-- Posted Friday, 17 April 2009 | | Source: GoldSeek.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
There is a Strategy which enables Investors to Prevail in their struggles for Protection and Profit, notwithstanding the endless stream of Outrages.
But in order to fully appreciate that Strategy it is important to understand key characteristics common to many of the Outrages. So lets consider certain recent ones.
Frank Rich in the New York Times writes:
“Lawrence Summers, the president’s chief economic adviser, made $5.2 million in 2008 from a hedge fund, D. E. Shaw, for a one-day-a-week job. He also earned $2.7 million in speaking fees from the likes of Citigroup and Goldman Sachs.
Those institutions are not merely the beneficiaries of taxpayers’ bailouts since the crash. They also benefited during the boom from government favors: the Wall Street deregulation that both Summers and Robert Rubin, his mentor and predecessor as Treasury secretary, championed in the Clinton administration.”
And as Chris Martenson in his superb article “America is Being Looted” quotes and notes:
“Rahm Emanuel, the current White House Chief of Staff, comes similarly burdened:
…the banking industry recently paid Rahm Emanuel $16 million for about two years of work. That investment was recently paid back when, as President Obama's chief of staff, Emanuel led the January campaign to release another $350 billion in bank bailout funds.”
But it goes deeper than that. Rahm Emanuel also took what I consider to be a lot of money serving on the board of Freddie Mac, a company that is certain to cost taxpayers hundreds of billions of dollars.
Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.
One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.”
Chris Martenson, April 14, 2009
All of the above can be found in the “Articles by Deepcaster” cache at http://www.deepcaster.com/.
Fundamentally, the Policy of encouraging ever more Borrowing and Creating ever more Fiat Currency to ostensibly “Solve” Crises created by Excessive Borrowing and creation of Fiat Currency (courtesy of the private for-profit U.S. Federal Reserve) is proving to be a Certain Route to Depression-creation. Today’s Depression (see Below) requires Different Strategic Approaches to Wealth Protection and Profit - - key ones of which we outline here.
Given the over $U.S. 60 Trillion (and increasing) in Downstream Unfunded Liabilities of the U.S. Government and the $10 Trillion Dollar (and increasing) U.S. Budget Deficit, it is clear these Liabilities can never be repaid without destroying the U.S. Dollar over the long term.
The Destruction of the Purchasing Power of the U.S. Dollar is already occurring; The U.S. Dollar has dropped by about 30% over the past six years, as measured by the USDX.
Even using the gimmicked Official (Bureau of Labor Statistics) Inflation Numbers, Real inflation-adjusted weekly earnings of U.S. Workers have declined 14% since 1972. (see below)
If an Economic “Depression” is defined as a Recession where a peak to trough contraction in inflation-adjusted economic activity exceeds 10% we have just recently entered into a Depression. That is because such a contraction in annualized terms was experienced in the Fourth Quarter, 2008 in real retail sales, and industrial production, and new orders for durable goods, and housing starts. That Ladies and Gentlemen is a Depression. Worse, indications are that this Great Depression will deepen and will be with us for many months to come.
To provide the basis for addressing Protection and Profit Strategies (and lest anyone believe that we have not recently entered into a Great Depression), consider the following:
The Federal Reserve Board’s Release reporting borrowed and non-borrowed Bank Reserves show that non-borrowed Bank Reserves were at about a paltry $100 billion as of February 11, 2009 whereas borrowed bank “reserves” were over $600 billion. This looks like the very definition of insolvent “Zombie” Banks to us. Moreover, (and notwithstanding the recent modest rally in bank stocks), the financial condition of the banks’ debtors - - the U.S. Taxpayers/consumers - - continue to deteriorate.
Moreover, the pace of Hyperinflation is accelerating, notwithstanding the deflationary effects of dramatically lower energy and equities and other asset prices. Fed-generated real money supply growth (M3), is still at 8% annualized as of April 11, 2009 (per www.shadowstats.com). Such a dramatic increase in Money Supply Inflation ultimately translates into Price Inflation (www.shadowstats.com calculates the figures the old fashioned way as they were calculated in the 1980s and early 90s before Official Gimmicking became a Serious Enterprise).
Worse yet, Real GDP annual growth was a negative 4% as of the March 26, 2009 shadowstats report contrary to the Official Figures that it was flat at 0% (shadowstats.com).
Worse also, the Real U.S. Unemployment rate is 19.8%, as opposed to the recent Official Figure, which claims it is just under 8% (shadowstats.com).
And annual Consumer Price Inflation (which has recently taken a dip from over 13%) is still at above 8% annualized (shadowstats.com) and not “flat” as the official statistics would have us believe.
Thus, Today we have Hyperinflation (see below) coupled with a Contracting Economy - - the worst of both worlds if you will. Deepcaster and several others (including the eminent Dr. Richebacher R.I.P) forecast that we were headed for this sorry state a few years ago, but our warnings went unheeded.
Given this background we now address Profit and Protection Issues by providing Guidelines.
Strategic Guidelines for Identifying and Realizing Profit Opportunities
Be Just as Willing to “Go Short” as to “Go Long”. Given the Foregoing Economic and Financial Market Realities, there will be many months and probably several years before the markets-in-general are in a durable healthy uptrend, as we have demonstrated in several articles. Thus, one must be just as willing and able to “go short” as to “go long”. Fortunately, there are unprecedented opportunities to “go short” (as well as long) via, for example, literally scores of short Exchange-Traded Funds. Carefully chosen and timed, these can be excellent vehicles for garnering profit in “fear markets”. For example, Deepcaster entered last September having recommended a total of five short positions. All of those subsequently were liquidated for significant profits.
Buy and Hold Rarely Works Anymore. As the market performance in the past year has demonstrated, those who adhered to the Outdated Strategy of “Buy and Hold” likely got smashed. Many have lost up to 50% of the price “value” of their portfolio with little prospect of recovery (absent employing Strategies suggested here). See “Opportunities to Escape Paper ‘Wealth’” in the “Articles by Deepcaster” Cache at www.deepcaster.com. What many of these investors did not realize, and hopefully now realize, is that we are now in a radically different economic and market environment which will, with very few exceptions, make “Buy and Hold” a very unprofitable strategy for several years.
The Basic Reality: Hyper Stagflation. We are in an Apparent Deflationary Environment (e.g. energy prices have dropped dramatically and the Equities Markets and other “Assets” have lost Trillions in Nominal Value). This Apparent Deflationary Environment masks an underlying Hyperinflationary Reality - - the Trillions in Fiat Currencies which are being printed and lent in a futile (in the long term) Attempt to stimulate the Economy are greater than the Trillions lost in Equities Markets Takedowns and other Asset Devaluations. Thus The Basic Long Term Trend is a Hyperinflationary Economic Decline - - the worst of both Worlds. We expect $20 hamburgers in three or four years.
Raise Cash - - Cash is King in this Credit Squeezed Environment. What Cash? So long as the deleveraging continues the U.S. Dollar should remain relatively strong. When the deleveraging is perceived to be beginning to end, the U.S. Dollar will begin its collapse. In such an environment the Swiss Franc is the currency of choice. Of course, the ultimate Money is the Precious Monetary Metals, Gold and Silver but, given The Cartel’s* periodic Interventions to drive lower their price we advocate acquiring them using the Strategy described in our Article “Defeating The Cartel…with Profit” in the Articles by Deepcaster cache at www.deepcaster.com.
*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Key Central Bankers and favored financial institutions to read Deepcaster’s December, 2008 Letter containing a summary overview of Overt and Covert Intervention entitled “A Strategy for Profiting from the Cartel’s Dark Interventions & Evolving Techniques” and Deepcaster’s July, 2008 Letter 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.”
Liquidate Debt - - Debt is the Enemy of Cash in this Cash is King Environment. Debt demands Repayment, with Cash that is ever harder to obtain.
Credit: Use it or Lose It: But only if you Must for Safety’s Sake. Lenders are Cutting Back or Eliminating Credit lines and raising rates. (Outrageous, of course, since it is the U.S. Taxpayer who has bailed many of these lenders out!) So if you do not have a sufficient cash cushion and can foreseeably make the payments, consider borrowing from that credit line. If you fail to do so, it may be reduced or eliminated.
Become more Self-Reliant. The Hard “Econo-Reality” is that in this increasingly “Hard Times” Era of increasing unemployment and decreasing economic strength - - a “Hard Times” Era which will likely persist for several years - - there will be more, much more, potential for civil disturbances and reduction in, or outright cut-off of, basic public services, and essential supplies as well. Given the increasing desperation of an increasingly large number of the population there will be more personal safety risks. Public infrastructure services upon which we have come to rely such as utilities and roads are likely to be compromised periodically, and increasingly severely. Prepare for blackouts, periodic interruptions of water and food supplies, and civil, and very uncivil, disturbances. Be prepared to combat increasing threats to Liberty and Privacy in the deceptive guise of ostensible Security. “Be prepared” is not just a wise motto for Boy Scouts.
Track the Interventionals and the Real Statistics. Many Otherwise Astute Investors were Blindsided by the Takedowns in the Equities and Precious Metals Markets in September, October and November, 2008. But they need not have been!
If these Otherwise Astute Investors had been tracking the Interventionals and monitoring the Genuine Key Statistics rather than the Gimmicked ones issued by Official Sources they would likely have seen the Takedowns coming and would not only have taken steps for Protection, but also for Profit.
Perhaps the single most important factor in the recent performance of certain Major Market Sectors is the Interventionals - - even more important than the Fundamentals or the Technicals.
There is compelling evidence that The Fed-led Cartel* of Central Bankers and allies and agents (e.g. certain primary dealers) are regularly engaged in Overt and Covert Interventions in a wide variety of markets as described in Deepcaster’s articles cited above. In order to understand why the Interventionals are the most important, it is essential first to examine how it is that investors typically do not get accurate Key Statistics from Official Sources.
Consider, in more detail for example, U.S. Consumer Price Inflation and other key Data cited above: the sky-high energy and food costs of 2007 and 2008 tend to belie what we were told by Official Sources about the CPI. According to Official Sources, from 1992 through the beginning of 2008 the CPI never went much above 4% annually but only bumped up to about 6% late in 2008. But these figures simply do not square with our own experience of the inflation of prices of practically everything during that period. Nor do they square with certain objective measures.
Fortunately, the service (shadowstats.com), which calculates CPI (and other important measures such as GDP, M3 and Unemployment) calculates them the old-fashioned way (i.e. the way they were calculated in the 1980’s and early 1990’s), prior to today’s Official Gimmicking.
Shadowstats.com’s most recent calculations of Real Consumer Price Inflation show that it was spiked up over 13% as of mid-October, 2008, and was still about 8% in early April 2009.
Even more shocking is a comparison of the Official U.S. Unemployment Rate with the Real Unemployment Rate. According to Official Sources, from 2002 to late 2008 U.S. Unemployment never rose above 6% and only popped up to just under 8% at the beginning of 2009. But shadowstats.com calculates the Unemployment Rate including accounting for “discouraged workers” as well as making an adjustment for the Official Absurdity of the “net jobs birth/death ratio.” With estimates calculated in this Realistic manner, we see that U.S. Unemployment has been above 12% since 2002 and has recently spiked to nearly 19.8% as of April 3, 2009 according to shadowstats. That shocking rate means that nearly 20 out of every 100 American workers are unemployed. That is a Great Depression for American Workers!
And, regarding U.S. Gross Domestic Product, the Official Numbers show GDP increases ranging between 1% and 2% annualized from the beginning of 2002 and lowering to 0% as of the end of 2008. In fact, the Real Numbers show that Real GDP has ranged from 0 to a negative 2% since 2002, and as recently as late 2008 Real GDP has spiked down to a negative 4%, as calculated by shadowstats.com.
Similarly, the Money Supply increase figures (M3) (which as of March, 2006 are no longer released by The private for-profit Fed) spiked up to nearly 17% annualized in early 2008, and are still showing an outrageously high 8% annualized Money Supply Growth figure as of April, 2009; thus our hyperinflationary Forecast.
Profit Opportunities from Money Supply Inflation
By encouraging massive lending and massive expansion of the actual Money Supply for years, the private for-profit Fed has guaranteed massive inflation. (Of course the private owners of The Fed profit immensely from this money which they “print” for free, because they then lend it to American Taxpayer with interest!) Similarly, key Central Banks around the world that have conducted similar actions and have thus bolstered massive monetary inflation. What this means is that, in the long run, the U.S. Dollar and many other major currencies will buy less, much less, in the future.
However, given that the financial system and key heavyweight investors are awash with printed and borrowed money, certain Key Sectors should explode upward very soon until the long-term negative Economic Fundamentals drag them down again. Of course, this would not happen in one fell swoop, it would happen in Spurts. And, indeed, we think that one Spurt resulting from this Monetary Inflationary “Juice” is not far off. Indeed, we have already forecast that this should be reflected in higher prices in certain Key Sectors identified in Deepcaster’s latest Alerts and Letters posted at www.deepcaster.com.
Thus, these considerations provide speculative opportunities, which have high profit potential as well as high risk. We are, after all, in a worsening Bear Market. The Rampant Monetary Inflation reflected in M3 and in the various Bailouts and Loans will provide several trillion dollars for equity investment. And this tremendously increased monetary base is available to inflate the paper value of the Equities and other Markets, when money managers first think the markets have a chance for a sustained (for a few months, or even weeks) Rally, and, when The Cartel Interventional Regime “agrees” with them.
Ascertain the Facts; Eschew Big Media Fictions
Other key figures are gimmicked or “spun” as well, with the complicity of the Mainstream Media. Consider the cost of “The Bailouts.” We were told that the cost of “The first Bailout” alone would be $700 billion. But the true cost of that Bailout to American Taxpayers (and, indirectly to investors around the world) will be much higher. One November, 2008 estimate put it at $3.5 trillion and growing, and this did not (and could not have) included any subsequent Stimulus Bill or other Obama Administration authorizations.
Astoundingly, the much-touted recently passed Obama administration Stimulus Bill will likely not create any net new jobs for American Workers.
That is because:
1. The Stimulus Bill allows 300,000 construction jobs to go to Illegal Aliens, as reported in a recent study by Robert Rector of The Heritage Foundation, and
2. “According to various Official Sources, about 138,000 work authorizations per month are issued to permanent (e.g. via green cards) and ostensibly temporary (e.g. H1b etc.) legal immigrant workers.
That’s over one and one half MILLION foreign workers per year! (even after deducting 156,000 from the annual number that are estimated ‘reauthorizations’)
The Stimulus Bill Does Nothing To Reduce This Flow!
So in other words and considering all the above, the flow of New Legal And Illegal Immigrant Workers In The Next Two Years will Take Virtually All The Three To Four Million Jobs Created By The Stimulus Bill!”
The foregoing is excerpted from a recent Alert Issued by the Washington D.C. non-profit Carrying Capacity Network, which sensibly advocates solving this problem with a zero-net-immigration Moratorium www.carryingcapacity.org and Real (not virtual) Fencing at the Border. Such a Moratorium would dramatically reduce the approximately two million legal (and help reduce the approximately two million illegal) immigrants and their offspring added to the U.S. Population annually. (As well, it is pushing an “Abolish The Fed! U.S. Treasury Instead!” Initiative.)
Thus, The Stimulus Bill is not likely to create or save three to four million jobs for American Workers. Indeed, if the recently introduced Illegal Alien Amnesty bills are enacted the job losses and social service costs will dramatically worsen.
Solution: Acquire Gold, Silver and Tangibles as Fortress Assets, but with Caveats
The Cartel* is still Potent, but not Omnipotent.
Many Hard Assets Partisans recently had the distasteful experience of being victims of the Cartel’s March 18 – 20, 2008 Takedown of Gold, Silver, Crude Oil, and other Hard Assets, and Previous, and Subsequent Takedowns. Other Hard Assets Partisans, including Deepcaster, profited.
While anger is a natural and understandable reaction to such continuing Perfidious Covert Market Intervention, we suggest it is more constructive to adopt an Investing/Trading Strategy which will help eventually to defeat The Cartel* and to profit along the way.
A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan while at the same time insulating oneself from future Takedowns. The following points provide an outline of The Strategy (particularly as applied to the Gold and Silver Markets) and are designed to help avoid such unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
1) Recognize that The Cartel is still Potent, as difficult as that may be psychologically for Deepcaster and other Hard Asset 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.
2) Accumulate Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
3) In order to know when one is near the bottom of a Cartel-generated takedown, it is essential to take account of the Interventionals as well as the Technicals and Fundamentals.
4) For example, regarding Gold & Silver, near such Interim Bottoms, accumulate a combination of the Physical Commodity (Deepcaster prefers “low premium to melt” bullion coins) and well-managed Juniors with large reserves. (Deepcaster provides a list of such Junior Candidates in our December 20, 2007 Alert “A Strategy for Profiting from Cartel Intervention” available in the Alerts Cache at www.deepcaster.com.) The “Physical” and “Juniors” are for holding for the long-term as a Core Position.
5) Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
6) Indeed, 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.
7) Near the next Interim Top, liquidate the long options and majors. Again, in order to know when we are close to the next Interim Top, it is essential to monitor the Interventionals, as well as Fundamentals and Technicals.
8) Near that Top, sell short or buy puts on Majors. We re-emphasize the Majors as preferred vehicles for trading positions because such positions are more liquid and tend to be quite responsive to Cartel moves.
9) Near the next Interim Bottom, cover your shorts and liquidate your puts and go long again to begin the process all over again. We emphasize that it is essential to consider the Interventionals as well as the Fundamentals and Technicals in order to determine the approximate Interim Tops and Bottoms.
10) Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of the Fed-led Cartel. 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 and excessive Monetary and Credit Creation. 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 both through loss of purchasing power, and from Taxpayer – funded “Bailouts.” 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 (we reiterate, a private for-profit Cartel of Key International Banks whose Profits are dramatically increased as U.S. Taxpayers increase their borrowings from it) as Deepcaster, Presidential candidate Rep. Ron Paul (R. – TX), and legendary investor Jim Rogers, all have advocated.
b) Join the 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 to prop up international financial institutions and to maintain its power. But this sacrifice cannot continue forever.
One key component of the Cartel’s Ominous “End Game” is the planned replacement of the U.S. Dollar with the Amero or some other functionally equivalent Fiat Currency. This would give even greater de facto power to the international Cartel of Central Bankers. We encourage readers to review the evidence for the entire multifaceted “End Game” Program in the following: Deepcaster’s Alert of 8/13/06 “Massive Financial Geopolitical Scheme Not Reported by Big Media” and Deepcaster’s June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” - - both available at www.deepcaster.com. Fortunately, a Resolution (H. Res 40, Goode, R. – VA) was recently introduced in the prior U.S. Congress that would stop this “End Game” attempt. We trust it will be reintroduced in this Session.
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.
Regarding deployment of the balance of assets devoted to one’s Tangible Assets Portfolio, we recommend The Strategy outlined above.
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 be regarded as the ultimate Measures and Stores of Value. In 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.
Essential to this Strategy, of course, is paying close attention to the Interventionals - - such attention has facilitated Deepcaster’s profitable recommendations displayed at www.deepcaster.com. A dramatic side benefit of this strategy is that it helps insulate one against vicious Cartel Takedowns of the Precious Metals (and Strategic Commodities) such as the one of March 18-20, 2008.
If this aforementioned Strategy is employed effectively, it can result both in an increasing and protective Core Position in Gold and Silver, and in considerable profit along the way.
April 17, 2009
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Gravitas, Pietas, Virtus
-- Posted Friday, 17 April 2009 | Digg This Article | Source: GoldSeek.com