The Hard Money Partisans’ Conundrum (to use the term which Alan Greenspan so deceptively misused) is how to invest in Gold (and Silver) without suffering the serious financial injury caused by one of The Cartel’s periodic devastating Price Takedowns.

     We Hard Money Advocates know that Gold and Silver are the ultimate Fortress Assets, the ultimate measures of value, and the ultimate currencies.  And we know that the colored pieces of paper we carry in our wallets are none of the above.

     However, we also know that the Fed-led Cartel of Central Bankers substantially influences the price that we can obtain for Gold and Silver at any given moment in the Market.  Indeed, it seems “The Market” price is all-too-often determined by the derivatives and other positions controlled by The Cartel.

That is, The Cartel is the largest participant in The Market at those times when it effectively controls the market price.  Indeed, a main occupation of The Cartel seems to be periodically launching swift, violent attacks on the price of bullion and precious metals shares.

Those not familiar with the very substantial evidence for Cartel Market Interventions and Government Data Manipulation should read Deepcaster’s Overview:  “Juiced Numbers:  How The Market Gets the Statistics It Wants, Markets Get Manipulated, Citizens Get Deluded, and Worse” in our October, 2006 Letter posted at www.deepcaster.com.  For the best evidence of Gold Market Manipulation visit the Gold Antitrust Action Committee’s website at www.gata.org.

     In order to minimize the damage from The Cartel’s Periodic Takedowns of Precious Metals prices, and to profit, hopefully, from such Takedowns it is important to consider The Characteristics of these Cartel Manufactured Takedowns.

1.      The Takedowns typically come swiftly and often after a period of weeks or months of relative market inactivity (e.g. price activity within a trading range).

2.      A price Takedown often begins before the markets open in the U.S. so those who are long feel trapped by, for example, a gap down to a much lower gold price at the opening.

3.      Takedowns are often preceeded by tempting Technical Analytical formations - - which Deepcaster calls “lures” - - these “lures” tempt Hard Money Advocates to believe that Gold or Silver are about to bullishly break out of technical formations.

4.      The Cartel’s Achilles Heel:  The Cartel must expend physical bullion to implement these Takedowns.  BUT simple logic indicates that The Cartel would like to expend as little bullion as possible implementing such Takedowns because of the dwindling aboveground supplies in the face of ever-increasing demand for both Gold and Silver.  This fact is The Cartel’s Achilles Heel.  Thus, the attacks are swift in hopes of getting the longs (many of whom are on margin) to puke up their positions at reduced prices - - a situation doubly profitable for The Cartel.

In light of these characteristics of Cartel Engineered Takedowns, how does one proceed to protect and profit?  Deepcaster has developed the following Guidelines Designed for Protection and Profit:

1. To the extent you are able, buy near the bottom of Cartel Takedowns.  Typically, these opportunities have come two or three times a year.

2. Do NOT buy on margin.  Positions bought on margin are very vulnerable to forced sales.

3. Deepcaster’s strong preference is for purchase of actual physical bullion or coins near the bottoms of Takedowns.  If you do not intend to hold bullion yourself, it is important that it be held in a segregated account.  Likewise for coins.  The fact is that even though the market price may be temporarily taken down, buying physical means that you own and have physical.  The more physical that you and other investors have, the less physical that The Cartel can have or acquire.

4. If you also buy shares (more below), give preference to those shares of “Junior” companies (which, typically, are not yet in production but) which have abundant reserves.

Deepcaster has developed a Short List of several such promising “Junior Gold and Silver companies (see Deepcaster’s April 2007 Letter at www.deepcaster.com).  The shares of these companies tend to be somewhat immune to Takedowns simply because, inter alia, when share prices are dramatically depressed through a Cartel Takedown those Juniors with precious metal large reserves become ever cheaper in the eyes of prospective acquirers.  Indeed, many of these companies with very ample reserves (particularly the smaller capitalization ones) are now candidates for buyouts or takeovers based on the value of those reserves.  The potential for being acquired provides a potential equity “kicker” for such an owner of shares in these Juniors.

5. Be very wary before buying the shares of Precious Metals Exchange-Traded Funds.  The bullion ostensibly held in certain Exchange-Traded Funds is not capable of being adequately audited, in Deepcaster’s view.  For example, certain Funds allow their ostensible bullion holdings to be held by un-auditable sub-custodians.  Even though you may think that you own shares in actual bullion via an Exchange-Traded Fund, for some funds it is not clear that you could adequately audit it much less actually take possession of it.  Deepcaster lists those Funds that appear to us to have adequate audit mechanisms in its April 2007 Letter at www.deepcaster.com.

6. If you buy producers, buy well-managed unhedged producers with large reserves near the bottoms of Takedowns such as the one identified in Deepcaster’s April, 2007 Letter.  Several of the larger gold production companies have hedged downstream sales.  Needless to say, this hedging is inimical to potential profit downstream, when Gold prices rise.

Why risk your investment funds buying companies with hedges where you have a limited upside and you are subject to a great downside as the result of a Cartel attack.

7. Hold your physical and under-appreciated Juniors and sell at least one-half of your producer shares near “tops” and await the next Takedown to buy again.

This is known as “taking profit.”

Deepcaster

March 30, 2007

DEEPCASTER LLC

www.deepcaster.com

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-- Posted Friday, 30 March 2007 | Digg This Article