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Profit From Fed-Catalyzed Crises



-- Posted Thursday, 3 July 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com

“If the system is so fragile that the collapse of the fifth-largest investment bank in America could bring the whole thing down, what's going to happen in a few years when the No. 2 or No. 1 banks go bad...What's Bernanke going to do, get in his helicopter and fly around the country repossessing cars and houses? This is insane."
                          Jim Rogers, June 25, 2008, Moneynews.com


Thus, Jim Rogers makes a compelling case those “insane” Fed policies of the past few years have brought the Financial System to the Brink of Meltdown.   Were that NOT the case, the Fed would not have seen it necessary to intervene to resolve the Bear Stearns crisis.  Bear Stearns was only the fifth largest investment bank in the United States.

Indeed, Deepcaster and Jim Rogers both recommend the same Solution to the crises catalyzed by The U.S. Federal Reserve: Abolish it.  The private for-profit Fed should be replaced by a U.S. National Bank as authorized by the U.S. Constitution.  That Bank could then Re-link the U.S. Dollar to Gold and Silver as constitutionally authorized.  This could prospectively avoid the massive Fed-catalyzed monetary and credit excesses which are the main cause of our current financial crises.

But it is not only Deepcaster and Jim Rogers who believe Fed policy risks Systemic Collapse.  A Number of European Bankers also agree.

“The clash between the European Central Bank and the US Federal Reserve over Monetary Strategy is causing serious strains in the global financial system and could lead to a replay of Europe's exchange rate crisis in the    1990's, a team of bankers has warned.  'We are seeing striking similarities between the transatlantic tensions that built up in the early 1990's and those that are accumulating again today.  The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe, said a report by Morgan Stanley's European experts..."
            
  Catastrophic' Event Feared as Fed fights ECB on Rates
Ambrose Evans-Pritchard, The Telegraph, London, Monday, June 16, 2008


As well, Fortis Bank, a large international bank and insurer headquartered
in Europe:
     
"Expects a complete collapse of the US financial markets within a few days to weeks...'The situation in the US is much worse than we thought'   Fortis expects bankruptcies among 6000 American banks...But also Citigroup, General Motors, there is starting a complete meltdown in the US."
      
  June 29, 2008 Google translation from the Dutch.

In addition, the Asian Clearing Union (ACU) also recently expressed a lack of confidence in the U.S. Federal Reserve.  On June 22, 2008 they announced that they had agreed to introduce the Euro alongside the U.S. Dollar for settlement of payment
among member countries beginning January, 2009.

This ACU Act puts another Nail in the Coffin of the U.S. Dollar as the World's Reserve Currency.  If Crude Oil ceases to be priced solely in U.S. Dollars, and given that the U.S. Dollar/Crude Oil Pricing link is already under serious strain, then the U.S. Financial and Economic Systems (and therefore those of the major nations of the world) will be in even more serious trouble, and even closer to meltdown.

Perhaps most significant, even the Bank for International Settlements (BIS -- The Central Bankers’ Bank) says the global economy could face a deeper downturn than expected. 

“In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation,” the BIS said in its annual report.

“While difficult to predict, their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect.”
   
   BIS:  Global economy could face deeper downturn
   George Frey, AP Business Writer, June 30, 2008


In response to these ongoing crises, the International Monetary Fund is undertaking an audit of the U.S. Financial System.  The IMF’s Board of Directors has ruled that a Financial Sector Assessment Program (FSAP) is to be carried out in the USA.

Indeed, the Primary Cause the aforementioned crises is U.S. Fed policy of recent
years.  Specifically, among the many crisis-creating Fed policies have been, and are:
     
--Expanding the money supply at a Hyperinflationary Rate, now about 16% per annum (M3), and coupling that with “easy credit,” and
--Thus creating skyrocketing Real Consumer Price Inflation, now nearly 12% annually, and
--Thus catalyzing record-high Real U.S. Unemployment, now nearly 14% annually. (all according to the quite credible calculations of shadowstats.com)


The Systemic Manifestation of The Fed-Led Cartel’s Outrageously Bad Policies is the creation of the various Bubbles: the Credit Bubble, the Mortgage Market Bubble, the Darkly Liquid OTC Derivatives Bubble, are among the major ones.  These are all in the process of Bursting, with quite deleterious consequences

Compounding the ongoing crises, the U.S. Fed-led Cartel* and cooperating Agents and Allies, have also been Intervening in all the Major Markets (e.g. artificially boosting equities and regularly suppressing the price of Gold and Silver) and/or manipulating the Statistics to suit their own purposes, as Deepcaster's July, 2008 Letter “Market Intervention, Data Manipulation Still Accelerating, Increasing Risks, The Cartel End Game,” available at www.deepcaster.com, demonstrates.
______________________________________

*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.”
_______________________________________


Of course, the Private, for-Profit U.S. Fed has continued to act with its usual Hubris.  Indeed, on June 8,2008 a Fed Governor, Timothy Geithner, said banks and investment banks whose health is crucial to the global financial system should operate under a "unified regulatory framework", with The Fed playing a "central role" in that framework.  James Politi and Gillian Tett, Financial Times, London, Sunday, June 8, 2008

It is hard to conceive of a statement that would reflect a more blatant grab for even
more power for The private, for-profit Fed than this one.  Fortunately, there are increasing numbers of countervailing forces arrayed against The Fed and its allies and factota.

In the United States, for example, a Fair Finance Activist recently filed a complaint questioning why The Fed conducted closed-door Rule-making with Private Entities in the massive $60 Trillion Credit Default Swaps Market. "The Fed thinks it can engage in rule-making in secret only with the industry,” said Matthew Lee Executive Director of the non-profit group Inner City Press/Community on the Move.  He requested copies of all relevant communications. "Secrecy for NY Fed's Derivatives Bailout Scheme Challenged" (Joanne Morrison, Reuters, June 15, 2008).

In Europe too, many citizens are Chafing under the Bit of Central Bank control.  Germans, for example, have begun to reject Euro Bank Notes with serial numbers reflecting that they have been printed in Italy, Spain, and Portugal.  Some are demanding Euro Notes reflecting German provenance.  Clearly, coupling this fact with the recent Irish rejection of EU hegemony, public support for the European Union and the Euro Currency is declining among the citizenry of the nations of Europe.

And so it is that the Fed-Led Cartel is under increasing pressure.

But one should not expect the Fed-led Globalist Banking Cartel to relinquish its power and pelf easily.  The U.S. Fed, for example, is the recipient of easy profits provided courtesy of U.S. taxpayers who pay "interest" on the Treasury Securities The Fed has “bought” with money it created out of thin air, --a “racket” as Richard Russell and others have pointed out (Cf. Deepcaster's July 2008 Letter at www.deepcaster.com).

Indeed, it is clear that The Cartel has a Nefarious 'End Game' plan, which they are already beginning to push to implement.  One of several key components of this plan is to substitute the Amero for the U.S. Dollar, which they clearly are intentionally causing to weaken.  See Deepcaster's 8/13/06 Alert “Massive Financial-Geopolitical Scheme Not Reported by Big Media,” and June, 2007 Alert “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” for details regarding this nefarious End Game Plan at www.deepcaster.com.

Fortunately there is a Resolution in the U.S. Congress which reflects opposition to this Threatening Endgame Plan: H.Res.40 (Goode, R-Va) is cosponsored by Reps. Ron Paul, Walter Jones, and Tom Tancredo.

Fortunately also, Deepcaster has developed a Strategy for both profiting from the attempted implementation of the ‘End Game’ plan, and ultimately defeating The Cartel in its attempt to do so. That Strategy is laid out in its Alert of 12/23/07, "A Strategy for Profiting from Cartel Intervention..." available in the Alerts Cache of www.deepcaster.com.

The essence of The Strategy, as applied to the Gold and Silver markets, is to consider not only the Fundamentals and Technicals but also The Interventionals in making investment decisions.  Such a Strategy can allow one to profit on the way down, in Takedowns of Gold and Silver for example, as well as on the way up. 

To summarize the strategy for protection and profit from the bursting of Fed-catalyzed bubbles and the Fed attempted implementation of its’ ‘End Game’:

1) Understand the various Bubbles and the implications of their bursting. This allows one to
2) Pick which Sectors are inflating and those which are deflating, which allows one to
3) Ride the inflating ones up and use short positions of various kinds to ride the deflating sectors down and
4) Recognize that one must regularly consider the Interventionals as well as the Fundamentals and Technicals in order to adequately forecast Market Moves; and
5) Recognize that Gold and Silver are authentic Safe Havens against both inflation and deflation but that their price at any given time is subject to massive distortion by the Fed-led Cartel of Central Bankers through its Interventions and, therefore
6) It is important to implement a Strategy that allows one to build one’s Core Position in Gold and Silver at the bottom of Cartel generated takedowns, but also to profit as Gold and Silver rise, and when they are Taken Down as well.

A major premise of The Strategy is that one can, and should, certainly remain a Hard Assets Partisan while at the same time insulating oneself from future Takedowns. Adopting such a strategy can help to avoid unpleasantness, or even possible financial ruin, in the future, as well as to make profit along the way:

In sum, Investors must recognize that The Cartel is still potent, as difficult as that may be psychologically for Deepcaster and other Hard Assets Partisans to acknowledge.  The Cartel is still the Biggest Player in many markets and, if the timing and market context are propitious, the Biggest Player makes Market Price. In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and that is a tremendous advantage; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.

However, there will be a time when The Cartel price capping is ineffective and Gold & Silver make record moves upward. The benefit of this Strategy is that one will likely be long in one’s speculative positions when this happens.

Consider also that Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of the Central Banker Cartel and return to “Hard Money.” It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets only to have those assets effectively de-valued by Cartel Takedowns. This is extremely injurious to many average citizens in many countries who are saving for the rainy day or retirement and have their retirement and/or reserves effectively taken from them. In order to help prevent this and similar outrages, we recommend taking three steps:

a) Become involved in the movement to abolish the U.S. Federal Reserve (a private for-profit Cartel of International Banks) as Deepcaster, Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, among many others, all have advocated.

b) Join the non-profit Gold AntiTrust Action Committee which works to eliminate the manipulation of the Gold and Silver markets (www.gata.org). GATA is a non-profit organization which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities.

c) Work to defeat The Cartel “End Game.”  Deepcaster has laid out the evidence regarding the Ominous Cartel End Game.  Clearly The Cartel is sacrificing the U.S. Dollar and price-capping Gold and Silver, inter alia, to prop up international financial institutions and to maintain its power. But this sacrifice cannot continue forever.

Conclusion

The Starting Point for protection and profit is to determine how much of one’s investable assets one wishes to have in a Core Position of Gold, Silver and other Tangible Assets and then to determine investment vehicles in which to hold them.  This Core Position is truly a long-term position and should represent a significant portion of one’s investable assets (Deepcaster recommends about 50%).

Since the cornerstone of The Cartel’s Power lies in maintaining the legitimacy of their Fiat Currencies and Treasury Securities, the last thing they want is to have Gold, Silver and Tangible Assets held by investors to increasingly be seen as the ultimate measures and stores of value.  Therefore by obtaining, and adding to, one’s own Core Position near the bottom of Cartel-induced Takedowns, one not only can help bolster one’s Core Assets for the future, but also can help defeat the Cartel’s nefarious “End Game” initiative.

DEEPCASTER LLC

www.deepcaster.com

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

 

Gravitas, Pietas, Virtus


-- Posted Thursday, 3 July 2008 | Digg This Article | Source: GoldSeek.com




 



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