-- Posted Friday, 9 March 2007 | Digg This Article
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
and a
Precious Metals and Strategic Commodities Markets Warning
Deepcaster uses the term “Impending” qualifiedly since the Real Data shows that the U.S. economy has been in a stagflationary condition for some months now. But given the probable duration and depth of the Stagflation to come, the use of the word “impending” is nonetheless appropriate.
The Good News is that understanding the character and causes of Stagflation and the ongoing Markets Intervention allows the savvy investor to develop a Rational Strategy for Profits. For a Summary Overview of Markets Interventions and Data Manipulations see “Juiced Number IV: How the Government Gets the Statistics It Wants, Markets Get Manipulated, Citizens Get Deluded and Worse” available at www.deepcaster.com.
Lest there be any doubt that the U.S. economy is in fact in an Inflationary Recession (i.e. Stagflation) consider two key data - - the GDP and CPI as reported in Deepcaster’s March Letter - - plus another recent key datum as reported below:
Regarding real Gross Domestic Product, shadowstats.com (Deepcaster’s choice for obtaining Real Statistics) indicated that “GDP declined” roughly 1.4% in 2006 versus the official 3.4% gain.
Similarly, Real Consumer Price Inflation, specifically, shadowstat.com’s Alternate Consumer Inflation Measure, averaged 10.2% in 2006 rather than the 3.2% claimed by the Government Statistics masseurs. (Shadow Government Statistics January/February 2007 Edition issued February 20, 2007.)
The “recent” datum also reported by shadowstats.com relates to Annual Payroll Growth: “on an unadjusted year-to-year basis, Annual Payroll Growth slowed sharply in January, 2007to 1.61% from 1.70% in December.”
In that same report, shadowstats.com summarizes our current and prospective condition: “the economic downturn already underway in the United States is an inflationary recession which could evolve into a hyperinflationary depression by the end of the decade.” (emphasis added)
Shadowstats.com ominously continues: “In terms of hyperinflation, the circumstance envisioned is not one of double or triple digit inflation but more along the lines of seven to ten digit inflation seen in other circumstances during the last century. Under these circumstances the currency becomes worthless as seen in Germany (Weimar Republic) in the early 1920’s and Hungary after World War II, in the dismembered Yugoslavia of the early 1990’s. The historical culprit has generally been massive printing of currency….”
Certainly not only the aforementioned Statistics but also the significant recent Equity Markets Breakdown must lead all realistic persons to consider how to financially cope with an Inflationary Recession (Stagflation), if not a Hyperinflationary Depression.
But, whether we face recession or depression, there is a Road to Profit for nimble investors who have the capacity and temperament to be either short or long on the markets. Indeed, those are two of the three criteria (i.e. the three necessary but not sufficient conditions) for profiting from current stagflation or a possible hyperinflationary depression: Nimbleness and the ability to go short or long at a moments notice.
Why these two? As Deepcaster has earlier noted, while gold (and silver) are normally the “go to” investments when the prospects are for recession and inflation, they are not in our view the “go to” investment at this time.
Deepcaster has repeatedly warned its Readers, beginning several weeks ago, of an impending substantial Gold and Silver Takedown. The first phase of that Takedown has occurred and we have not yet seen the end of it. The factual basis on which Deepcaster was able to generate this warning may be an unpalatable truth to some, as it is to Deepcaster.
Nonetheless, The Bald Fact is that The Central Bankers Cartel quite apparently still has commanding control over the Gold and Silver Market Prices (and, apparently, Gold and Silver shares) and can place (with the aid of their $450+ billion derivatives position) those prices where they wish, at any time they wish.
As we have noted, above all The Cartel of Central Bankers wishes to protect their Treasury Securities and Fiat Currency regimes. Thus they quite apparently engage in periodic Gold, Silver and Crude Oil takedowns. In no way can they or will they (so long as they are able) allow these Tangible Assets - - Gold, Silver and Crude Oil - - to be viable alternative investments to their paper.
Therefore, The Unpalatable Reality is that as equity markets are taken down (as we expect over the next few months) and as our stagflationary economy rolls along, Tangible Asset Alternatives must (in The Cartel’s view) also be somewhat de-legitimized as investments. Thus we expect them to be taken down as well.
Only when the prices of Gold, Silver and Crude Oil are at considerable risk of breaking loose from the shackles of Cartel Intervention will we see them climb, and likely explosively, to their “true market values.”
Unfortunately, that is not likely now, nor likely for months to come. Ironically, the market that has the greatest risk of exploding beyond the manipulator’s control is the natural gas market. If the situation develops in which there are very tight supplies due to a long hot summer (read natural gas generated electricity demand from air conditioning) or a long cold winter, this could well put the natural gas market beyond even The Cartel’s rigorous control. But that is not now either. So far in that market it appears the riggers have been able to keep natural gas cycling in the $7-$8 range with their $5 trillion plus derivatives position.
So what is the result of all this for one’s investment strategy? Well in an Inflationary Recession bonds and cash are the “go to” vehicles. In addition, if one has the stomach for shorting, Gold, Silver and Crude Oil would be excellent shorts at the right time.
And it is the timing issue which Deepcaster puts much effort into ascertaining.
Thus, the key to capital preservation and enhancement is to be intermittently long bonds (i.e. long-term Treasury Bonds) and intermittently short gold, silver and crude oil until The Interventional Landscape changes. And that is the third key to the puzzle: intermittently.
Above all, the Cartel seeks Plausible Deniability for its interventions. Thus, market volatility, multi-directional moves, and strict attention to Technical Analytical Patterns are essential to implement Cartel Purposes, just as knowledge of them is essential to Investor Wealth Protection and Enhancement.
As Deepcaster has noted elsewhere, The Cartel appears to use Technical Analytical Patterns coupled with sudden and substantial “breakout pattern” up moves as “lures” to attract long investors in gold, silver and crude oil (i.e. tangible assets investors) and then to punish them with sharp sudden takedowns. In this connection, analysis of current and prospective interventional actions not only becomes crucial for profit, but also for financial survival.
Similarly, after the last long bond strengthening episode which ended at the beginning of December 2006, yields on the 10-year then shot up to the 4.9% range at the beginning of February, 2007 near which point Deepcaster recommended yet another long bond position which has in the recent weeks treated our subscribers very generously to paper profits.
Indeed, Deepcaster has warned its Readers that another Very Major Market Move is likely in the next very few weeks in the Precious Metals and Strategic Commodities Sectors.
Deepcaster intends to employ nimbleness, the ability to go short and long, and intermittency considerations in addition to technical, fundamental, and interventional analysis to hopefully put our Readers in the way of additional profits.
Thus, except for the very well capitalized, it is not possible to cleave to one direction in the market (i.e. long bonds or short gold, silver and crude oil) without suffering serious financial damage. Therefore, nimbleness, the ability to go short and long, and to do so intermittently and, most important, at the right time, as guided by interventional analysis, are the watchwords for investment success in our stagflationary economy and manipulated markets.
Deepcaster
DEEPCASTER LLC
www.deepcaster.com
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
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