-- Published: Sunday, 21 June 2015 | Print | Disqus
“Texas … following the lead of Germany, Austria, and Holland …(has) decided to repatriate the gold that it has stored at the New York Federal Reserve. ... Upon completion of the facility, Texas will pull $1 billion in gold bullion from the Fed’s vault.
“Texas Wants It’s Gold Back,”
Joshua Krause, 06/13/15
“On June 7, 2015, The Financial Times’ John Authers observed: This has been a very dramatic week…. The real action was in the bond markets…the cost of borrowing, the cost of money within Germany over the long term more than doubled in the space of four trading days….
“On the same day, CNNMoney warned: ‘Pay Attention To The Chaos In The Bond Market - Bond Market Selloff Continues’
“That hissing sound you just heard is more air coming out of the bubble in the global bond market. From Germany to the US, fixed income prices tanked last week, sending yields way up…Investors are yanking cash out of the fixed income market. Government bonds experienced a sixth-straight week of outflows, according to Bank of America Merrill Lynch. Emerging market debt, a big beneficiary of extremely low U.S. interest rates, suffered the biggest outflow in nearly five months.
“The same week, Michael Snyder in Investors Start To Panic As A Global Bond Market Crash Begins, asked:
“‘Is the financial collapse that so many are expecting in the second half of 2015 already starting?’
“Many have believed that we would see bonds crash before the stock market crashes, and that is precisely what is happening right now. …. And it isn’t just German – bond yields are going crazy all over Europe. So far, it is being estimated that global investors have (already suffered) “… a cumulative loss of [$1.2 trillion] in last three months…. In the end, the overall losses could be well into the trillions…”
“Panic in the Bond Markets,” Darryl R. Schoon,
via lemetropolecafe.com 06/17/2015
To Identify The Major Culprit behind the impending Crisis of the Bond and several other Markets, we need to look no further than the private-for-profit U.S. Federal Reserve. Collapse of the Bond and other Markets could, of course, lead ultimately to the Implosion of The Fed.
“Noted investor Jim Rogers says outgoing Federal Reserve Chairman Ben Bernanke has set the stage for the collapse of the U.S. central bank within the next decade, and had turned the nation’s fiscal balance sheet into ‘garbage.’
“In a recent interview with the British financial website Mineweb, Rogers said Bernanke and his fellow central bankers in other countries have brought the global economy to the brink of disaster….
“Rogers predicted that history will remember Bernanke as ‘the guy who set the stage for the demise of the central bank in America.’
“‘It’s not a possibility,’ Rogers said, ‘it’s a probability. People will realize that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last five years, and a lot of it’s garbage.’…”(emphasis added)
“Jim Rogers: The Federal Reserve’s Days Are Numbered,”
Master Investor (Billionaire) Jim Rogers’ Negative view of the private-for-profit Fed is echoed by former Director of the OMB, David Stockman, who has said that The Fed has created “The Mother of All Bubbles.”
Deepcaster agrees, and would add that analyzing the ongoing and prospective Effects of Fed Policy and Market Interventions are the Most Essential Actions (among several) for Maximizing Real Gains and Wealth Protection going forward.
First one must realize that Fed Actions are primarily aimed at aiding Mega-Banks, and not the Citizenry.
Consider the following little Exposé from the Establishment The Wall Street Journal of all places.
“Foreign banks are collecting billions of dollars in interest from the Federal Reserve, analysts said, a sum that stands to rise when the central bank ultimately begins raising interest rates.
“In 2014, the Fed will pay … an estimated $3.37 billion headed to foreign banks specifically, according to an analysis from J.P. Morgan, which used Fed data.”
“Foreign Banks Collecting Billions from the Fed,” Mike Cherney
Ah yes, $3.37 billion in printed $US “paid” to Non-US Banks for “Interest.” Such a deal!
Nonetheless, it is very Important to Understand Fed Policies and their Effects in order for for Investors and Traders to Profit and Protect.
One Key is to Track and Heed Signals from Fed and other Central Banks’ Interventions, as well as Fundamentals and Technicals Tracking these Interventionals has facilitated Deepcaster’s recent Profitable Recommendations as well as those profitable ones (see Note 3 below) made before the 2008 Market Crash (see Note 2 below).
Another Key is to Track the Pace and Effects of various Central Banks’ ongoing Competitive Currency Devaluations (i.e., Purchasing Power Destruction) via the so-called Currency Wars.
Consider that Purchasing Power (Wealth) Destruction has been going on since The Fed’s Founding.
“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
Indeed, a few months after Ian Gordon correctly announced “the credit bubble is blown up,” it (the housing Bubble), burst and the 2008-2009 Market Crash ensued.
Thus another Key is to Track Real Gains (in Purchasing Power Terms) and losses and not just Nominal ones.
The Proper Measure for Gains is “Purchasing Power.”
For example, consider the effect of Real Inflation from the March, 2009 Equity Market lows to the June, 2015 highs. Inflation has averaged about 8% per year during that period, per Shadowstats. (Shadowstats measures Inflation the way it was measured in the 1980s before the Official Figures became Politicized and therefore Bogus (see Note 1 and Chart).
In other words, Purchasing Power losses must be taken into account by factoring in Real Inflation. Real Inflation in the U.S. for example, is still high 7.38% (as of May, 2015) per shadowstats.com. The Bottom line is that from March, 2009 to the present, no Asset has had a Real Gain unless it has appreciated in nominal $US currency terms by more than an average of 8% per year.
Why is performing a “Purchasing Power” Analysis so Crucial? Because the Private-for-Profit Fed, the ECB, and other Central Banks have for years been, and increasingly are, Printing/Digitizing Fiat Money and Credit into existence ($Trillions in recent years—including The Fed’s $4 Trillion Balance Sheet!) well in excess of any increase in Global Production of Goods and Services, thus diminishing Fiat Currencies‘ Purchasing Power and devaluing the Real Value of Bonds denominated in those Fiat Currencies. Ongoing Excess Money Creation is why the Purchasing Power of the U.S. Dollar (Federal Reserve Note) has declined by over 95% since The Fed was founded in 1913 and why Bond Market Volatility has increased dramatically recently.
And that is the Primary Reason a Bond Market Crisis and probable Crash is likely in the next few months.
Another Key point is that, considering all the Major Central Banks in toto, this Fiat Currency Creation out of Thin Air continues to increase at an accelerating rate and thus is a sure Precursor to Price Inflation (see Note 1).
But why have the Prices of the Ultimate Safe Haven from Fiat Money Printing — Gold and Silver — not recently reflected this Monetary Inflation. Historically, indeed they have, with the Gold Price increasing four-fold in decade prior to September 2011. But owning Gold and Silver is challenging.
This is because the prices of the aforementioned Precious Metals, are periodically the victims of Interventional Price Suppression Action by a Fed-led Cartel (see Note 2) of Central Bankers and their Allies and Agents. The Cartel’s motivation for ongoing Price Suppression Actions 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 (i.e. Real Money) to compete with their Fiat Treasury Securities and Fiat Currencies.
As an historical example, nearly $470 billion in OTC (i.e. Dark, not Exchange Traded) Derivatives were available to suppress Gold prices alone as of June, 2011 (as reported by the BIS, the Central Bankers’ Bank based in Switzerland - www.bis.org. (Path: www.bis.org>statistics>derivatives>statistical tables). Indeed, were it not for active Gold Price Suppression by The Cartel, Deepcaster (and other independent Analysts) believes Gold would have exceeded $3000/oz. by now.
Clearly Gold and Silver Prices were and still are subject to capping attempts, as they seem to have been nearly every time negative economic data or market developments are revealed. See the Gold Anti-Trust Action Committee website gata.org for many specific Examples
However, the Cartel is finding it increasingly difficult to successfully and sustainably cap paper prices because of huge drawdown of available Bullion, Bullion which is increasingly being shipped to China (e.g., recent 360% increase year over year), India, and Russia. And Germany, Holland, Austria and now Texas are now wisely demanding return of their Gold they believe is stored at The New York Fed.
But Cartel Price Suppression Attempts continue.
Thus, for example, the price of Gold and Silver on any given day may not reflect anything near their Ultimate Value. See Deepcaster‘s March, 2012 Article “Profit, Protection Despite Cartel Intervention” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.
Unfortunately too, 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, for example, the (nearly daily) Repo injections. [However, on the positive side, our attention to Interventions and related signals facilitates Profitable Recommendations.
Importantly, this fact of Ongoing Intervention is one major reason a mere “Buy and Hold” strategy increasingly fails. A Holder of the S&P through the last decade would have lost substantial value when Real Inflation is considered, and will likely lose more as Fiat Money Printing intensifies. And it Surely will.
Thus, it is essential to consider the Interventionals as well as the Fundamentals and Technicals when making a Market Forecast or Buy or Sell Recommendation.
And the Central Banks must keep printing/digitizing to maintain and increase the Bubble … until it Bursts.
“QE to Infinity is set in cement in the ‘European Stabilization Mechanism Treaty‘. This is the new European Union and the euro. It will be in place and operative by July of 2012.
“The European Stability Mechanism (ESM) is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism in the 17-member Eurozone. The ESM is due to be launched as soon as Member States representing 90% of the capital commitments have ratified it, which is expected in July 2012.”
Jim Sinclair, Mineset, 04/19/2012
The Fed, of course, maintains that it will soon raise interest rates because the economy is (ostensibly) recovering. We doubt that seriously because any Raise in interest rates could Trigger the Collapse of $555 Trillion (Trillion!) in Interest-Rate based Derivatives. Instead, we expect another round of QE as does Jim Sinclair.
But QE to Infinity results in Unpayable Sovereign (consider Greece) and other Debts, and, along the way creates the Opportunity for Mega Banks to engage in Massive Wealth Transfers.
“Taxpayers are paying billions of dollars for a swindle pulled off by the world’s biggest banks, using a form of derivative called interest-rate swaps; and the Federal Deposit Insurance Corporation has now joined a chorus of litigants suing over it….
“Derivatives . . . have turned into a windfall for banks and a nightmare for taxpayers…. While banks are still collecting fixed rates of 3 to 6 percent, they are now regularly paying public entities as little as a tenth of one percent on the outstanding bonds, with rates expected to remain low in the future. Over the life of the deals, banks are now projected to collect billions more than they pay state and local governments – an outcome which amounts to a second bailout for banks, this one paid directly out of state and local budgets.
“It is not just that local governments, universities and pension funds made a bad bet on these swaps. The game itself was rigged,…
“On March 14, 2014, the FDIC filed suit for LIBOR-rigging against sixteen of the world’s largest banks – including the three largest US banks (JPMorgan Chase, Bank of America, and Citigroup), the three largest UK banks, the largest German bank, the largest Japanese bank, and several of the largest Swiss banks. Bill Black, professor of law and economics and a former bank fraud investigator, calls them “the largest cartel in world history, by at least three and probably four orders of magnitude.”
“IBOR (the London Interbank Offering Rate) is the benchmark rate by which banks themselves can borrow. It is a crucial rate involved in hundreds of trillions of dollars in derivative trades, and it is set by these sixteen megabanks privately and in secret….
“The rate-rigging banks have been caught red-handed, but the greater manipulation of interest rates was done by the Federal Reserve itself. The Fed aggressively drove down interest rates to save the big banks and spur economic recovery after the financial collapse. In the fall of 2008, it dropped the prime rate (the rate at which banks borrow from each other) nearly to zero.
“This gross manipulation of interest rates was a giant windfall for the major derivative banks. Indeed, the Fed has been called a tool of the global banking cartel….
“Bill Black concurs, stating, ‘Our system is completely rotten. All of the largest banks are involved—eagerly engaged in this fraud for years, covering it up.’”…
“The Global Banking Game Is Rigged, and the FDIC Is Suing,” Ellen Brown, webofdebt.com, April 13, 2014
And Ellen Brown also eloquently described the profitable consequences of the ESM bailout coup for Private Mega Banks, some of which are shareholders of the private, for-profit U.S. Federal Reserve.
“The Goldman Sachs coup that failed in America has nearly succeeded in Europe—a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers”
“The European Stabilization Mechanism, or How the Goldman Vampire Squid Just Captured Europe,” Ellen Brown, webofdebt.com/articles, 04/18/2012, via LeMetropoleCafe.com
Quite apart from the covert Wealth Transfers exposed in the foregoing, one important Takeaway is that there is now yet another Great Bubble, a Credit/Debt Bubble, a Bubble destined to loudly Pop with Seriously Negative Consequences for Citizens around the world.
As long as the private-for-profit United States Federal Reserve and ECB and Bank of Japan and others continue to profligately expand the supply of money and credit, we will see continuing debasement of the U.S. Dollar and Euro and Yen in Purchasing Power Terms and this virtually guarantees eventual Price Inflation and an increase in size of that other Bubble, a Financial Assets Bubble which caused Billionaire Carl Icahn to correctly call over a year ago (on 3/1/2014) levels of Stock Prices a “Mirage.” Thus much of the Financial Asset Appreciation, in terms of U.S. Dollars, which we have seen in recent years, is really only dollar depreciation. Indeed, the U.S. Dollar depreciated over 30% (in purchasing power) between January, 2002 and July, 2008, for example, though many Assets nominally appreciated.
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 mainly the Increasing depreciation of the Purchasing Power of the U.S. Dollar. That is we have Prices Inflation which The Cartel and its Mainstream Media Allies and Agents try to hide from us.
John Brimelow, a savvy long-time observer of Markets has written,
“Bloomberg, which in JBGJ‘s informed opinion is exceptionally top-down directed on an ideological basis even by American mainstream Media standards, has apparently been mobilized to counteract inflation fears: CPI Conspiracy Theories Fail to Die with Banana-to-Haircut Check. The invocation of the ‘Conspiracy Theory’ concept in the context of 21st Century America polemics is the most extreme form of anathematization. “Excommunication of this severity suggests alarming inflation data at least at the anecdotal level is looming.”
JBGJ LLC, 04/18/2012
In light of the foregoing, it is important to consider, over decades and centuries, one can find no better “Safe Haven” and Measure of Value than in the Precious Monetary Metals, Gold and Silver, and selected other Tangible Assets, like basic Foodstuffs, and interests in Food Producers and Distributors.
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 continue to be subject to the considerable price manipulation Suppression Attempts by The Cartel of Central Bankers (Note 2). Of course, this Price Suppression has since the Highs of September, 2011, been “helped” by the International Economic Contraction which has suppressed prices of nearly all commodities, but not for much longer due to Central Bank Money Printing.
However, there is increasingly reason for optimism. The Cartel‘s ability to implement and sustain Takedowns has been considerably weakened recently largely because of increasing demand for Delivery of Physical Gold and Silver to China, India and Russia (as opposed to the manipulable “Paper” shares of Certain Precious Metal ETFs.
Moreover, other Central Banks are increasingly Acquirers of Physical as well as (the aforementioned) demands to return their Physical Gold “stored” at the U.S. Fed.
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 increasingly Bullish fundamentals propel them further up? Deepcaster provides his most recent Forecasts in his latest Letter and Alerts posted at www.deepcaster.com.
In sum, 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 Stagflation and The Cartel‘s ominous “End Game,” which Deepcaster has described in its Alert of 8/13/07 “Massive Financial-Geopolitical Scheme Not Reported by Big Media” and June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” and in 9/23/10 Article “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It” all available at www.deepcaster.com. In light of this “End Game,” it is no surprise that several Mega-Banks are increasingly discouraging their Customers from using Physical Cash. This is yet another Power Play designed to make the public more dependent on those Banks. Therefore, in a very real sense, cash under the Mattress and Gold and Silver in one’s basement Vault are a helpful guarantor of one’s independence.
Jim Rogers and David Stockman and Richard Fisher and Mohammed el Erian point out, Fed Policy is impelling us to such a Major Climax.
(This situation is) “a Ticking Time Bomb,”
Richard Fisher, (Former Fed Governor) (05/21/15)
“By suppressing Rates, The Fed has borrowed Growth and Returns from the Future.”
Mohammed el Erian, 5/21/15 (Former PIMCO CEO)
"‘Now we've had the weakest recovery in post-war history and what has happened? The Fed has simply reflated the bubble to an even more gigantic proportion.’
“And it's not just stocks that are in trouble. Stockman sees some troubling signs in the bond market. ‘It's not possible that the interest rate on the 10-year German bond (NYSE Arca: BUNL) should be 70 basis points when it was 5 just a few weeks ago-or even that the U.S. Treasurys [sic] (U.S.:US10Y) should be trading at 2 percent on the 10-year when we have taxes and inflation.’
“To Stockman, the message is clear, "everything is totally distorted and there is a day of reckoning coming down the pike.’ "
David Stockman, Former OMB Director, via Yahoo Finance (05/22/15)
Consider therefore Deepcaster‘s prescriptions for achieving Real Gains and Wealth Protection:
1. Locating one‘s capital primarily in Tangible Assets which are in great and relatively inelastic demand in a Stagflationary Future, including in
2. The Essential Agricultural Commodities, Production and Distribution Sector and in the
3. Precious Monetary Metals (e.g., Gold and Silver) but, preferably when acquired near the interim bottoms of Cartel-generated Takedowns. Timing and Selection here are important. 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. Financial Assets (e.g., Stocks) could and should be acquired when the timing is right, but also disposed of when the timing is right. “Buying and Holding” for the (Multi-Year) Long-Term will increasingly lead to losses for Many Assets.
5. Stay informed, daily, as much as possible, regarding “The Interventionals” as implemented by the Major Central Banks and Governments as well as the Fundamentals and Technicals.
6. Know the Real News and Real Statistics. Do not rely on often-spun Main Stream Media “News” and Bogus Official Data.
7. Monitor the Exchange Rate Value and Purchasing Power Value of the $US and other Major Currencies. Monitor Real Price Inflation.
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, and reacquires Key Tangible Assets.
Deutsche Bank indicates that the Worst is yet to come
“The worst may be yet to come in the global financial crisis as the central bank spending that kept defaults low runs out, according to Deutsche Bank AG.
Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments including Spain and Italy jumped 26 percent in the past month as the region‘s crisis flared up.
“’If these implied defaults come vaguely close to being realized then the next five years of corporate and financial defaults could easily be worse than the last five relatively calm years,’ the analysts in London said.
“Much may eventually depend on how much money-printing can be tolerated as we are very close to being maxed out fiscally.”
“Deutsche Bank: Worst of Global Crisis Yet to Come as Rescue Cash Runs Out,” Bloomberg, 04/18/2012
Deutsche Bank’s analysis, written over three years ago, is even more strongly applicable today.
June 19, 2015
Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported May 22, 2015
-0.20% / 7.38%
U.S. Unemployment reported June 5, 2015
5.51% / 23.1%
U.S. GDP Annual Growth/Decline reported May 29, 2015
2.73% / -1.31%
U.S. M3 reported June 6, 2015 (Month of May, Y.O.Y.)
No Official Report / 5.05% (i.e., total M3 Now at $16.668 Trillion!)
Note 2: We encourage those who doubt the scope and Power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster‘s December, 2009, Special Alert containing a summary overview of Intervention entitled, “Forecasts and December, 2009 Special Alert: Profiting From The Cartel‘s Dark Interventions – III,” and Deepcaster’s July, 2010 Letter entitled, "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds," in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, 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.” Attention to The Interventionals facilitated Deepcaster‘s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Note 3: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:
- 60% Profit on a Telecommunications Company on March 11, 2015 after just over 3 years (i.e., about 20% Annualized)
- 45% Profit on a Double Short ETF on January 22, 2015 after just 9 months (i.e., about 59% Annualized)
- 23% Profit on a leveraged ETN on the Volatility Index on January 6, 2015 after just 119 days (i.e., about 70% Annualized)
- 85% Profit on a REIT on December 31, 2014 after just three years (i.e., about 25% Annualized)
- 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
- 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
- 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)
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-- Published: Sunday, 21 June 2015 | E-Mail | Print | Source: GoldSeek.com