LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
Essential Knowledge for Maximizing Real Gains



-- Posted Friday, 22 August 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

 

- - Gold, Silver, Crude Oil, Equities & the U.S. Dollar - -

 

“Since its inception in 1913, The Federal Reserve Board has been responsible for almost 95% devaluation of the U.S. Dollar.  All this has been achieved through its ability to continually inflate the money supply.

 

And, between 1985 and 2005, the Federal Reserve Board has increased the money supply by five times.  This extraordinary money creation is merely the catalyst for debt creation.  In a fiat money system, money is debt…there is absolutely no way this money can ever be repaid except by continued inflation.  But, now that the credit bubble is blown up, inflation is no longer an option; bankruptcy looms.”

 

     “The Federal Reserve…What Has It Done For You Lately?”

     Ian Gordon, December 29, 2007, www.axisoflogic.com

 

 

Rising U.S. Equities Markets from the September, 2002 lows (or for that matter, the 2005 lows) through the September, 2007 highs lulled some investors and several commentators into believing that they had gains as of September, 2007.  Unfortunately, when properly measured, many of these ostensible gains actually are not.

 

Deepcaster contends that the proper measure for gains is “purchasing power.”

 

Consider, specifically, the rise in the U.S. Equities Markets from 2005 through 2006.  If one owned shares in the S&P 500 (SPX – the market basket of S&P 500 Securities) for the 12-month period ending April 30, 2006, the value of that market basket of securities would have risen in U.S. Dollar terms.

 

But it would have declined over 30% since the summer of 2005 when measured by the price of Gold.  The point is that, from the summer of 2005 until late April 2006 the S&P 500 was in a Bull Market in Dollar terms, but in a Bear Market in Gold terms.

 

Consider also the United States’ Dollar.  From January 2002 through late April 2006; for example, the U.S. Dollar, as measured by the USDX (the U.S. Dollar’s value as measured by a market basket of other currencies) lost purchasing power in an amount exceeding 25%.

 

Since many, if not most, of the prices of goods and services we purchase are determined in an international economy, this loss of purchasing power is quite substantial.  Thus, a person whose increases in U.S. Dollar income from January 2002 through April 2006 collectively amounted to less than 25% actually suffered a loss of purchasing power in the international economy in that period.

 

The key point is that one must decide what asset or asset class one will use as the “baseline asset” against which to measure one’s wealth and income increase or decrease.  Assets and asset classes rise and fall vis-à-vis each other, as regular readers of Deepcaster know.

 

Deepcaster’s view is that the Ultimate Measure of Value should be Gold (first), then Silver and the other Precious Metals and the Strategic Commodities (i.e., generally, Tangible Assets rather than Paper “Assets”).

 

But one must employ this Golden Tangible Asset “Ultimate” Valuation Measure with caution because the prices of the aforementioned Precious Metals and other commodities as well as Equities are periodically the victims of Interventional Action by a Fed-led Cartel* of Central Bankers and their Allies and Agents.  Indeed, some Interventions are conducted quite publicly.  Interest Rate Adjustments are the most publicly visible.  The August 17, 2007 Fed Discount Rate Cut is one example.  Less visible, but not less potent, are the nearly daily Repurchase Agreement (Repo) injections (by The Fed, via their Primary Dealers), used, inter alia, to control the levels of the Equities Markets.  And there are other Potent Ongoing, but barely visible, Interventions as well.

 

 

*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 July, 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.  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.”

 

 

For example, nearly $600 billion in OTC (i.e. not Exchange Traded) Derivatives were available to suppress Gold prices alone as of December, 2007 (as reported by the BIS, the Central Bankers’ Bank based in Switzerland - www.bis.org.  Path:  statistics>derivatives>Table 19ff).  Indeed, were it not for active Gold Price Suppression by The Cartel, Deepcaster believes Gold would have exceeded $2500/oz. by now.

 

For example, observing the markets upon arising on Tuesday, August 19,2008, Deepcaster noted that the two main stories headlined in the Big Financial Media were the prospective collapse of Fannie Mae and Freddie Mac, as well as the July PPI increase of 1.2% - - twice what was expected.

 

Of course, Gold and Silver should have rocketed up on this news but, instead, Gold was down several dollars at the time and moved very little when the PPI number was announced.

 

Similarly, in mid-March, 2008 when the Financial Crisis culminated (temporarily) with the demise of Bear Stearns, Gold and Silver were smashed down, whereas in a Free Market they would have shot up.

 

Clearly Gold and Silver were being capped, as they seem to have been every time this year when negative economic data or market developments are revealed.

 

The insight which we garner, again, from these and many similar observations is that it is essential to consider the Interventionals as well as the Fundamentals and Technicals when making a Market Forecast or Buy or Sell Recommendation. 

 

Thus Deepcaster’s recent correct Forecasts for a short-term bounce in the U.S. Dollar, the beginning of a Takedown of Equity Market, the recent (and now perhaps temporarily abated) Takedowns of Gold and Silver prices, and the Takedown of Crude Oil prices have all been facilitated by attention to the Interventionals as well as the Fundamentals and Technicals.

 

Thus, for example, the price of Gold and Silver on any given day may not reflect anything near their Ultimate Value.  See Deepcaster’s 12/23/07 Alert “A Strategy for Profiting From Cartel Intervention” in the Alerts Cache at www.deepcaster.com.

 

Unfortunately, there are also ongoing Interventions in Major Markets other than the Gold and Silver markets.  They are especially visible in the U.S. Equities Markets via the (nearly daily) Repo injections (see Deepcaster’s July, 2008 Letter for details).

 

Thus, importantly, as we explain in our postings, this fact of Ongoing Intervention is one major reason a mere “Buy and Hold” strategy increasingly fails, especially so far as Equities are concerned.

 

The Cartel’s motivation for takedown attempts of Gold, Silver and other Tangible Assets is clear:  they do not want the further legitimization of Gold & Silver (or Tangible Assets in general, for that matter) as Measures and Stores of Value to compete with their Treasury Securities and Fiat Currencies.

 

But, notwithstanding the Interventions, one can still utilize a “comparative valuation” approach.  The benefit of the “comparative valuation” approach outlined above is that it actually gives one a different and illuminating perspective on asset inflation, asset deflation, and purchasing power.  For example, if the reader chooses not to use Gold (Deepcaster’s “baseline asset” of choice) or other precious Metals as a baseline asset, we invite the reader to consider the consequences of using the Energy Assets Class instead.

 

But again, the Interventional Caveat applies:  there exist over $8 trillion of OTC Derivatives available to manipulate the price of Crude Oil and other Commodities - - see BIS Table referenced above.

 

Of course, The Cartel’s Interventional Regime allows flexibility for real-world developments.  For example, a Crude Oil Skyrocket is highly likely if the U.S. is so foolish and reckless as to try to muscle Russia out of Ossetia - - an area close and vital to Russian National Interests.  After all, the U.S.-backed Georgians attacked the Ossetians first and the Russians responded a full two days later - - contrary to Mainstream Media Reports.  Even if there were such a Geopolitical Crisis, The Cartel could easily accommodate it (and ultimately control many of its effects on the Markets) though its massive OTC Derivatives Positions.

 

Also quite important for investors and traders is to monitor Real Key Statistics, rather than the often-manipulated Official ones.  For example, Real U.S. annual Consumer Price Inflation is about 12%, Real U.S. Unemployment about 14%, Real U.S. M3 Growth over 15% annually, and Real GDP decreasing about 2% per year, according to the credible calculations of shadowstats.com.

 

So long as the private-for-profit United States Federal Reserve continues to profligately expand the supply of money and credit, it risks the continuing debasement of the U.S. Dollar and virtually guarantees Price Inflation.  Thus much of the Financial Asset and Commodity appreciation, in terms of U.S. Dollars, which we have seen in recent years, is really only dollar depreciation.  Indeed, the U.S. Dollar has been depreciated over 30% between January, 2002 and July, 2008.

 

In sum, therefore, if one holds appreciated (in dollar terms) financial “assets” one must consider "appreciation (or depreciation) vis-à-vis what?”  Depending on one's choice, one may find that the ostensible appreciation is really depreciation.  [And especially so, if one factors in the tax consequences of being taxed on a larger number of U.S. Dollars which have a substantially decreased purchasing power.]

 

Specifically, for example, measured as of May 1, 2006 (just to pick a salient date) against Gold or even other currencies, the ostensible appreciation of financial assets from late 2002 through the end of April, 2006 is arguably only a delusion.  That is, it is arguably only an artifact of the Fed's profligate printing of paper money and increase of credit - - enabling an unhealthy “borrowed liquidity” as opposed to a healthy “earned liquidity”  (e.g. savings) to use the late Dr. Kurt Richebacher’s (R.I.P.) superb distinction.  Given this Reality, the ostensible appreciation reflects only the depreciation of the purchasing power of the U.S. Dollar.

 

In the long run, Deepcaster believes one can find no better “Safe Haven” and Measure and Store of Value than in the Precious Monetary Metals, Gold and Silver, and selected other Tangible Assets.

 

BUT, we must reiterate that one essential Caveat regarding finding a “Safe Haven” and Measure and Store of Value in Precious Monetary Metals:  in the short run they are subject to the considerable price manipulation by The Cartel of Central Bankers*.

 

Tragically, several times in recent years investors who have invested their resources in the “Safe Haven” Precious Monetary Metals Sector have been greatly disappointed and have had their net worth considerably reduced by massive Cartel-induced Takedowns of the prices of the precious monetary metals (see Deepcaster’s July 2008 Letter at www.deepcaster.com for specific examples).  Of course, these Takedowns have enriched Central Bankers and their Allies and Agents at the expense of wise and prudent (but victimized) citizens around the world.

 

Yet now the fundamentals have become ever more bullish in terms of pushing the prices of Tangible Assets to record levels as they have recently been for Gold, Crude Oil, certain agricultural products, and other Tangible Assets.

 

So the question is, in the next round, will The Cartel price suppressors win out when it comes to Precious Metals and other Tangible Assets prices, or will blazingly bullish fundamentals propel them further up?  Deepcaster provides his most recent Forecasts in his latest Alert posted at www.deepcaster.com.

 

Whatever the answer, the mounting evidence is that the Fed-led Cartel is knowingly creating conditions designed to force the U.S (and, indeed, the entire industrialized world), to eventually choose between a Hyperinflationary Great Depression and The Cartel’s ominous “End Game,” which Deepcaster has described in its Alert of 8/13/07 entitled “Massive Financial-Geopolitical Scheme Not Reported by Big Media” and June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” both available at www.deepcaster.com.

 

Thus Deepcaster makes it a high priority to take the aforementioned considerations into account in its portfolio selections, since it is important that investors achieve Real Gains and not chimerical ones.

 

Specifically, among the key components of Deepcaster’s prescription for achieving “Real Gains” are:

 

1)     Locating one’s capital primarily in Tangible Assets which are in great and relatively inelastic demand, including in

2)     The Consumer Staples Sector, and in the

3)     Precious monetary metals (i.e. Gold and Silver) but, only when acquired near the interim bottoms of Cartel-generated Takedowns.  But the Timing and Selection here are key.  For further details see Deepcaster’s 12/23/07 Alert entitled “A Strategy for Profiting From Cartel Intervention in Gold, Silver, Crude & Other Tangible Assets Markets” at www.deepcaster.com.

4)     Stay informed, daily, if possible, regarding “The Interventionals” as well as the Fundamentals and Technicals.

5)     Know the Real Statistics.  Do not rely on the Official, often-gimmicked, Official Data.

 

 

Ultimately, the authentic stores and measures of value are Gold and Silver and other key Tangible Assets, not paper Fiat Currencies and Treasury Securities.  But with the Intervenors extremely active it behooves investors to regularly attend to the Interventionals as one acquires, and disposes of, Tangible Assets.

 

IMPORTANT NOTE:  Prospective buyers of MITTS should consider carefully The Siren Song of those who claim the worst that could happen is they will “get the same amount of money back that they invested.”  Yes, they may get the same amount of U.S. Dollars (or other fiat currency) back, but in “purchasing power” terms they may have suffered a dramatic loss.

 

Deepcaster

August 22, 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, 22 August 2008 | Digg This Article | Source: GoldSeek.com




 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.