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US Historic Bubble

Gold and Silver Enhanced Investor Opportunities Loci

Commodities / Gold and Silver 2013 Feb 24, 2013 - 12:29 PM GMT

By: DeepCaster_LLC

Commodities

“Plus ça change, plus c’est la même chose.”           French Wisdom Nugget

 

“Federal Reserve Policymaker’s late last month expressed explicit and detailed squeamishness over their monetary stimulus, which might be scaled back sooner than the Fed’s own guidance suggests, according to Minutes released Wednesday.” (emphasis added) IBD, 02/21/13

 

All Investment Cognoscenti know that The Fed’s “Communication Policy” is aimed at Financial and Market Ends, not at Truth. (Here, should we rely on The Fed’s earlier expressed “Guidance,” or this week’s “Scaling Back” Hint? They can not both be True.)


Indeed that Policy could well be paraphrased “Tell whatever Lie you need to, to achieve your Goals.”

 

Those recently released Minutes, for example, achieved a Primary Fed Goal of blowing the Gold and Silver Prices down through Major Resistance, and a Secondary one of cooling somewhat inflated Equities and Commodities Prices.

 

As leader of The Cartel (Note 1) a Cornerstone of The Fed’s Policy is, and has long been, to suppress Gold and Silver Prices, lest they further devalue their Fiat Currencies and Treasury Securities, and so they will not alarm the Hoi Polloi about the intensifying Price Inflation (e.g., 9.24% in the U.S. – Note 2) which their Ongoing Monetary Inflation is increasingly producing.

 

But The Fed’s (and other Central Banks’) ongoing Monetizing and Dissembling creates Enhanced Investment and Trading Opportunities in Several Sectors.

 

Consider Gold and Silver

 

Extraordinarily low levels of Fear (reflected in an ultra low VIX), plus increasing (but unjustified) Bullish sentiment for Economic strength reflected by MSM Talking Heads, is facilitating Cartel success, for many weeks now, in keeping the P.M. prices (save Platinum) trending down to the bottom of trading ranges, and, now, below.

 

Just as we earlier Forecast The Cartel took advantage of the Lunar New Year to drive down P.M. prices. Thus Gold and Silver have traded down to and through Major resistance.

 

Unfortunately for us Precious Metals Partisans already holding positions, The Cartel has succeeded in breaking Gold down below its 50 and 200 Day Moving Averages – very Bearish short-term.

 

JBGJ confirms The Cartel’s recent successful Bear Raid:

 

“The CME Final for Friday confirms that volume was 283,225 lots. 4.7% above estimated. This means half the day’s volume was done in the 8am-9am period.

 

Open interest only rose 854 lots, 2.66 tonnes or 0.19%, to 445,413 lots. (The Preliminary had indicated 1.04%.) Nevertheless, any increase on a day in which gold was down 1.71% at the floor close, 1.63% at the stock market close and sustained so much technical damage is remarkable. Friday was a monster Bear raid.”

 

“Friday O.I. Increase Confirms Friday Major Bear Raid,”

John Brimelow, JBGJ, 2/19/2013

 

 

And The Fed’s Minutes (hinting at possible “Tapering” off of QE) released this week administered the Coup de Gras with the result that Gold and Silver have broken down through Major Resistance at $1600 and $30 respectively, The next Major Resistance is $1535ish for Gold and $26 to $27 for Silver. Given the breakdown we would not be surprised to see these P.M.’s taken down to these levels, short-term.

 

We reiterate however that, we expect these levels to be temporary because The Cartel is having increasing difficulty holding three P.M.’s down, given the unrelenting demand for Physical, especially Physical Silver.

 

In other words, Gold and Silver are likely still participating in the completion of their bottoming process and The Fed’s Action has created an Enhanced Buy Opportunity.

 

Thus, there continue to be increasingly Excellent Buying Opportunities at these levels in both the Bullion and the Shares and especially in Silver.

 

A similar Opportunity, but in Reverse as it were, exists in Equities.

 

Fed (and other Central Bank) Money Printing has kept Equities afloat on a Sea of Liquidity, resulting in an Artificial Rally, i.e., one not founded on Fundamentals.

 

But the slightest Hint of decreasing Fed support, such as in The Fed Minutes, gives the Equities Markets Serious Trouble, Trouble which Establishment Newsletter Writer, Dennis Gartman, has recently labeled a “Tectonic Shift”.

 

The Stock Rally which began last November reminds us that Stock Prices can stay divorced from Fundamentals for a long time. And, fundamentally, the OECD (Developed) Nations’ Economies are still Shrinking. The USA’s Real GDP is already a Negative -2.20% per shadowstats.com.

 

So it is no surprise that the Top of this Artificial Rally (yet to arrive) would complete the Ominous Hindenberg Omen Pattern, and that that top will likely be followed by a cataclysmic multi-leg, multi-year crash—the impending Mega-Move of which we have spoken, and which we think is highly probable.

 

We emphasize this scenario is consistent with the Real Numbers. For example, just 4.9% of the companies which have reported have raised guidance. This is the sixth quarter in a row in which more companies have lowered guidance than raised it and that is the Trend – ever lower earnings guidance, which signals lower Equities Prices dead ahead.

 

Moreover, the Economic Fundamentals including Debt Saturation, Ever Higher Unemployment, and Economic Stagnation, including the OECD’s outright contraction referenced above, have not disappeared, but have, overall, worsened.

 

Thus, we reiterate: it is  very important to bear in mind that the Equities Markets are not being impelled upward on Fundamental Strength but rather on The Fed-provided (along with other Central Banks) Tide of Liquidity… and that is a Dangerous Situation which will likely lead to a Crash.

 

This is what the multi-year Hindenberg Omen Chart Pattern is telling us.

 

But this eventually will provide us with Great Opportunities to Profit on the Short Side, when the time is Right, a Time which we forecast in our latest Alert, “17.97% Yield Buy Reco & Remarkable Forecasts: Equities, Gold, Silver, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, & Crude Oil” post in ‘Alerts Cache’ at deepcaster.com.

 

Similar Short side Opportunities exist in the $US and U.S. Treasury Securities over the long term, where The Fed is creating The Mother of All Asset Bubbles.

 

The $US Moving Averages Chart has recently generated a “Death Cross – the 50 Day Moving Average has crossed below the 200 Day Moving Average. Not good, but not surprising, given The Fed’s ongoing $US Destruction Derby.

 

The $US Action since mid-November (and notwithstanding the recent pop up) appears to be the first leg down of what will become the long-term trend we have earlier forecast – the Destruction of the $US as the World Reserve Currency, and its replacement by a Gold-backed Yuan.

 

In sum, the $US Action since November is the beginning of a chopping long term down trend for the $US, interrupted by spikes up (as we are seeing this week) on Eurozone weakness and/or an Equities Crash, and/or Risk-off Moves.

 

Indeed, there is an increasing Threat of that Massive Sell-off in the U.S. Dollar, especially vis-à-vis Real Physical Assets, beginning any time in the next very few months notwithstanding what the Central Banks do; that is because of The Orgy of Fiat Currency Printing The Fed (and other Central Banks) is unleashing, coupled with increasing and unpayable U.S. Debt.

 

That is, The Biggest One, Rising Interest Rates aka The Bursting Treasury (and other) Bond/s Bubble, has just begun, as we earlier Forecast. It is no secret that yield on the U.S. 10-year has shot up over the past few days and is now bouncing around 2%.

 

Thus $US Treasuries will offer an excellent short play as well provided the timing is right.

 

In sum, even though Fed (and other Central Banks) Policies are quite destructive to U.S. National Economic health (as well as to the health of other Nations, and to Individuals, such as Savers and Retirees) via Inflation, The Fed’s Money Printing does offer Opportunities for The Prepared.

Best regards,

www.deepcaster.com
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© 2013 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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