-- Posted Friday, 8 August 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
- - Gold, Silver, Equities, Crude Oil and U.S. Treasuries - -
Investors and Traders seeking profits in today’s markets have an extraordinarily difficult task.
That is because some of the challenges are unprecedented.
In order to understand how to profit and to avoid losses in spite of these challenges, it is important to understand those challenges which are unique today.
Manipulation of Share Prices and Earnings Per Share: Skilled Financial and Public Relations Officers and Outside Analysts have long been able to manipulate and/or just plain misjudge Earnings Per Share. In polite circles this problem is referred to as lack of “earnings transparency.” But the scope and magnitude, and vehicles available, to achieve such manipulation or misjudgment are particularly diverse today. The case of “Crocs” is an excellent example, courtesy of Marc Faber.
“…Take Crocs, a manufacturer and designer of fashionable shoes. After its stock had declined from a high of $75 last October to $9 the company recently announced that it now expects earnings per share of 3 cents to 7 cents for the second quarter, significantly lower than the 42 cents to 47 cents per share previously expected. The brilliant stocks analysts had according to Thomson Financial projected EPS of 41 cents for the second quarter…The stock subsequently fell another 50% and trades now at $4.50! As I often said before, the stock market is a far better forecaster than some financial analyst who just listens to and reports in thick research reports the lies management dishes out periodically in order to boost a company’s share price…”
Dr. Marc Faber, Market Commentary, August 1, 2008,
www.gloomboomdoom.com
The fact is that “Real Earnings” and justifiable Share Prices are especially difficult to determine today, especially in light of the following:
Off the books liabilities: Arcane and complicated accounting rules leave “loopholes” for certain Off the Books Actual or Contingent Liabilities, which can thus be left unrecognized at the discretion of Financial Officers.
Toxic OTC derivatives: Often appearing where one would least expect them. Deepcaster and a few others have extensively documented the dangers of OTC Derivatives (now, about $600 TRILLION! In toto) which Warren Buffet has called “toxic.” But part of the problem is that they show up in the most unlikely places. For example, earlier this year we called attention to Bristol Myers Squibb which had to take a multi-million dollar writedown due to their Toxic OTC Derivatives. How many responsible investors would, or could, have known in advance that a leading company in the Pharmaceutical Sector would be vulnerable to, and suffer losses from, the Toxic Derivatives Disease? See Deepcaster’s July 2008 Letter entitled “Market Intervention, Data Manipulation Still Accelerating, Increasing Risks, The Cartel End Game and Latest Forecasts for Gold, Silver, Equities, Crude, U.S. Dollar and Treasuries” at www.deepcaster.com.
Dark Liquidity: Estimates are that over 10% of all Market Transactions by Value occur privately -- i.e. outside of public markets in Dark Liquidity Pools. That means that few, if any, know (apart from the parties to a particular transaction) what the transactions are, the strength of the parties and counterparties, and many other essential factors affecting the values of the assets involved. How does one properly value such assets or, for that matter, the companies engaged in such transactions -- see Deepcaster's Alerts "Derivatives, Dark Liquidity and Increasing Systemic Risk" and "Protecting Profit From 'Dark Liquidity' & Other Systemic Risks" contained in the Alerts Cache at www.deepcaster.com
The Dark Liquidity issue has serious implications for Investors, Traders and Markets. Consider:
1) As increasing volume moves to the so-called "Dark Liquidity in Dark Pools" the very concept of "public pricing" becomes suspect. How do we know that the so-called public price is the "real price" if we are seeing only half of the pricing.
2) To what extent, if at all, will regulators be drawn to and act regarding private “dark pools,” which by their very nature defeat the idea of a fair and level playing field in markets with transparent pricing.
3) Particularly with regard to small cap stocks where "big money" can move the stocks dramatically, how can the investor who does not have access to dark pools not be seriously disadvantaged because he does not know where, and when, buying, and or selling in very large amounts, is coming from?
4) Many large institutions, which employ “Dark Pools,” now use Order Execution Algorithms to mask their trading and/or to optimize trades at the "best price." Order Execution Algorithms used in Public Market Trading in conjunction with Dark Liquidity Pools in Private “Market” trading can be lethally disadvantageous for the average investor.
Fed & U.S. Government Establishments Favor Wall Street and
The International Bankers
It is clear that the Fed and U.S. Government Establishments favor Wall Street and the International Bankers. Consider this statement from Eric Hermann, President of FH International Assets Management.
“…the Fed’s “loose” monetary policy…extends artificially low cost funding in artificially large quantities to certain lucky beneficiaries (banks, investment banks). These happy few beneficiaries are not passing on their subsidized cost and availability of funds to their customers. We American taxpayers are instead facing expensive cost of borrowing and restricted amounts of available credit from these same financial institutions. In other words, the Fed is writing a massive check to the shareholders of the commercial and investment banks. This subsidy would produce an uproar if the government were transparent about its existence and size, but the Washington politicians cleverly characterize the transfer of wealth from the taxpayer to the shareholders of Fed supported financial institutions as “saving the financial system.”
Buy and hold increasingly fails: There are many reasons Buy and Hold increasingly fails, not the least of which is that in 2008, for the first time in thirty four years, the Equities Markets in the United States and in many markets elsewhere, have actually moved from being in a technical long-term Bull Trend to a long-term Bear Trend. Simple logic dictates that buying and holding in a downtrending market will not result in profits, but rather losses. But, more than that, there are other reasons 'Buy and Hold' increasingly fails, including horrible Fundamentals, Data Manipulation and Market Intervention.
Market Intervention: One example of the effects of Intervention is the recent takedowns of Gold and Silver. In recent years sagacious organizations and individuals have developed convincing evidence that a U.S. Fed-led Cartel* of Central Bankers and Allies and Factota regularly intervenes in all major Markets, including but not limited to Precious Metals, Equities, Crude Oil and other Strategic Commodities and, in many instances, actually controls Market Price.
*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.”
Regarding The Motivation for the ongoing Cartel Market Interventions, consider that because the “Mortal Enemies” of The Central Bankers Fiat Currencies and Treasury Securities are The Monetary Metals Gold and Silver because the Monetary Metals are rivals for the Treasury Securities and Fiat Currencies for being the Ultimate Store and Measure of Value. Thus The Cartel expends considerable effort to periodically take them down.
For example, that traditional Safe Haven from inflation and risk, Gold, was, during the period of extreme Financial Market Turmoil in March, 2008, taken down in price from over $1000/oz to below $900/0z. Of course, the Marketplace Fundamentals at that time dictated that it should explode in price. In a non-manipulated market it surely would have.
Deepcaster and others, including the Gold AntiTrust Action Committee, have offered considerable evidence that the Cartel* of Central Bankers is the culprit behind these dramatic and devastating Takedowns. See Deepcaster’s July, 2008 Letter and Alert of December 25, 2007 in the Latest Letter and Alerts Caches at www.deepcaster.com.
Data Manipulation: Not only are the markets regularly intervened in, but also the typical "Official Data” on which long-time investors and traders have traditionally relied is just simply no longer reliable. It is generally acknowledged that the Official Figures for annual Consumer Price Inflation of 4-5% typically issued recently by Official Sources simply cannot be correct.
Our intuition that key Official Data are Bogus is correct. In fact, Real U.S. Consumer Price Inflation is running at about 12% annualized, Real Unemployment at about 14% annualized, and Real GPD dropping at a –2% annualized, all according to the very credible calculations of shadowstats.com.
Thus, monitoring the Interventionals and the Real Data, as well as the Fundamentals and Technicals, is essential today.
In sum, it is clear that since a Fed-led Cartel* of Central Bankers has been regularly intervening in all of the major markets including, but not limited to, Gold, Silver, Equities and Crude Oil, failing to take account of the “Interventionals” and the Real Data can be lethal to profitable investing and trading.
Therefore, Strategies for Profiting and Protecting Wealth today should include:
1) Taking account of Interventionals and Real Data as well as Fundamentals and Technicals.
2) Avoiding the trap of investing in companies whose Earnings Per Share have been manipulated and/or which are vulnerable to “Off the Books Liabilities,” and/or Toxic Derivatives. Of course, this is very hard to know. Therefore, consider using Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs). Fortunately, today there are increasing numbers, indeed a few hundred, of ETFs and ETNs, which provide opportunities to “play” Sectors on both the Short and the Long side. Some of these funds even offer double leverage.
The advantage of using Sector ETFs is that they tend to minimize the worst company performances. Deepcaster has recommended several Exchange Traded Funds in the past and expects to do so again very soon.
3) Recognizing that the “Buy and Hold” strategy increasing fails, as explained above. The Eminence Grise of Newsletter writers, Harry Schultz perhaps put it the best when he recently stated that “buy and hold no longer works anymore, even with Gold.” Therefore, "long-term" Investors must adopt some of the strategies of Traders. For example, take profits when you have them.
4) Educating yourself about the realities of the marketplace using Alternative Data Sources such as Deepcaster, Gold Anti-Trust Committee (www.gata.com), and shadowstats.com, for example. Gathering and staying attuned to Authentic Information regarding the marketplace can save one much financial grief and position one for profit.
5) Tracking the Interventionals daily, as Deepcaster does, as well as the Technicals and Fundamentals. Tracking the Interventionals daily can often, but not always, give one excellent clues about The Cartel’s next likely Interventional Moves. Such clues which are essential to preserving wealth and making profits. Deepcaster’s recent tracking of The Interventionals, for example, has facilitated his making several profitable recommendations listed at www.deepcaster.com.
6) Being prepared to go both long and short Major Market Sectors - - long near the bottoms of Interim Takedowns and short near Sector Tops. The Interventionals are essential in helping identify these approximate tops and bottoms.
7) Being aware of the overall Geopolitical Landscape in order to gain an adequate understanding of how that Landscape might affect the present and future direction of the markets and the Interventionals by the Cartel. The Cartel is a "political animal" as well as a financial one as Deepcaster describes in his July Letter "Market Intervention, Data Manipulation Still Accelerating, Cartel End Game Threatening" found at www.deepcaster.com. It is essential that one understand the motivations of the major players in the market and the resources at their disposal.
For example, a Major Motivation of the U.S. Federal Reserve and other Central Banks is the protection and enhancement of the legitimacy of their Treasury Securities and Fiat Currencies as Measures and Stores and Value. Therefore, one can understand that one of their Major Goals is to de-legitimize Gold, Silver and the Strategic Commodities, including especially Crude Oil, as Stores and Measures of Value. With this in mind, the periodic attempted takedowns of Gold and Silver become understandable. Such an insight applied daily to the market can result in a tremendous edge in understanding market performance, present and future.
Moreover, regarding the Assets at The Cartel’s disposal, if one tracks the Repurchase Agreement Pool daily, as Deepcaster does, and is aware of deployment of OTC Derivatives contracts outstanding as well as being aware of the other Interventional tools which The Cartel has at its disposal, then one gains a considerable edge. Indeed, Deepcaster’s profitable recommendations displayed at www.deepcaster.com and its Forecasts have all been facilitated by attention to the Interventionals.
Consider just one example. If one visits the Bank for International Settlements (the Central Bankers Bank) website (www.bis.org) and follows the path Statistics>Derivatives>Table 19 and following, one can see the entire range of trillions of dollars worth of OTC Dark Liquid Derivatives (nearly $600 Trillion as of December, 2007) available for use in Market Manipulation.
For example, over $9 trillion in OTC Derivatives was available for Commodities price manipulation alone as of December, 2007 - - a large chunk of these are available to manipulate the Crude Oil price. Also, as of December 2007, something in excess of $56 trillion in OTC Derivatives were available for Foreign Exchange Price Manipulation, and a whopping $393 trillion in OTC Interest Rate Contracts were available for Interest Rate Manipulation all along the Yield Curve and not just at the short end.
Of course, Fundamentals and Technicals still do matter, since The Cartel would lose considerable clout and effectiveness if its machinations were broadly exposed, or if they flew directly in the face of overwhelming Fundamentals. Therefore, it makes sense that The Cartel would create and/or use Fundamental and Technical Patterns as “cover” and as occasions for Market Intervention (or as "lures" to get savvy investors and traders "offside") and would also use or create geopolitical events to achieve the same ends.
Indeed, the actions of The Cartel must be fairly plausible in order to maintain "Plausible Deniability.”
Even so, there are times when other Cartel Concerns trump plausibility and these are manifested in market anomalies. For example, consider the period when a Financial Crisis came to a head in the Bear Stearns collapse and “buyout” in mid-March, 2008. In this period of Great Financial Stress in the markets, Gold and Silver, instead of reflecting this crisis by skyrocketing up (which would have happened in a normal non-manipulated market) was taken down substantially.
Such developments should be a lesson to the wise and open-minded that something more is going on in the Major Markets than Normal Market Action. If that recognition is reflected in attention paid to the aforementioned principles, it can result in achieving a Profitable Refuge from Data Manipulation and Market Intervention.
Deepcaster
August 8, 2008
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Gravitas, Pietas, Virtus
-- Posted Friday, 8 August 2008 | Digg This Article | Source: GoldSeek.com
