Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Is A Sharp Stock Market Crash Ahead? - 21st Nov 18
Have We Seen The Worst of the Gold Bubble Burst? - 21st Nov 18
The Real Price of LNG, Climate Change, Coming Fracking Environmental Disaster - 21st Nov 18
Powell and Gold between Inflation and Global Slowdown - 21st Nov 18
Why is the North American Wilderness Known for Spiritualism? - 21st Nov 18
Stock Market Buy the Dip is Dead - 20th Nov 18
Deep State Mad World - 20th Nov 18
Commodities - What Do You Need To Know? - 20th Nov 18
Precious Metals Moving In Unison For A Massive Price Advance - 20th Nov 18
Handicapping the Precious Metals Through Year-End - 20th Nov 18
Betting Markets Confirm Theresa May Safe From Tory Leadership Challenge this Week - 20th Nov 18
Rail Chaos Transpennine Express Cancels Services to Manchester Airport Whilst on the Train! - 20th Nov 18
The Giants Are Coming...Giants of The Internet! - 20th Nov 18
Gold & Silver Corrective Rally is Almost Over - 19th Nov 18
Stock Market Going Sideways - Which Direction is Next? - 19th Nov 18
Technical Analysis Points to DOW 30k Next Target - 19th Nov 18
Stock Market Consolidating in a Downtrend  - 19th Nov 18
Next Tory Leader, Prime Minister Forecast and Betting Market Odds - 18th Nov 18
The Fed's Misleading Money Supply Measures - 17th Nov 18
Stock Market Outlook: Why the Economy is Bullish for Stocks Going into 2019 - 17th Nov 18
NO DEAL HARD BrExit Tory Chaos, Theresa May Leadership Challenge - 17th Nov 18
Gold vs Several Key Investments - 17th Nov 18
GDX Gold Mining Stocks Q3 18 Fundamentals - 17th Nov 18
Is Gold Under or Overpriced? - 17th Nov 18
Active Managers are Bearish on Stocks. A Bullish Contrarian Sign - 16th Nov 18
Will The Fed Sacrifice Retirement Portfolio Values For The "Common Good"? - 16th Nov 18
BrExit War - Tory Party About to Replace Theresa May for NO DEAL BrExit - 16th Nov 18
Aspire Global Makes Significant Financial Strides - 16th Nov 18
Gold Oil and Commodities …Back to the Future ? - 16th Nov 18
Will Oil Price Crash Lead to “Contagion” for the U.S. Stock Market? - 15th Nov 18
How NOT to Be Among the MANY Stock Investors Fooled by This Market Myth - 15th Nov 18
Tory BrExit Chaos Cripples UK Economy, Wrecks Housing Market Confidence - 15th Nov 18
Stocks Could End 2018 With A Dramatic Rally - 15th Nov 18
What Could Be the Last Nail in This Stock Bull Markets Coffin - 15th Nov 18
Defensive Stock Sectors Outperforming, Just Like During the Dot-com Bubble - 15th Nov 18
Buying Your First Home? Here’s How to Save Money - 15th Nov 18
US Economy Ten Points or Ten Miles to ‘Bridge Out’? - 14th Nov 18
US Stocks: Whither from Here? - 14th Nov 18
Know exactly when to Enter&Exit trades using this... - 14th Nov 18
Understanding the Benefits of Keeping a Trading Journal - 14th Nov 18
S&P 500 Below 2,800 Again, New Downtrend or Just Correction? - 13th Nov 18
Warning: Precious Metals’ Gold and Silver Prices are about to Collapse! - 13th Nov 18
Why the End of the Longest Crude Oil Bull Market Since 2008? - 13th Nov 18
Stock Market Counter-trend Rally Reaches .618 Retracement - 13th Nov 18
How to Create the Best Website Content and Generate Organic Traffic - 13th Nov 18
Why the Stock Market Will Pullback, Rally, and Roll Into a Bear Market - 13th Nov 18
Stock Markets Around the World are Crashing. What Not to Worry About? - 12th Nov 18
Cyclical Commodities Continue to Weaken, Gold Moves in Relation - 12th Nov 18
Olympus Tough TG-5 Camera Stuck or Dead Pixels, Rubbish Video Auto Focus - 12th Nov 18
5 Things That Precede Gold Price Major Bottoms - 12th Nov 18
Big US Stocks Q3 Fundamentals - 12th Nov 18
How "Free Money" Helped Create Sizzling Housing Market & REIT Gains - 12th Nov 18
One Direction More Likely for Bitcoin Price - 12th Nov 18
The Place of HSE Software in Today's Business - 12th Nov 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Self-Reliance Investing – Key to Profit & Protection – Part I

Stock-Markets / Financial Markets 2013 Sep 14, 2013 - 11:02 AM GMT

By: DeepCaster_LLC

Stock-Markets

“Collective belief can create its own reality, and at least for the past few years, collective belief is that Fed actions simply make stocks go up, and so they have. The problem is that this outcome is based almost wholly on perception and confidence bordering on superstition – not on any analytical or mechanistic link that closely relates the quantity of monetary base created by the Fed to the equity prices (despite the correlation-presumed-to-be-causation between the two when one measures precisely from the 2009 market low). Some of the deepest market losses in history have occurred in environments of aggressive Fed easing.” John Hussman, Hussman Funds, September 2013


One of the Crucially Important Lessons of the Housing Bubble Burst of 2008, the Internet Bubble Burst of 2002, the Market Crash of 2008-2009, and Most Crashes and Bursts before these, is that Certain Assets which were widely believed to be Safe, were not.

And given today’s Uncertainty and Impending Crises, that Truth remains – Many ostensibly “Safe” Assets are Not.

Thus, here we identify certain of these Risky “Safe” Asset classes (and those not so Risky), and indicate how one can best Profit and Protect through Self-Reliance Investing. Deepcaster identifies specific Investments which actually provide Opportunities for Profit and Wealth Protection in his recent Letter and Alerts.

Also here, we identify Major Risks to these Ostensibly Safe Assets.

Identifying Major Risks to Ostensibly Safe Assets is the First Essential step to Effective Self-Reliance Investing.

Counter-Party Risks

As the Geopolitical, Economic, and Financial Risks Mount, so too do the Risks of Major Counter-Party Failure.

The Housing Collapse, Financial Collapse as manifested in the AIG Collapse, and MF Global Debacle are but three recent examples of three Asset classes thought by many to be Safe (respectively, Mortgage-backed Securities, Insurance “products” provided via AIG, and Investments in MF Global) which were not. All three are examples of Counter-Party Risks which were realized.

And there are Counter-Party Risks Aplenty in today’s International Financial System. And many of them are in the same Sectors in which Counter-Party Failure occurred in the last Crash!

The Primary (but not sole) Cause is over-leverage. One need only consider that there are nearly $700 Trillion in OTC Derivatives currently Outstanding, but annual Global GDP is only approximately $70 Trillion. (www.bis.org, Path: Statistics, Derivatives, Table 19) to realize that the Systemic Risk is Arguably Greater Now than before the 2008-2009 Financial Crisis.

In sum, many of the Asset Classes and Institutions which proved risky in 2008-2009 are at least as Risky Now as they were then. It is critical that investors valuate Counter-Party risks before investing.

Bail-ins

“Bail-ins” in which Bank Depositors’ Deposits! are confiscated by a failing or Bankrupt Bank (and often “compensated” for by Stock in the failing or Failed Banks) are not limited to Cyprus.

A Bank in Poland, for example, is implementing a Bail-in as we write.

Even more threatening are the Operative Rules under which many Banks in Europe and North America conduct Business, which also allow Bail-ins.

Conclusions: Self-Reliant Investors should take account of the fact that Deposits in such Banks are Vulnerable and thus are for Transactions not for Savings or for Assets held for the long-term.

OTC Derivatives

As indicated above, the Risk reflected in the nearly $700 Trillion of OTC Derivatives is Orders of Magnitude greater than the collateral available to secure them.

Therefore, when (not if) there is another Major Market Takedown, certain Counter-Parties will be called upon to perform and will likely be unable to do so (cf. AIG in the last Market Crash) And such Failures will likely create a Ripple Effect via the OTC Derivatives Parties and Counter-Parties as they did in 2008.

Self-Reliant Investors should give priority to investments which are not encumbered by such risks.

Domestic vs Foreign Production Reliance

Reliance on Goods and Services produced abroad (regardless of where one lives) can be extremely Risky as all Crude Oil-importing Nations know.

But it is not just the Citizens of Oil importing Nations that are subject to Such Risks.

The Citizens of any countries which cannot feed themselves (e.g., Egypt and arguably, China) and which rely on Extra-territorial supplies are at Great Risk – as Participants in Nations with an Arab Spring know.

And National-Security-Sensitive Goods and Services produced abroad are another significant Risk Category as well.

Markets Manipulation

As Precious Metals Investors know all too well, Gold and Silver Investments are subject to Price Suppression by a Cartel (Note 1) of Central and Allied Mega-Banks (See Deepcaster’s Archives for Deepcaster’s Letters and Alerts for an extensive Treatment).

These Price Suppression Attacks have been primarily Responsible for the Takedowns in the Paper Gold and Silver Prices in the last two years.

But given universal and Increasing Demand for delivery of Physical metal and the High Risk Market Environments, prospects for these Metals are Bright.

Consider two recent Reports re Gold and Silver respectively:

“…overnight just before 3 am Eastern, a block of just 200 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz…whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed: following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!

“To summarize: a humble black of 2000 gold futs (GC) taking out the bid stack, and slamming the price of gold, managed to halt the gold market: one of the largest “asset” markets in the world in terms of total national, for 20 seconds.”

“Vicious Gold Slamdown Breaks Gold Market For 20 Seconds,”

John Brimelow, JBGJ, LLC

But notwithstanding ongoing Cartel Takedowns, increased demand for Physical makes the Precious Metals price prospects bright indeed. 

From its low-close on June 27 of $18.59 (Comex front-month basis) through its high-close on August 27 of $24.70, silver jumped 32.8% in just 42 trading days. Using today's Comex close of $23.12, silver is up 24.4% from its June bottom. Many investors are wondering if this has been a dead-cat bounce off an oversold bottom or if a new bull trend has begun. Based on all of the fundamental and technical data that I monitor, it would appear to me as if silver put in a definitive bottom in late June and is poised to resume its long-term bull market trend. I would further opine that it is likely that we'll see silver (and gold) hit a new all-time high in price before we get another big correction like the one the metals just went through.

“The inflation-adjusted all-time high for silver is $140/oz. This number is derived by compounding silver's high of $50 in 1980 using the Government-reported CPI rate. While I don't expect silver to reach that inflation-adjusted high on this next bull-cycle move, I would not be surprised if silver hit $100/oz before the next major price correction. I see both technical and fundamental factors which will drive this type of move in price…

“First is the sheer size of global demand for physical silver. 1 billion ounces of silver is produced annually from mine production and recycling. Of that, roughly 900 million is consumed in industrial use (Silver Institute data). That leaves roughly 100 million ounces for investors.

“But what about China and India? Because of the restrictions put on gold imports by the Indian Government for most of 2013, Indian imports of silver have soared vs. 2012. In just the 1st half of 2013 (for which I have a data source), India imported 3,000 tonnes of silver, which translates into about 103 million ounces. It's safe to say based on the trend in India that India will import over 200 million ounces this year….

“As you can see, just counting the U.S. and Canadian mints plus India and China imports, well over 251 million ounces of silver demand are accounted for. To be sure, part of the silver imported into India and China is for industrial use. But in total, just for the those four countries, investors will likely buy significantly more than the 100 million ounces of silver produced by mines in 2013 that does not go to industrial users. ...”

“Silver is Getting Ready to Make a Big Move Higher,” Dave Kranzler

lemetropolecafe.com, 09/12/2013

Caveat:  one should expect continued Cartel Takedown attempts.

In that connection, Grant Williams, portfolio manager of the Vulpes Precious Metals Fund recently noted that at the COMEX warehouse, there are 55 paper claims for every ounce of Gold in that warehouse, and that a recent demand by shareholders of GLD ETF for Physical Gold in exchange for shares, was refused by the COMEX.

Independent Information Sources

Having accurate information about one’s Investment Interests, such as Deepcaster and other Independent Commentators aim to provide is essential for successful Self-Reliant Investing.

Best regards,

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

DEEPCASTER HIGH POTENTIAL SPECULATOR

Wealth Preservation         Wealth Enhancement

© 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.

DEEPCASTER LLC Archive

© 2005-2018 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

6 Critical Money Making Rules