians…

“15 Years Ago, the Combined Assets of the 6 Biggest Banks Totaled 17% of GDP... Now, 63%” George Washington,, 3/2/10

Isn’t the Regulatory ‘Reform’ legislation generated in Congress just dandy!?!

It appears the private for-profit Fed may now be given even more power to “protect” Consumers, yet Congress has so watered down the ‘Audit the Fed’ bill that no meaningful audit will be performed.

We ask, will the private for-profit Fed “protect” consumers as well as it did in the first decade of the 21st Century when millions of investors around the world lost huge chunks of their savings, and/or their homes and/or their jobs largely as a result of the easy credit, easy money policies of The Fed?

Will it protect them from the depredations of the ever-larger too-big-to fail Mega-banks which, after they were saved with Taxpayer money, pay rich compensation to executives while raising credit card rates to ever more usurious levels. And which of these Mega-banks are themselves shareholders of the private for-profit Fed? We shall never know for sure until there is an Authentic Audit.

Or will it protect the economy and Financial System for Investors/Consumers benefit as “well” as it has done in recent years done? Sarcasm intended. Just consider the Real Economic and Financial Fundamentals as set forth in a recent economic report by

It Is Not Over. Underlying economic and financial fundamentals signal and suggest ongoing economic contraction and continued financial system instability. Despite the relatively happy talk out of the Fed in the last several weeks as to systemic stability…Consider the latest surge in the monetary base…

…the St. Louis Fed’s Adjusted Monetary… base surged by $90 billion dollars (an annualized 198% pace of increase) in the two weeks ended February 24th, to a record $2.184 trillion…

The monetary base — currency in circulation plus bank reserves — is the Fed’s primary tool for adjusting broad systemic liquidity, as measured by the money supply. Yet, the SGS Ongoing M3 Estimate — M3 once was the Fed’s broadest money measure — still is on track for a deepening annual contraction in February 2010. Since November 2009, annual real M3 (net of CPI-U inflation) has been in a deepening contraction, signaling an intensifying economic downturn in the months ahead…

As a result, economic reporting increasingly will surprise the markets to the downside...

…the best picture from the better quality series is one of ongoing bottom-bouncing. Consumers account for more than 70% of GDP, yet growth in personal consumption cannot be sustained without growth in inflation-adjusted income…but consumer credit is contracting, and actual, disposable consumer income is not keeping up with inflation. This is a long-term structural problem, and, until it is addressed, there can be no economic recovery.

…Six-percent growth is considered an outright economic boom, but few believe the current economy is booming, despite the revised report of official 5.9% annualized growth in the fourth-quarter GDP… most of the reported growth was due to relatively stronger nonfarm inventories, yet the inventory improvement is not supported by strong orders. When consumption fails to support production and inventories build-up, manufacturers tend to cut back production, and GDP falls. While I do not find the reported current quarterly gain credible, it is in place, and it sets up renewed quarterly contractions beginning as early the current quarter. Such would be viewed popularly as a double-dip recession.

Consensus economists, Wall Street and political Washington nonetheless continue touting the end of the recession. Yet, the longest and deepest economic downturn since the first downleg of the Great Depression still has some time to run…the current downturn already is the second-dip of a multiple-dip depression than began in late-2000…

…GDP is the GNP net of trade in factor income (interest and dividend payments). GNP growth usually is weaker than GDP growth for net-debtor nations…

GDP… by the Bureau of Economic Analysis (BEA) showed an annualized real growth rate of 5.93%...

The aggregate revision was little more than statistical noise, with the upside revision reflected fully in a downside revision to GDP inflation…

The GDP series remains largely worthless in its early reporting and heavily gimmicked in both short- and long-term reporting…

The SGS Alternate-GDP estimate for fourth-quarter 2009 remains an annual contraction of 4.6% versus the official estimate of a 0.1% gain…

Employment/Unemployment (February 2010). The February employment and unemployment estimates are scheduled for release on Friday, March 5th. reports consensus estimates of the unemployment rate rising to 9.8% in February from 9.7% in January, with payroll employment expected to lose 20,000 jobs for a second month. I would expect both a higher unemployment rate and deeper payroll decline than the consensus forecasts, given among other issues catch-up in bad seasonal factors and renewed slowing in the general economy. An updated outlook on the employment/unemployment report will be published next week as detail from related series becomes available.”

“69% of 4th-Quarter’s 5.9% ‘Boom’ Due to Nonfarm Inventories Economic and Financial Crises Are Not Over Fed Still Panicking Despite Happy Talk”

Commentary Number 281
General Update, GDP, Durable Goods
John Williams’ Shadow Government Statistics, 2/26/10 calculates key statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest.

Consider the following Official versus Real Numbers

Official Numbers       vs.      Real Numbers

Annual Consumer Price Inflation reported February 19, 2010

2.63%                              9.76% (annualized February Rate)

U.S. Unemployment reported March 5, 2010

9.7%                               21.6%

U.S. GDP Annual Growth/Decline reported February 26, 2010

0.15%                              -4.62%

The foregoing provides considerable evidence that the structural changes necessary for long term-economic health have not been made. And it provides evidence that the ongoing “Recovery”, as the MSM dubs, it is merely a ‘Sugar High’, destined to end painfully.

So how does one surmount and profit in spite of, the ever increasing litany of Perils – prospective sovereign debt defaults, fiat currencies with ever-decreasing purchasing power, increasing Real unemployment, dangerously high consumer price inflation (albeit long hidden by Bogus Official Statistics) an economy with plummeting GDP, among many others?

There is one Salvation, the Ultimate Safe Haven from Inflation, Deflation and Economic Stagnation – Gold and Silver.

Indeed, we advise purchasing Gold and Silver as the best way to Protect Profits from the Apparent (i.e. Fake) Recovery, but with one Important Caveat.

The Caveat is that Gold and Silver prices have for years been suppressed by a Fed-led Cartel* of Central Bankers, and their Allies and Agents.

*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 Cache’ 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.” 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.

The Cartel’s Motivation for this Price Suppression is clear.

It is to prevent Gold and Silver from being more widely recognized as the legitimate Ultimate Stores and Measures of Value, a recognition which would further delegitimize The Cartel’s Treasury Securities and Fiat currencies as such.

It is essential therefore to acquire Gold and Silver according to a Strategy designed to counter the effects of Cartel Precious Metal price suppression and to profit in spite of it. Deepcaster has developed the following Strategy. The Solution – A Strategy for Investors & Traders

The Solution is to invest in Gold and Silver (and in Strategic Hard Assets in general) according to the following Strategy designed to diminish the effects of adverse Cartel actions.

A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan while at the same time insulating oneself from future Cartel 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 such 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 $50 Takedowns of the Gold Price in the first week of December, 2009 and February, 2010 are a case in Point). 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. (see note above for details)
  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.
  5. Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term 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. Indeed, 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. At 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. Be just as willing to go short as to go long, and even using leveraged funds.
  11. Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of the Central Banker 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 Takedowns and the de facto Stealth Tax imposed via Fiat Currency Purchasing Power degradation. 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:
      1. Become involved in the movement to abolish the U.S. Federal Reserve (a private for-profit Cartel of International Banks) as Deepcaster, Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. The non-profit group Carrying Capacity Network ( advocates abolishing The Fed after auditing it.
      2. Join the Gold AntiTrust Action Committee which works to eliminate the manipulation of the Gold and Silver markets ( 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.
      3. Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game.” Clearly The Cartel is pushing ever greater debts on Taxpayers and is sacrificing the U.S. Dollar to prop up international financial institutions and to maintain and enhance its Power and Profit. But this sacrifice cannot continue forever.

And one other essential recommendation – the first sensible structural change recommendation to emanate from a Fed source (Fed. Governor Fisher) in many a moon.

“’The disagreeable but sound thing to do regarding institutions that are too big to fail is to dismantle them over time into institutions that can be prudently managed and regulated across borders,’ Fisher said in prepared remarks to the Council on Foreign Relations.” (emphasis added)

“Fed's Fisher: Break Up Banks Seen as Too Large to Fail”, 3/3/10

But, alas, no meaningful steps have been taken to begin such dismantling.

Therefore, Batten down the Hatches!

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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