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PROFIT AND PROTECTION DESPITE FINANCIAL CHAOS - - Gold, Silver and The Cartel “End Game”



-- Posted Friday, 25 January 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

DEEPCASTER HIGH POTENTIAL SPECULATOR

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

 

 

Increasing market volatility and financial system “mishaps” (e.g. the subprime mortgage mess, bank credit freeze-ups, etc.) have given investors notice that the financial system is increasingly unhealthy.

 

Gold and Silver, the Monetary Metals, can serve as a Profitable Refuge from Financial Chaos, provided they break free of the price suppressing shackles of the Fed-led Cartel* of Central Bankers, and defeat The Cartel’s “End Game” scheme.

___

 

*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers to read Deepcaster’s January, 2008 Letter containing a summary overview of Intervention entitled “Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast” at www.deepcaster.com>LatestLetter.  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.”  (Regarding The Cartel’s “End Game,” see Deepcaster’s August 11, 2006 Alert “Massive Financial-Geopolitical Scheme Not Reported by Media” and June, 2007 Letter posted at www.deepcaster.com.)

___

 

Thus Deepcaster offers the following considerations as an aid to profit and protection despite Financial Chaos and The Cartel “End Game.” 

 

The first requirement for profit and protection during financial chaos is to realize that we have only seen the beginning (and not even the end of the beginning) of difficult times for the markets, the financial system, and the U.S. economy, as we shall show.

 

Second, it is imperative to identify the key aspects of the ongoing crisis in order to develop an approach to coping with them.

 

In our recent article entitled “Our Crisis = Great Danger + Great Opportunity” we described several aspects of the ongoing crisis and laid out some guidelines for protection and profit via investment in Precious Metals.

 

Now, we review several additional causes of structural weakness and make additional suggestions about how to cope.  Since the U.S. economy is still the world’s largest economy and the U.S. Dollar still the world’s Reserve Currency (though for how much longer is a matter for discussion) we will focus on the U.S economy.

 

1)     The U.S. housing market will not revive any time soon.  Seasonally adjusted December housing starts fell by 14.2% (15.2% net over revisions) on a monthly basis.  Year-over-year, December starts were down by 38.2%.  Subprime mortgage resets are projected to continue for many months.  The mortgage securitization business, which in recent years helped facilitate lots of easy lending, is now seriously impaired due to increased default rates, “dark liquidity” concerns, and the credit crunch.

 

2)     The reported official annual CPI inflation rate of 4.1% exceeded reported annual growth in December, 2007 retail sales.

 

“Though still shy of reality, the December CPI inflation rate was high enough to take the reported 4.1% annual growth in December retail sales into contraction, net of inflation.  Such rarely is seen outside of recessions and is particularly ominous where retail outlets often make or break their year with holiday sales.”**

 

Real Consumer Price Inflation (i.e. the SGS, Shadowstats Government Statistics, Alternative Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies since 1980) was roughly 11.7% in December, 2007.  (shadowstats.com, January 19, 2008, Flash Alert).

 

3)     The Municipal Bond “Insurers’ business model is irreparably broken’.  Municipal bond insurers are extremely important because it is their insurance which provides the basis for the bond ratings (often AAA) which allows municipalities to get low-cost credit.  But the viability of several leading insurers is now seriously in question.  Thus, Municipal Bond financing will likely be seriously impaired, as will the “market” value of those bonds held by banks in their portfolios.  In a domino effect, Banks will be forced to write down the value of these portfolios which will impair their credit ratios.

 

And lest anyone think that massive public works projects, of which the U.S. is in great need given its deteriorating infrastructure, can pull the financial system out of its doldrums, just consider that this vehicle for obtaining high ratings (and thus low interest rates) on bonds for public works projects has just crashed.

 

“The real problem (is with) the monoline insurers like ACA, Ambac, and MBIA.  Here is a quick primer on how they work.  Say you are a small municipality and want to borrow $10 million for a bond offering to build a road or water treatment plant.  If you went to the market with your credit rating, it would be a low rating and the cost of money would be high.  But if you get one of the seven monoline insurers to guarantee your bond then you get whatever their credit rating is.  The fees for such insurance are lower than the savings you get on the bonds so everyone wins.

 

But over the years, most of the monoline insurers went from boring municipal bonds and jumped into the to mortgage-backed security markets, selling credit default swaps that significantly juiced their earnings.  But it also added a lot of risk that they clearly did not, in hindsight, understand.”

 

Suffice it to say that the credit ratings of many of these monoline insurers have gone from AAA down to junk or near junk.

  

“ACA has already seen its credit rating go from AA to CCC, which is basically junk.”  “The bond insurers’ business model is irreparably broken.  In HCM’s view, it will be all but impossible for these companies to raise capital at economic levels for the foreseeable future…”   John Mauldin Letter, January, 2008.

 

4)     Manufacturing, which used to be the engine of the U.S. economy, has been severely weakened - - the U.S. has lost more than 3 million manufacturing jobs since 2001, due to NAFTA, CAFTA, (and other globalist projects) and the refusal of the U.S. government to protect U.S. industry and American workers jobs with tariffs.

 

5)     Consequently, foreign made goods now account for 1/3 of all goods consumed in the United States, tripling their share over the last quarter century.

 

6)     Thus, the 1980s claim that the U.S. could profit by replacing bricks and mortars factories with financial services has now been shown to be a paper falsehood.  The “Paper Emperor” of Financial Services Sector Excesses has been shown to have no clothes.  Those Financial Services Entities which overreached are now in the process of imploding.

 

This implosion should have been expected since the strength (or weakness) of the financial services industry is ultimately derived from the real underlying economy which provides tangible goods and services.

 

With a diminished manufacturing base, massive and increasing deficits and downstream-unfunded liabilities, and a weakened and compromised financial services market sector, the U.S. economy is in deep trouble.

 

7)     A temporary “solution” to the “debt” and related crises has been the now ongoing sale of key U.S. assets to foreign investors.  But this is another temporary “cure” which is worse than the disease.  U.S. industries remain on sale at discount prices.  Given the recent weakness in the U.S. Dollar, in 2007 foreign investors poured a record $4.14 billion in buying stakes in American companies, factories, and other properties.  That was up 90% from 2006 and more than double the average of the past decade.

 

Can The Fed rate cuts and the U.S. Federal Government “Stimulus Packages” Protect Investors and Economic Health?  Not likely.  As Deepcaster pointed out in its January, 2008 Letter and last week’s Alert, The Fed’s policies are a major cause of the current Financial System Chaos.  One can argue that, fundamentally, The Fed was and is designed to protect the super wealthy and the Banking Cartel and to expand their wealth.

 

Indeed, The Fed’s business is creating fiat currency (and thus more debt) out of thin air through the mechanism of extending credit.  Since it extends credit to the U.S. government it profits greatly with the ever-increasing indebtedness of that government.  Moreover, the IRS guarantees payment of the interest on that government debt by enforcing tax laws and collecting receipts.

 

The Fundamental reality is that there is thus a huge incentive for The (privately owned) Fed to support ever more profligate government spending (via ever-increasing indebtedness), including for war.  Consider G. Edward Griffin’s (author of “The Creature from Jekyll Island” about the Federal Reserve) view of the IRS and the U.S. Federal Reserve.

 

“Although it would seem that the IRS and the Federal Reserve system are unrelated, appearances can be deceiving.  It is true that they are separate creatures - - one that collects and one that creates money - - but on examination we find they are fraternal twins with common parentage and instinct.  They both have grown to gargantuan proportions since their birth in 1913 and have become insatiable predators, dining on the productivity of the common man.  In the case of the IRS, the perpetual feast is consumed as taxes, taken directly from our earnings.  In the case of The Fed, it is taken indirectly as inflation but the net effect is the same.”

 

Griffin emphasizes that the laws establishing both the Fed and the IRS were drafted and sponsored in 1913 by the politicians clustered around the huge international banking dynasties. 

 

“Both are essential to the expansion of government power and the establishment of control over the masses, which is the ultimate goal of the elitists who anticipate being the hidden rulers of such a system….both are protected by the leaders of the major political parties who are amply funded by these elitists and their institution….both creatures will continue to grow until the devour every last vestige of our personal wealth and freedom  - - unless they are slain.  They are intrinsically deadly and a nation cannot survive in freedom unless we replace the puppets now in Congress with real Americans who place our nation ahead of personal gain.  The IRS and Fed must be abolished.”  (emphasis added) G. Edward Griffin, The IRS and the Federal Reserve:  Fraternal Twins, January 9, 2008.

 

Deepcaster has described the goal of the Fed-led Cartel as “The Cartel End Game.”

 

It behooves investors to consider once again how to respond to The Cartel’s implementation of its (now ongoing) End Game.  That ‘End Game’ has several important facets (see Deepcaster’s August 11, 2006 Alert and June, 2007 Letter).

 

But one key facet involves destruction of the U.S. Dollar, and its replacement by the “Amero” which would (The Cartel apparently plans) NOT be linked to Gold and Silver.  Indeed, commercial investment advisors (e.g. Swiss Portfolios) are already touting the “Amero.”

 

In short, the evidence indicates that the destruction of the U.S. Dollar, and its replacement by another purely fiat currency, the “Amero” is part of the Cartel “End Game” plan.

 

Deepcaster has addressed the issue of the demise of the U.S. dollar on other occasions. But the consequences of the demise are so significant that one must ask the question about the possible alternatives to the U.S. Dollar and the implications of each.

 

There are two major alternatives to the U.S. Dollar (and other similarly weakening purely fiat currencies). One is re-linking the (presently fiat) currencies to gold and silver, an approach which Deepcaster has long favored as fundamentally sound. The other alternative (doubtless favored by The Cartel of Central Bankers and certain other Pooh-Bahs of international finance) is to dissolve major national “fiat” currencies and create regional or multi-national fiat currencies, such as the “Amero.”

 

Thus the battle lines are drawn for the Great Currency War of the next few years: Gold and Silver-based currencies versus the Amero, Euro, and other Fiat Currencies.  Deepcaster has developed Guidelines to cope with the End Game and the push to displace the U.S. Dollar which are set forth in its January 21, 2008 Alert (in the Alerts Cache at www.deepcaster.com).

 

The bottom line of the push for de-nationalized currencies and the deconstruction of nations is that it benefits globalist institutions and businesses to the great detriment of most nations, intra-national businesses and their citizens, including most individual investors.

 

Adoption of a Regional Fiat Currency such as the Amero whose value (purchasing power) is determined by a Central Bank Cartel, would likely spell a further reduction in economic and individual freedom, as well as even greater profit and power for The Cartel.

 

 

Deepcaster

January 25, 2008

 

  

 

DEEPCASTER LLC

www.deepcaster.com

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

 

Gravitas, Pietas, Virtus


-- Posted Friday, 25 January 2008 | Digg This Article | Source: GoldSeek.com




 



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