Profiting From the Showdown at the Precious Metals Corral
Commodities / Gold & Silver 2009 Aug 22, 2009 - 08:07 AM GMTBy: DeepCaster_LLC
The Fundamentals for Gold and Silver have rarely been more bullish.
Peace has not “broken out” in many places in the world.
The Economy and Markets are awash with Fiat Currencies and Debt. And the continuing increase in Money Supply (M3 still increasing at about 5% -- see below) and Debt shows no sign of abating.
13.54% of U.S. Home Mortgages are now delinquent or in foreclosure, according to the Mortgage Bankers Association.
Thus Systemic Risks reflected in the fragility of the Financial System continue to increase. The Cascade of small and medium size Bank failures continues, but the protection offered depositors by the FDIC has just become more tenuous. As of August 14, 2009 the FDIC was de facto Bankrupt according to a Sovereign Society Offshore A-letter report.
Henceforward the FDIC will have to use the $100 billion in back-up funding authorized by the U.S. Congress.
Moreover, 70% of the U.S. Economy – the U.S. Taxpayer/Consumer/and, often, mortgage holder – is no better off after the Bailouts and Stimulus Bill. These have helped primarily the Mega-Financial Institutions to continue making extraordinary profits. Indeed, The U.S. Taxpayer-financed Bailouts allowed these Mega-financial institutions to commonize costs, risks and losses, but to privatize profits.
Thus Gold and Silver would be the unquestioned Ultimate Stores and Measures of Value, and their prices would have already exceeded the 1980 inflation – adjusted highs ($2,300+ for Gold), if their prices were not periodically capped by Cartel* intervention (see below).
And the list of Gold and Silver – bullish Fundamentals is much longer than just the aforementioned.
Similarly the intermediate and long-term Technicals for Gold and Silver are extremely bullish.
Notably, the HUI price pattern for 2008 and 2009 reflects a beautiful confirmed Reverse Head and Shoulders targeting 500+.
Similarly the Gold Technicals also reflect a nearly confirmed (and similarly beautiful, for TA aficionados) reverse Head and Shoulders with a price Target over $1,300/oz for Gold.
As well, metals analyst Peter Grant notes a bullish “symmetrical triangle” AKA a “coil” like a “spring being compressed as it coils in an increasingly narrow range.” Such Patterns in Gold have proceeded upward breakouts, Grant notes.
One could argue that over the last hundred years the Precious Metals Fundamentals and Technicals have never been more bullish, with the possible exception of the Weimar Republic era in Germany in the 1920s.
But, given this observation, one can ask why Gold (and Silver) have not already considerably exceeded their 1980 high, which, adjusted for inflation, would be at least $2,300/oz, basis Gold.
The answer lies in The continuing overt and covert interventions by a Fed-led Cartel* of Central Bankers and favored Mega-Financial Institutions to cap Precious Metals prices, and, indeed, to manipulate other Key markets, especially Equities and Key Strategic commodities.
*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, 2008 Letter containing a summary overview of Intervention entitled “A Strategy for Profiting from the Cartel’s Dark Interventions & Evolving Techniques” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the “Latest Letter” Cache 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.”
The Motivations for these continuing Interventions is clear. The Cartel does not want the Precious Metals and Strategic Commodities to be seen as what they are – the Ultimate Stores and Measures of Value.
Instead, The Cartel wants their Paper – Fiat Currencies and Treasury Securities – to be seen as The Ultimate Stores and Measures. In that way they maintain and enhance their power and profits. See “Coping with the Superpower-Cartel Threat!” (01/30/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
As well, another Precious-Metals-Bullish Factor is “The Realities” regarding the Economy and The Markets, as reflected in the Real Statistics.
Indeed, a Substantial Cartel advantage is the ability to manipulate and/or manufacture (e.g. by using the classic technique of ‘Painting the Charts’) Key Market Price Patterns and Statistics. Thus Key Official Statistics are often far removed from the Realities of the economy and market place. For example, consider the latest Real Numbers versus the Official Versions, thanks to Shadow Government Statistics.
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported August 14, 2009
-3% 5.5% (annualized August Rate)
U.S. Unemployment reported August 7, 2009
9.5% 20.5%
U.S. GDP Annual Growth/Decline reported July 31, 2009
-4% -6%
All the above Real Numbers are calculated by Shadow Government Statistics the old-fashioned way i.e. with the methods used before the official gimmicking of these numbers began in the 1980’s and 1990’s. See www.shadowstats.com and click on ‘Alternate Data’.
So it is clear that now, in August, 2009, we have a set-up for a Showdown at the Precious Metals Corral. The Fundamentals and Technicals are ragingly Bullish, but the Interventionals indicate another Cartel Takedown attempt is impending.
Will the unprecedentedly bullish Fundamentals and Technicals prevail, and launch Gold and Silver to New highs? Or will Cartel Interventions prevail once more and again succeed in taking down Precious Metals prices. Deepcaster’s latest Forecast regarding the likely Outcome of the impending Showdown at the Precious Metals Corral is available in his latest Alert posted in the ‘Alerts Cache’ at www.deepcaster.com.
In light of the foregoing, Deepcaster offers the following Guidelines to aid in profiting from (and protecting against) such a Showdown, whatever the Outcome.
A Strategy for Profit and Protection
Normally, (that is to say in a Genuine Free Market situation) the go-to “Safe Haven” Assets in times of Financial Crisis would be the Precious Monetary Metals Gold and Silver, as well as other tangible assets such as Strategic Commodities.
We say “normally” because nearly every time another Financial Market and/or Economic Crisis has come prominently into the public eye in recent years The Cartel* has successfully taken down the price of what would normally be the Safe Haven Assets - - the Precious Monetary Metals.
A prime example occurred during the much-publicized demise of Bear Stearns in March, 2008, which was accompanied by a vicious Takedown of Gold and Silver. In a non-manipulated Market, given the fact that Bear Stearns reflected great and increasing weaknesses in the Financial System, Gold and Silver should have skyrocketed. But instead they were dramatically taken down.
Similarly, during the Fall, 2009 Market Crash Gold was taken down from $900/oz. during September, 2008, down to the low $700s, when it should have exploded upward.
Yet, it launched again toward $900 in December, 2008 and has actually traded above $900 for most of 2009.
So the question now, near end-Summer, 2009, is it different this time around? Have Gold and Silver finally thrust off the shackles of Cartel Intervention? Or will The Cartel be able once again to cap and take down the prices of these Precious Monetary Metals and Strategic Commodities?
One thing is certain: The Cartel will certainly attempt again to take down Gold, Silver and Strategic Commodities at the earliest opportunity because the Strategic Commodities and Precious Monetary Metals are Competitors as Stores and Measures of Value with the Central Bankers’ Treasury Securities and Fiat Currencies.
Thus Deepcaster has developed is a Strategy which accommodates Cartel Interventional attempts and at the same time provides excellent Profit Opportunities, whether the Interventional attempts are successful or not.
A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan (as Deepcaster is) 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 Portfolio unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
- Recognize that The Cartel is still Potent, as difficult as that may be psychologically for Deepcaster and other Hard Assets 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.
- Accumulate Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
- 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. Paying attention to the Interventionals facilitated Deepcaster recommending five short equities positions as of early September 2008 (just before the Fall Crash) all of which we subsequentially recommended be liquidated quite profitably.
- 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.
- Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term call options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
- However, 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.
- 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.
- 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.
- At 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.
- Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The 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 Hard Assets Takedowns and Taxpayer-funded Bailouts of Cartel Members and favored financial Institutions. 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. In order to help prevent this and similar outrages, we recommend three possibilities:
- Become involved in the movement (first to audit and then) to abolish the private-for-profit U.S. Federal Reserve as Deepcaster, ex-Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. Rep. Paul has introduced the ‘Audit the Fed’ Bill H.R.1207 (which already has a large majority of U.S. House of Representatives Members as co-sponsors), as well as the Federal Reserve Abolition Act, H.R.2755. The non-Profit activist organization www.carryingcapacity.org strongly supports these bills.
- 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.
- Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game.” See “Coping with Power Moves in the Cartel's ‘End Game’” (04/24/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Clearly The Cartel is sacrificing the U.S. Dollar and the “Main Street” Taxpayer/Investor to prop up Favored International Financial Institutions and to maintain its Power and Profits. But this sacrifice cannot continue forever. (For an expose of the details regarding $13 Trillion in Cartel Profits Made in the Fall, 2008 when Equities Markets were crashing see “Opportunities & Threats in Derivatives Shocker” (05/29/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com
If this aforementioned Strategy is employed effectively, it can result both in an increasing Core Position in Gold and Silver, and in considerable profit along the way.
Additional insights and details regarding this Strategy which are essential to profiting from the private for-profit Fed’s Policies, are laid out in Deepcaster’s article of 9/26/08 entitled “Protection and Profit from Bailouts Failed to Doom” and 6/30/06 “Profiting from Cartel Intervention”, in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.
Protection and profit require Proactivity and attention to the Interventionals, Fundamentals and Technicals, not “Buy and Hold.” “Buy and Hold” rarely succeeds anymore as current market conditions attest.
Indeed, the Key Point of the Strategy for Protection and Profit is careful attention not only to the Fundamentals and Technicals but also to the Interventionals. These Overt and Covert Cartel-generated Interventions have the power to move markets as those who study the matter can attest.
Thus, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover engaging in the Actions suggested above can help prevent The Cartel’s solidifying its Superpower status.
Best regards,
By DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
© 2009 Copyright DeepCaster LLC - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
DEEPCASTER LLC Archive |
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
