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Crude Crash Is No Conundrum - Nor Gold's, Nor Silver's Either



-- Posted Friday, 22 September 2006 | Digg This ArticleDigg It!

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence 

 

 

            Crude oil prices have dived from over $78 a barrel in mid-July to close to $60 a barrel in the week just ending September 22, 2006.  And gold and silver have dropped from approximately $740 and $15 per ounce to about $580 and $11, respectively, from their highs this year.

 

            The crude and gold and silver crashes come as no surprise to Deepcaster who forecast them in late Spring, 2006.

 

            BUT, the reasons given by the pundits for these crashes are not adequate to explain the magnitude of the drops.  Nor would they be adequate to explain Deepcaster's forecast for the period from now until Election Day this November.

 

            We have an explanation:

 

            Considering crude, it is true that one of the causes for the drop is that springtime fears that summer hurricanes would disrupt the Gulf of Mexico production have not materialized.

 

            Also true is that fears about the U.S. confrontation with Iran over its nuclear program appear to have fizzled, as has the ostensible crisis.

 

            And, perhaps the predominate cause of all, global inventories of crude oil are rising and, in the U.S., the rate of increase in demand is decreasing.

 

            BUT, in fact, supplies of crude oil were more than ample at the beginning of the summer and demand in the U.S. is not tapering off that much.  Year over year U.S. demand is still in an upward trend.

 

            So how DOES one explain the 20% drop in crude that we've seen already?

 

In answering one must consider the fact the Fed/BIS Cartel controls $3.2 TRILLION in derivatives apparently focused on "managing" the crude oil market.

 

            Couple that consideration with the fact that the U.S. and Britain have, until just the last few weeks, "pushed" the confrontation with Iran over its "nuclear program."  Yet, recently, it seems that the "pushers" have backed off.

 

            Moreover, if one charts the progressive (and currency adjusted), increases in the oil price to $78 and then charts its decreases to $60, it reflects a shocking and improbable linearity.  That is to say, the chart appears to have none of the characteristics of random market fluctuations.

 

            Similarly, the takedown in the price of gold and silver in recent weeks can be partly explained by the diminishment of tensions in the Middle East and the apparent deflationary environment setting in.

 

            But, considered more deeply, as Deepcaster is wont to do, one realizes that the demand over supply deficits for both gold and silver (and especially silver) are still very real and worsening.  Moreover, one also realizes that none of the tensions which ostensibly gave rise to the increasing gold and silver prices early this year has disappeared.  Indeed, they have just gone from hot to simmering.

 

Most important, these tensions could boil over at any time.  So, the risk premium in the prices of gold and silver should not really have evaporated.  Indeed, the risks certainly have not diminished to the extent that a 20% drop of gold and 25% drop of silver is justified.

 

            Thus we have to look to other causes to explain the magnitude of these drops.  We find that, like crude oil, the case for the capping of the prices of gold and silver by the Cartel is quite persuasive.

 

Those who have doubts we are encouraged to review the evidence by reading Deepcaster's June, 2006 Letter entitled "Juiced Numbers - - The Interventional Takedown - - How The Government Gets The Statistics It "Wants," Markets Get Manipulated, And Citizens Get Deluded, And Worse."  In particular take note of the record in the Barrick/Blanchard/JP Morgan Chase litigation.  Also note the admission of such by the head of the Monetary and Economic Department for the Bank for International Settlements (the Central Bankers' bank) among others.  And note that former Clinton Administration official, George Stephanopolous (in a publicly broadcast interview) admitted the existence of the so-called Exchange Stabilization Fund whose purpose was to manipulate the markets.

 

            So considering all of the aforementioned facts together, coupled with the fact that we are in an election season, it does not seem at all surprising to Deepcaster that crude oil prices and gold and silver prices have been taken down.  And it is on the basis of observing such apparent manipulations that Deepcaster recently issued its Fall Forecast.

 

So not only is the crude crash no conundrum, neither is the crash of gold, nor silver either.

 

 

 

 

Deepcaster

September 22, 2006

 

 

DEEPCASTER LLC

www.deepcaster.com

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

 

Gravitas, Pietas, Virtus


-- Posted Friday, 22 September 2006 | Digg This Article




 



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