-- Posted Friday, 3 November 2006 | Digg This Article
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Deepcaster trusts that those who have read his Juiced Numbers series, and particularly the most recent iteration "Mega Manipulations - Juiced Numbers IV: How the Government Gets the Statistics It Wants, Markets Get Manipulated, Citizens Get Deluded and Worse" - - will have been convinced that many important markets are regularly manipulated. But being convinced of the reality of manipulation does not in itself provide one with techniques which can help one profit from an intervention, or even merely cope with it.
Thus, in this article we provide a few guidelines for helping to cope with and, indeed, potentially profit from, market interventions.
1: Think geopolitically. The Fed-led Central Bank Cartel has, inferring from its actions, not only an economic and financial agenda but also a political agenda.
Consider, for example, the month of October, 2006 in the United States. How many of our readers find it significant, to say the least, that the Dow and other market indices have been propelled to record highs during that pre-Election month?
Moreover, how many find it significant that since its high in mid-July the price of crude oil has been taken down nearly $20 or about 25% as of the week prior to the election? Are these mere coincidences, given the fact that Election Day is fast approaching?
2: Intervention trumps fundamentals and technicals. This statement can be substantiated simply by considering that in many important circumstances there is no other plausible explanation for market action.
For example, as of 2006, the production of silver has fallen short of demand for 17 years in a row so above ground stockpiles are at a 15 year low. Thus one may reasonably ask why would silver have fallen from $15 an ounce down to $11-$12 an ounce in the month of October, 2006. Is there any reasonable explanation other than intervention?
3. Apparent Cartel Strategy: Presenting "Lures" to Trap Unwary Investors. The Cartel appears to ensnare investors and particularly big hedge funds (and especially those using "black box" programs) into supporting its interventional goals. The strategy appears to be to present investors with "lures" at technically significant levels to get them to buy in at what appear to be those technically propitious points. Then it can proceed to smash them with huge injections of derivatives or actual sales, or purchases, as they may see fit. For example, during the last gold takedown phase this past summer, gold appeared to break out and up from a descending triangle. This breakout would have encouraged TA players to go long at that point. But after the breakout the market immediately reversed and proceeded to be taken down significantly.
Another apparent technique is to use black box "computer driven" trading programs to its advantage. The Cartel is aware that many black box programs tend to "pause" and wait for direction when markets reach Fibonacci values. Thus, when the Cartel intends on selling the market down it starts the attack at a Fibonacci retracement level. Thus, it enlists the aid of various black box programs which are then signaled to "go with the flow."
4. Focus on the important and unique characteristics of a specific market. When considering the potential and direction of a major interventional move, consider the salient characteristics of a particular market. The gold market, for example, is a relatively small cap market. Thus gold bullion and shares are relatively easy to manipulate. Likewise, since the interest rate market is a "paper" market which reflects no tangible asset, it too is relatively easy to manipulate given enough derivatives. As we have earlier pointed out, the Bank for International Settlements, as of December, 2005, maintained a $216 trillion derivative position giving them the ability to do just that.
However, markets for a major tangible asset such as crude oil are harder to manipulate. Once the Cartel has begun moving crude in a certain direction, the market itself is like a Very Large Crude Carrier. It does not easily change direction.
Therefore, those who acted on Deepcaster's forecast late last Spring would have profited from the trending crude oils two-month descent from its July highs of $78 down to the high $50s at October's end, has been relatively easy. Once started the trend of a crude oil market is not easily changed.
None (nor all) of these guidelines is sufficient to ensure profiting or even avoiding loss. But they are helpful to consider when making investment decisions.
Conclusion: How can we apply these guidelines to the current situation, that is, just pre-election?
Gold and Silver
Let us consider the prospects for gold and silver. As we have explained before, gold and silver are the bete noirs of the central bankers. The central bankers appear not to like investors to have Hard Asset rivals to their Treasury paper, securities, and fiat currencies. Therefore, as a high priority for them, the prices of gold and silver must be controlled or suppressed. Moreover, since the total market capitalization for the securities of gold and silver production and exploration companies is small relative to other markets, they are relatively easy to manipulate.
Given the Cartel's overall goals, we can say with high probability that the two gold and silver market takedowns earlier this year were likely a prelude to the third. But we cannot say exactly when that third might be - we can only make an educated forecast. And Deepcaster does make such a forecast on its website.
Finally, it is appearing more and more as if the Cartel is interested in making the takedown of these precious metals as long, and painful a process as possible by dividing it into multiple stages, and drawing the takedown out over many months. It appears as if they wish for hard asset investors to be discouraged from seeing gold, silver and the strategic commodities as rivals to paper assets.
Crude Oil
We shall conclude with crude. Late last spring Deepcaster forecast that crude oil would suffer a major fall and in our September 24th Alert we forecast it would last until the election. And so it has. Is there any reasonable doubt that a political agenda is being reflected here? Not only in the prices of crude oil but in the elevated Dow and other indices.
However, we conclude that after the election all bets are off. While Deepcaster does forecast where we think The Cartel will eventually take the price of crude oil, we do not think that will necessarily happen immediately after the election.
Overall, the foregoing guidelines will not in themselves be adequate to determine what constitutes a potentially profitable investment, but they may, coupled with fundamental and technical analysis, make an investors likelihood of profiting, and not losing, from an investment much greater.
Deepcaster
November 2, 2006
DEEPCASTER LLC
www.deepcaster.com
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
-- Posted Friday, 3 November 2006 | Digg This Article
