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-- Posted Friday, 11 April 2008 | 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
March, 2008 saw two Major Takedowns of Gold and Silver, the apparent topping of Crude Oil, and a distinct sideways and uninspired chop for the Equities Markets. But key Fundamental, Technical and Interventional Indicators lead Deepcaster to Forecast Major Moves coming in mid or late April, 2008 in all these Markets.
Economic and Financial Context for The Anticipated Moves The data provide a quite adequate basis for forecasting that we will see a continuation and worsening of the current Hyperinflationary Recession in the U.S. and abroad. Today Real Consumer Price Inflation is nearly 12% annualized, Real U.S. GDP is dropping at an annual rate of about 2%, and M3 is now increasing at an annual rate of nearly 18% - - a doubling time of about 4 years, according to shadowstats.com. Moreover, we see a continuing series of crises in the Financial Sector due primarily to the perils of dark liquidity OTC Derivatives-based financial transactions which will continue to surface for many months to come. Continuing Economic and Financial Sector Weakness should result in an increased reliance on and investment in Gold and Silver as “Safe Haven” assets. But, in fact The Cartel* can be expected to fight the ascendancy of Gold and Silver as Safe Havens tooth and nail as the two major Takedowns of Gold and Silver in March, 2008 demonstrate. As we have explained on several occasions, the Precious Monetary Metals and Strategic Commodities are the “Mortal Enemy” of The Cartel because they serve they threaten the legitimacy of their Treasury Securities and Fiat Currencies as stores and measures of value. See e.g. Deepcaster’s January, 2008 Letter “Market Intervention, Data Manipulation, Increasing Risks, The Cartel End Game and Latest Forecast” at www.deepcaster.com. The question is whether The Cartel* still has the financial ammunition (e.g. over $1 trillion in OTC Gold Contract Derivatives alone, as reported by the BIS) to win the battles and will thus continue to be able successfully to opportunistically take down Gold and Silver. Indeed, a clue that a pretext or catalyst for such a Cartel* Takedown Attempt may be near was provided by the April 7, 2008 announcement by the IMF that it will seek to sell over 400 tons of Gold in increments. As well, the fact of a slowing U.S. economy (which, we reiterate, is moving into a worsening Hyperinflationary Recession, and perhaps even a Depression) provides an ideal Pretext for The Cartel to attempt again to take down Gold and Silver, on the grounds that a slowing economy dampens inflation, and that thus holding Gold and Silver is not needed as an inflation hedge. A specious argument indeed, because, inter alia, it omits that Gold and Silver are also deflation hedges.
Major Markets Context for Impending Moves - - Gold, Silver, Crude Oil & Equities After having been taken down through nearly the end of January, 2008 the U.S. Equities Markets Price Performance has since then been characterized by a sideways chop - - on The Dow, for example, between about 11,700 and 12,700. As well, although Gold and Silver suffered major Takedowns in March, in early April they have since made a modest bounces back up. And Crude Oil appears to be making a double top near $110/barrel. All these appear to be at major Turning Points as we move into mid-April. Indeed, several indicators tell us is that we can expect major moves coming in all these Sectors soon. What the indicators are in conflict about is the direction of the impending moves. Yet there are clues in all these Sectors about the ways in which the Sectors are likely to move. Let us briefly examine them with an eye to ascertaining the likely future direction of the next Major Moves. Fundamentals So far as the Equities Markets are concerned, the Fundamentals are simply dreadful. Deepcaster and many others have exhaustively described the Fundamentals in the past few months - - a continuing financial markets implosion, credit markets freeze-up, subprime and other mortgage defaults, increasing unemployment (greatly in excess of official figures - - the real U.S. Unemployment Rate is about 13%, according to shadowstats.com) and a deepening Hyperinflationary Recession. The list goes on and on. All these factors together should have taken down the Equities Markets to a far greater extent than they have been. But, in our view, Intervention by the Fed-led Cartel* of Central Bankers and their Allies have kept Equities artificially propped up in a sideways trading range. Nonetheless, we see the Equities Markets are set for a major move in the next few days or very few weeks. __ *We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers and Allies 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.” ___
In light of all the aforementioned negatives, Gold and Silver as Authentic Safe Haven Assets should have skyrocketed in March, 2008. In fact, however, they were taken down by over 10%. How could this be, with economic and financial Fundamentals that are so bad? Once again, Massive Intervention and Price Suppression by The Cartel* explain the Takedowns of these Precious Monetary Metals.
Even so, our view is that, when considered together, the Fundamentals, Technicals and Interventionals indicate Major Moves are coming soon, again, in the Gold and Silver Markets. Indeed, excess of demand over long-term supply Fundamentals, and Financial and Geopolitical Uncertainties are quite bullish for Gold and Silver. For example, if the U.S. attacks Iran soon, as former Assistant Secretary of the Treasury in the Bush Administration Paul Craig Roberts legitimately fears, Gold and Silver would likely shoot up again. (See “Petraeus Testimony May Signal Iran Attacks” in the Paul Craig Roberts Archive at vdare.com.) Similarly, in the world of Strategic Commodities, the weakening U.S. Dollar and continuing robust demand have been the primary causes of an increase to well over $100/barrel in Crude Oil prices. Yet Crude too seems to have stalled in a trading range at the beginning of April, with approx. $110/barrel arguably being a legitimate top. Thus Crude too is primed for a significant Move which we see coming soon. The slowing economy should ultimately result in somewhat lowered energy prices provided that the U.S. Dollar (in which Crude Oil is traded) does not substantially weaken further and provided Geopolitical Developments do not launch the price of Crude upward. As well, in the Crude Oil and Commodities Markets generally, there is very substantial evidence of Cartel market manipulation through the use of the over $7 trillion in OTC Derivatives devoted to Commodities reported by the Bank for International Settlements in Switzerland (see www.bis.org path: derivatives>Table 19). $7 trillion in Derivatives makes the holders of those Derivatives the Biggest Player in the Crude Oil and other Commodities markets. And the Biggest Player (absent other factors) makes the Market Price.
Technicals Technicals, particularly in the Equities Markets, are in conflict. Just as an example, the Equities Markets have been chopping in a sideways channel for a couple of months now with the Dow bouncing between 11,700 and 12,700. But sideways chops do not last forever and once there is a definitive breakout that should indicate the direction of the next Major Move. A massive Head and Shoulders top in the Dow Industrials is now confirmed. It has a downside target of just below 10,000. That Head and Shoulders chart suggests that the break will be to the downside. Buttressing this downside bias, the Monthly Moving Average Convergence Divergence Charts suggest that we are in for a protracted decline. And there are other Technicals which suggest breaks to the upside or downside. However, if one is a follower of the Dow Theory, the fact that the Trannies do not confirm the prospective downtrend suggests that the Equities breakout might be to the upside. And the Trannies have continued to perform relatively well, until a major move down on Wednesday, April 9, 2008. Nonetheless, the Trannies are still far from confirming the Equities Indices downtrend. As to timing, there are certain indicators that focus on mid-April, give or take a few days, as the timing for the next major markets move. Specifically, for example, we have a Fibonacci numbers clusters and ratios which converge around mid-April. Similarly, the Bollinger Band suggests the recent very modest Equities Market rally has reached its minimum objective for an upward directional move within the larger downtrend. Thus this indicates a major decline could start at any time. Yet the 14-day Dow as Nasdaq Stochastics have moved to a sell signal while the 30-day Stochastics for these remain on a “buy.” And the McClellan Oscillator indicates a major move is coming soon. Similarly, the Fundamentals and Technicals for Gold and Silver (and Gold and Silver shares) reflect a conflict. The Fundamentals suggest that Gold and Silver, and Gold and Silver shares, should continue to climb higher. But technically the HUI 30-day Stochastic Indicator suggests that the Precious Metals stocks are ready for a Takedown very soon. Moreover, as the March Takedowns have shown, Gold and Silver prices are both still quite vulnerable to Cartel Intervention.
Interventionals Thus the key question of the day: “Does The Cartel Desire, and are they still able, to Takedown the Precious Metals (and, for that matter, Crude Oil) once again?” Deepcaster has no doubt as to their desire and intent. To reiterate, The Cartel does not want Gold and Silver (or the Strategic Commodities) to become further legitimized as Alternative Stores and Measures of Value, to their Treasury Securities and Fiat Currencies. Yet the Fundamentals and most of the Technicals for the Precious Monetary Metals are ragingly strong. So will it be the Interventionals which will once again carry the day during the next Major Moves? Or will the Fundamental forces prevail? Deepcaster’s evaluation of these conflicting Fundamental, Technical and Interventional Indicators and his Forecast for the anticipated Major Moves are contained in his latest Alert posted in the ‘Alerts Cache’ at www.deepcaster.com. Finally, though the Fundamentals for Crude remain bullish, ample aboveground supplies and a developing Technical Double Top suggest at least a modest decline will begin soon. Of course, Geopolitical Developments can always trump Technicals and other Fundamentals. An attack on Iran could launch Crude upward. An announcement that the aboveground supplies of Crude Oil are more than ample could launch it downward. Whatever the future holds, Deepcaster expects the outcomes of this Turning Point for various Major Market Sectors to be determined as a result of Fundamentals, Technicals and Interventionals. One last observation: All of the foregoing indicates increasing Systemic Risk. Increasing Systemic Risk has, in recent years, been the Harbinger for increased Intervention attempts in many markets. Increasing Systemic Risk heightens the probability of a Cartel attempt to implement its ominous “End Game.” See Deepcaster’s February 29, 2008 article “Increasing Systemic Risk Portends Cartel ‘End Game’ Attempt.” In closing, we must note that the Fed-generated Repo Pool - - a major weapon in its panoply of interventional tools - - is at record highs, having shot up to a record of over $344 billion on Monday, April 7, 2008 and another record high of $359 billion on Wednesday, April 09, 2008. Clearly The Cartel is generating plenty of Interventional Firepower for some major use. Those prospective Interventions provide yet another reason to Forecast that (in addition to the Fundamentals and Technicals) Major Moves are coming aforementioned markets in mid or late April. Deepcaster April 10, 2008
DEEPCASTER LLC www.deepcaster.com Wealth Preservation Wealth Enhancement Financial and Geopolitical Intelligence Gravitas, Pietas, Virtus
-- Posted Friday, 11 April 2008 | Digg This Article | Source: GoldSeek.com
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