Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investors Prepare for More Big Crisis

Stock-Markets / Financial Markets 2011 Sep 23, 2011 - 11:42 AM GMT

By: DeepCaster_LLC

Stock-Markets

Best Financial Markets Analysis Article“The debt markets have been warned…

‘The incremental parts of our foreign reserve holdings should be invested in physical assets… we will liquidate (U.S. Treasuries)…when…’

To my knowledge, this is the first time that a top adviser to China's central bank has uttered the word "liquidate."…

The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.”

“China to 'liquidate' U.S. Treasuries, not dollars”

Ambrose Evans-Pritchard, The Telegraph, London, 9/16/11


Reality #1

The Chinese, by some accounts holders of over $2 Trillion in U.S. Treasury, Agency, and other Debt, are clearly fed up with The Fed’s Dollar Debasement Policies, which erodes the Value of their 2 Trillion worth of U.S. Dollar Holdings.

Their being fed up with The Fed might not matter much, except that they have the leverage to do something about it. “Liquidate” was the word the Advisor to the Chinese Central banks used when referring to their U.S. Treasury holdings.

It is not rational to assume that China would destroy the economy of its largest trading partner, the USA, by engaging in an Ongoing liquidations of U.S. Treasuries.

But it is entirely reasonable to assume that that leverage will be used to limit significant further any dollar degrading, inflation producing QE.

And any such massive selling of U.S. Treasuries into the Market would cause yields, and thus borrowing costs, to rise dramatically.

And such would doom any prospects for economic recovery soon.

And it would usher in a New Era of Hyperstagflation.

In any event long-dated U.S. Treasuries are arguably the largest Asset Bubble in History, a Bubble which will burst at some point, but not quite yet.

Preparation #1

Borrowing costs will not move significantly lower, indeed they are bound to start rising starting some time in the next few months. If you must borrow, act now to lock in low fixed rates. And increasingly focus Investments on the Precious Monetary Metals & Essential Tangible Assets Sectors. (But the Precious Monetary Metals are subject to ongoing Price Suppression Actions, so timing and form of Investments is important – see #8 below.)

Reality #2

But the window for obtaining credit on Reasonable Terms is already closing. Mega-Banks have not been lending much to small business (the jobs producers) or Households, and now are becoming increasingly reluctant to lend to each other.

Euribor (the average rates of 50 European banks lending to each other) has spiked in the last few months, just as it did in 2008, prior to the market crash.

Indeed, the Bank Runs have started. Industrial Giant Siemens just pulled 500 Million from a French bank and redeposited it with the ECB. And as the Credit Markets go, so go the Equities Markets, soon after.

Preparation #2

Prepare for an Equities Market multiple-downleg Crash, as we have been urging our readers to do for months.

Reality #3

A key Characteristics of the 2008 Financial Markets Crises was increasing Counterparty Risk and CounterParty Failure. As several developments, like the tightening interbank credit Markets, show, Counterparty Risk, and thus the Risk of Counterparty failure, is rapidly increasing.

Preparation #3

Before making any investment, or trade, carefully evaluate the counterparty risk, and continue to evaluate it so long as you hold the position.

Which leads us to:

Reality #4

ETF’s are inherently highly risky, but do have advantages. Therefore use them only in a Speculative Portfolios, NOT for long-term Core Positions.

ETFs are relatively low cost, and allow Investors of modest means to trade whole Sectors or Markets throughout the Day, BUT many are quite risky.

Consider:

  • they have inherent counterparty risk since, inter alia,
  • about half do not match or track the index they purport to and
  • about half are “swap based”, i.e. they use derivatives agreements to simulate the performance of the underlying assets and
  • liquidity tends to dry up in times of crises, and especially ETF liquidity at just the time when investors need liquidity and
  • leveraged ETFs, due to compounding and other issues, often do not achieve the % leverage they aim for, e.g. a 300% leverage ETF may only achieve 250 or 200% leverage on the upside, and may magnify losses by more than 300% on the downside

Note: while the foregoing do not apply to all ETF’s, any ETF should be carefully evaluated before investing in it.

Preparation #4

Use ETF’s for speculative purposes only, and only if you can tolerate great risk.

And do not fail to continuously evaluate counterparty risk, and be especially careful if Crises are impending.

Reality #5

The private for-profit Fed and other Major Central Banks continue to print/digitize massive amount of their Fiat Currencies into existence for free, thus creating Monetary Growth Far in excess of GDP growth (de facto contraction in the U.S.). This is degrading the purchasing Power of these Fiat currencies and will eventually create Hyperinflation.

Preparation #5

Our strategy for surmounting Hyperinflation is laid out in our Article “Essentials for Wealth Acquisition Acceleration (7/28/11)” (and see notes 1 and 2 below).

Reality #6

Official Statistics are often seriously Bogus. Real U.S. CPI is now running at 11.4% (Shadowstats.com) for example.

Preparation #6

Use the Real Numbers such as those generated by Shadowstats.com.

Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

 

Bogus Official Numbers     vs.     Real Numbers (per Shadowstats.com)

Annual U.S. Consumer Price Inflation reported September 15, 2011
3.8%                             11.4% (annualized August, 2011 Rate)

U.S. Unemployment reported September 2, 2011
9.1%                             22.8%

U.S. GDP Annual Growth/Decline reported August 26, 2011
1.55%                                    -2.83%

U.S. M3 reported September 9, 2011 (Month of August, Y.O.Y.)
No Official Report            2.30%

 

11.4% CPI is threshold hyperinflationary. Our High Yield Portfolio (see note 1 below) is aimed at achieving a Total Return (Gain plus Yield) in excess of Real Inflation.

Reality #7

Perhaps most important of all, Fundamentals are lousy.

  • Sovereign and other Debt Problems have not been Solved
  • Economic Growth is not occurring
  • Unemployment is Rising (already 22.8% in USA)
  • Inflation is rising (already 11.4% in USA)
  • Stimulus and “Bailouts” worked only to support the Mega-Banks, not Small Business or Households
  • U.S. Housing starts continue a 3 year pattern of bottom-bouncing

Preparation #7

See Preparations 1 through 6.

Reality #8

Buy Gold and Silver notwithstanding ongoing Cartel* price suppression Activities, preferably near the interim bottoms of Cartel-generated takedowns.

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, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, 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.” 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.

Preparation #8

Track the Interventional Patterns, as we do. These facilitate maximizing profits and minimizing losses from Precious Metals Trading and in other Sectors.

Reality #9

Long-term, the U.S. Dollar and other Fiat Currencies are likely doomed.

Preparation #9

Diversify among Inflation resistant Tangible Assets with Gold and Silver and Essential Foodstuffs central to your core positions.

By DEEPCASTER LLC

www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation         Wealth Enhancement

© 2011 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.

DEEPCASTER LLC Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in