-- Posted Wednesday, 24 December 2008 | | Source: GoldSeek.com
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Investors who failed to have The Real Numbers in 2008 typically suffered Serious Losses.
Having The Real Numbers could not only have helped prevent losses. It would also have allowed these Investors to Profit because they would have had several significant indicators that they should have shorted the markets before they suffered very substantial takedowns.
The Real Numbers to which we refer are realistic revisions of gimmicked Official Government and Agency Statistics as well as the Real Numbers (e.g. OTC Dark Derivatives) which reflect the Interventional Capacity of the Fed-led Banker Cartel*. We thus offer you a brief review of key Real Numbers and some clues for protecting your wealth and even profiting in the turbulent months to come.
Regarding revisions of the gimmicked Official Government and Agency statistics, an excellent source of Real Numbers is the website shadowstats.com. Shadowstats calculates key statistics as they were calculated before the politicians started to modify traditional methods in the 1980s and 1990s. Consider:
Inflation: Official U.S. Consumer Price Inflation (CPI) numbers have been “politically adjusted” since perhaps as early as the 1980s. By 2001, the Official Statistics reported Real Consumer Price Inflation was averaging just under 4% annualized. In fact, Real CPI was then running at nearly 10%, according to shadowstats.com.
In 2008 (and, again, contrary to Official Statistics) CPI has ranged as high as nearly 14% annualized (an as reported on a monthly basis) and (notwithstanding the deflationary forces in the Fall, 2008) was still above 9% annualized as of the end of November.
Money Supply (M3): The private-for-profit Fed stopped reporting M3 in March, 2006 and immediately thereafter Real M3 rose to a 17% annualized rate (i.e. a staggering amount of monetary production - - reflecting a doubling time of about 4 years!). As of the end of November, 2008 M3 is still running at about 9% annualized. That rate of monetary inflation (notwithstanding the current deflationary forces) is surely enough to propel us further into hyperinflation and to further weaken the U.S. Dollar in the long run. Indeed, preliminary indicators are that December, 2008 numbers will reflect a surge back to 15% annualized. Of course, Monetary Inflation is a key Driver of Price Inflation. This massive Monetary Inflation has been more than enough to offset the deflationary effect of the trillions of dollars of wealth destruction which occurred as the Equities Markets were taken down by 40 to 50% in 2008.
U.S. Unemployment: According to Official Figures, Unemployment ranged between about 4 and 6% from 1995 to 2007. Only in 2008 did it spike up to nearly 7% according to Official BLS statistics.
In fact, Real U.S. Unemployment has exceeded 12% every year since 2002, and in 2008 has spiked up over 16% and is still increasing, according to shadowstats.com.
GDP Annual Growth: If one’s intuitive sense is that the economy has for some time been in deep trouble and is slowing further, one’s intuitive sense is correct. The Real Numbers indicate that the U.S. economy has not exhibited real economic growth since about 2000. Indeed, since the beginning of 2001, GDP has been either a negative number or flat. Significantly, Real GDP has been negative since 2004. Indeed, 2008 GDP is a negative 3%.
In sum, the Real M3 and GDP numbers show we are in a deteriorating Stagflationary Environment.
Federal Deficit: The Federal Deficit for 2008 as recently reported by the U.S. Treasury (basis GAAP) was just over $1 trillion versus $275 billion in 2007. But, the Treasury figure does not account for annual change in the net present value of unfunded Social Security and Medicate liabilities. Counting these changes (as every corporation would have to do) results in an annual Federal Deficit of about $5.1 trillion for 2008 versus $1.2 trillion in 2007 (shadowstats.com).
Worse, if one includes all the downstream, but as yet unfunded, U.S. obligations as of December 15, 2008, the U.S. National Debt is $66 trillion. Clearly, this $66 trillion of unfunded liabilities can never be paid, unless the U.S. Dollar is very substantially further debased. This inevitable debasement will entail a continuing further very considerable long-term reduction in purchasing power for the U.S. Dollar. Think Weimar Republic.
As we have explained before, the purchasing power of the U.S. Dollar has already been dramatically reduced by Fed over-printing - - that is to say printing in excess of GDP growth. For example, vis-à-vis other currencies, the U.S. Dollar lost over 1/3 of its purchasing power in the last five years. That is to say, it dropped from 120 to under 80 as measured by the USDX.
The Interventionals: Arguably the most important numbers of which one must be aware for protection and profit are The Interventionals. These Interventional Numbers represent the covert Interventional Capacity (and, indeed, when tracked on a daily basis reflect Intervention in action) of the Fed-led Cartel* of Central Bankers to intervene in the markets. Typical covert Interventions include capping the price of Gold and Silver and manipulating the Equities and Oil prices and other key price levels. |
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The Cartel conducts complementary Overt and Covert Interventions. It is the Covert ones which are mainly responsible for several examples of Market Manipulation as we describe in our July, 2008 and December, 2008 Letters available at www.deepcaster.com.
There are a number of vehicles through which Covert Cartel Market Intervention occurs, but three of the most important are:
1) Record high and increasing numbers of Over the Counter (OTC) Dark (i.e. generally hidden) Derivatives as reported by the BIS (the Bank for International Settlements) – the Central Bankers Bank. Indeed, $683 trillion of Dark OTC Derivatives exist as of June 2008. And that number is increasing dramatically (see www.bis.org, path statistics/derivatives/Table 19 and Deepcaster’s December 2008 Letter).
2) The Repurchase Agreement (Repo) Pool has also been dramatically increased in recent years to a level of around $400 billion. Daily changes in Repo Pool levels often serve as a leading Indicator of Equities Market Levels.
3) The TSLF Pool and other bailout monies and authorizations. It now also appears that The Fed-led Cartel has recently begun using the TSLF Pool as a Market Manipulation Device, although the indicators are still preliminary. Certainly, with the increased power they have unwisely been given by Congress, the TSLF Pool provides substantial Interventional Capacity.
Consider the following example of Cartel Intervention in 2008. As the economic and financial crises worsened from the March, 2008 Bear Stearns debacle through the present, the Traditional Safe Haven Assets Gold and Silver should have skyrocketed. But instead of skyrocketing Gold and Silver Bullion were taken down significantly that March and intermittently thereafter. No phenomenon other than Cartel Market Intervention could explain these otherwise outrageously anomalous developments. Indeed, as the Financial Crises intensified from later September through early November, the Cartel effected additional major takedowns of Precious Metals prices.
The Cartel’s motivation for such Takedowns is not hard to understand. The Cartel does not want to allow Gold and Silver to acquire increasing (and justifiable) legitimacy as primary Stores and Measures of Value vis-à-vis their paper Treasury Securities and Fiat Currencies.
It is thus critically important to monitor the Interventionals as well as the aforementioned Real Statistics regularly. Deepcaster thus does carefully track the Interventionals and the Genuine Statistics.
Indeed, tracking the aforementioned Real Statistics and Interventional Indicators prompted Deepcaster’s recent article entitled “Opportunities in the Impending Perfect Storm” dated 9/5/08 in which we wrote: “we sit at the beginning of an impending Perfect Storm in the U.S. economy and markets - - a Perfect Storm that will reverberate around the world.”
Thus, that tracking was a primary cause of Deepcaster’s having recommended five short (i.e. those which profit when the market declines) Equities Fund positions of various kinds, as of early September, 2008. By mid-December, Deepcaster had recommended liquidating all of those Equities positions for a profit. Tracking Cartel Interventionals and monitoring Real Statistics, in addition to considering the Fundamentals and Technicals, facilitated that profitable result.
In sum, tracking the Authentic Statistics and the Interventionals as well as the Fundamentals and Technicals is essential to making prudent and profitable investment and trading decisions.
Neither that Perfect Storm nor Cartel Market Intervention has ceased, unfortunately. Indeed, they have intensified. Investors will be better equipped to cope if they closely track Real Statistics and the Interventionals, as well as the Fundamentals and Technicals as a part of an overall Investment Strategy.
The following are key highlights of a Strategy for protection and profit in these chaotic markets. A more detailed discussion of this Strategy is provided in Deepcaster’s “Defeating the Cartel…with Profit” in the Articles Cache at www.deepcaster.com.
1) Track the Interventionals and the Real Numbers, as well as the housing, credit, and other 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 look at Interventionals and Real Numbers regularly as well as 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 (as, for example, laid out in Deepcaster’s “Defeating the Cartel…With Profit” Article in the “Alerts Cache” at www.deepcaster.com). This Strategy allows one to build one’s Core Position in Gold and Silver near the bottom of Fed-led Takedowns, but also to profit as Gold and Silver rise, and when they are Taken Down as well.
Deepcaster
December 24, 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 Wednesday, 24 December 2008 | Digg This Article
| Source: GoldSeek.com
