-- Posted Wednesday, 21 November 2007 | Digg This Article
| Source: GoldSeek.com
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Recent high price volatility provides an opportunity to profit from a position in Gold. But it is essential to Forecast the direction of the prospective moves correctly, of course, in order to know WHAT position to take, whether short or long.
There is considerable evidence that a Fed-led Cartel of Central Bankers* regularly intervenes in the Gold (and other) market(s) to substantially influence the price for Gold at any given moment. This Intervention is apparently accomplished via its Primary Dealers as Deepcaster describes in its November, 2007 Letter posted at www.deepcaster.com.
Indeed, the Bank for International Settlements (The Central Bankers’ Bank) reports that over $450 billion in OTC derivatives is available to control the Gold price (www.bis.org>stats>derivatives>Table19).
In sum, The Cartel is the largest participant in The Market (via its Primary Dealers) 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 to takedown the price of bullion and precious metals shares.
Unfortunately, the weight of the evidence is that The Cartel of Central Bankers is still the single largest determinant of the Gold price. Savvy Investors need to deal realistically with this major market force.
The Banking Cartel’s motivation for hostility to high precious Monetary Metals and Strategic Commodities prices is clear. High prices for these serve as a threat to the legitimacy of its paper Fiat Currencies and Treasury Securities (see Deepcaster’s November, 2007 Letter for more details).
In order to understand how to profit (and/or to minimize the damage) from The Cartel’s Periodic Takedowns of Precious Metals prices it is important to consider The Characteristics of these Cartel Manufactured Takedowns.
- 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).
- 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.
- Takedowns are often preceeded by tempting bullish Technical Analytical formations - - which Deepcaster calls “lures” - - these “lures” tempt Hard Assets Partisans to believe that Gold or Silver or other hard assets are about to bullishly break out of technical formations.
- Examples of these alluring technical patterns are Fibonacci retracement levels, Head & Shoulders, and Trend Channel Breakouts. Longs in these circumstances are literally the hens led into the slaughterhouse by technical “lures.”
- Similarly, however, The Cartel also apparently uses such Technical Patterns as pretexts for their Interventions to create Plausible Deniability for their Interventions.
- Regular attention to Interventionals such as the Dollar Adjusted Value of Gold and the Repo Pool (see November, 2007 Letter) give important clues regarding impending Interventions. Deepcaster has used these “Interventionals” to facilitate its profitable recommendations displayed at www.deepcaster.com.
Apparently enabling such Intervention (in addition to the aforementioned $450 billion OTC derivatives position reported by the BIS) is cooperation among Primary Dealers. For example, we have noted elsewhere the borrower/lender relationship (for precious metal shares) between Oppenheimer Co. and J.P. Morgan Chase. And we have asked why such a share lending relationship would exist if it were not to make shares available for massive takedowns directed by The Cartel? No one has had a satisfactory answer to this question other than they are to be used exactly for that purpose.
The Cartel’s Achilles Heel: The Cartel must also 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 above ground 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 the aforementioned characteristics of Cartel Engineered Takedowns, how does one proceed to protect and profit? Deepcaster has developed the following Guidelines Designed for Protection and Profit:
- To the extent you are able, buy near the bottom of Cartel Takedowns. Typically, these opportunities occur two or three times a year. Consideration of The Interventionals is essential to forecasting these.
- Do NOT buy on margin. Positions bought on margin are very vulnerable to forced sales.
- 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.
- 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 certain 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.
- 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.
- If buying 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.
- 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.”
8. When Technical and Interventional analyses both indicate the likelihood of an imminent Cartel-caused Gold Takedown coupled with a takedown of a market linked to gold (or one which would move correspondingly - - see above) the prudent course is to either be out of the market or be short gold. Among several ways to be short gold are: selling major gold producers such as Newmont Mining short, or buying puts on Newmont, or buying puts on gold bullion in the futures market, provided one is comfortable with the substantial risk which options entail.
NOTE:
The magnitude of Interventions and Data Manipulation extends far beyond the Gold market. In this regard, manipulation of key statistics (e.g. the Consumer Price Index) and available money supply (The Fed is now hiding money supply inflation - - M3 - - which is currently increasing at 15+%** per year) have indirect but potent effects in all major markets.
Regarding the Cost of Living, Fed policy, primarily, has led to massive decreases in purchasing power of the U.S. Dollar. And it has led to massive decreases in the price of Gold in inflation-adjusted U.S. Dollar terms. For example, the 1980 Gold price peak of $850/troy ounce in terms of today’s U.S. Dollar is: “…inflation-adjusted peak Gold would be $2,283 per troy ounce based on October, 2007 Dollars and $6,030 per troy ounce in terms of October, 2007 SGS-Alternate CPI Dollars…”**
The Near-Term Forecast
Of course, the key question is always “Which way next?” Is it time to buy puts, sell short, or stand aside or whether it is time to load up on physical or high reserve juniors, if one believes a rise is coming. Making this decision requires using technical, fundamental and, especially, interventional analysis.
Indeed, Deepcaster has recently Forecast major moves coming soon in Gold (as well as Silver, Crude Oil and the Major Equities Markets). Regarding Gold, the fundamentals and technicals are quite bullish. That is why it is essential to consider The Interventionals when forecasting the next major move.
Moreover, it is Interventional Analysis that is critical to the judgment about whether Technical Patterns are a “lure” or a genuine Harbinger of a move soon to come.
Thus, analysis of The Interventionals should be crucial for making specific Forecasts regarding, and profiting from Major Moves in Gold and other Major Markets.
Deepcaster
November 21, 2007
*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers to read Deepcaster’s November, 2007 Letter containing a summary overview of Intervention entitled “Market Intervention and Data Manipulation - - Consequences & Forecast for Gold, Crude & Equities and The Cartel End Game” at www.deepcaster.com/Latest Letter. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “interventionals.”
**www.shadowstats.com
-- Posted Wednesday, 21 November 2007 | Digg This Article | Source: GoldSeek.com
