Deepcaster: Profit, Protection Despite Cartel Intervention
DEEPCASTER LLC
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Remarkably, The BIS, The Central Bankers’ Bank advertised in June, 2008 that one of its “Products” was “Interventions” in the Gold Market. This came as no surprise to the Gold Anti Trust Action Committee (GATA uncovered the BIS advertisement) nor to Deepcaster, nor to others of us who have for years contended that a Cartel* of Mega-Banks (including those who own the private for-profit U.S. Federal Reserve, and Key major Eurozone Bankers) is engaged in an ongoing campaign to suppress Gold and Silver Prices. Market Manipulation (and not just of the Precious Metals Markets as we shall see) provides a Challenge to Investors, and a Threat to their Wealth, but also an Opportunity to Profit and Protect, as we explain. First, reviewing several facets of Manipulation is crucial to understand the variety of effects, and how to Profit and Protect from them. (See e.g., Notes 1 and 2 below) Consider…
Another Essential to understand is that The Fed is a private for-profit entity, owned by Global Mega-Banks, some of which are headquartered in Europe. David Stockman explains some of the Negative consequences of this mega-bank Cartel for Investor Citizens around the World.
Among the Mega-Banks holding huge Precious Metals and other Derivatives Positions are familiar names (JPM holds a Derivative Portfolio of some $70 Trillion Notional value per a recent report).
Other Negative Consequences of Massive Fed and other Mega-Bank QE (Money “Printing” and Credit Facilitation) are identified by Bob Chapman and Warren Buffet.
Indeed, Ben’s Fed has arrived at his Rubicon. The Time Bomb to which Buffet refers has started to explode. And The Fed and other central Bankers Massively Monetizing (i.e. printing/digitizing Money and Buying) Sovereign and other Debt, and thus create another Asset Bubble. In the December, 2011 to February, 2012 period The ECB injected One trillion Euros into the International Economy on top of all the Fed QE and other injections. And it is this Immense and Ongoing QE which provides Great Profit Opportunities as well as Great Systemic Threats, as we explain. But it is important to understand that it is not just the P.M. Markets that are manipulated but Equities, Bond, and other Markets as well. Consider:
See also “Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer” 2/20/2012, Bob Janjuah, Nomura International Strategist. Near the end of the Fall, 2008 Equities Market Crash (i.e. as of December 2008) there were about U.S. $548 Trillion in Notional OTC (i.e. Dark, Not Exchange Traded; thus traded mainly by Mega-Banks) Derivatives still outstanding worldwide. Yet two and one-half years later (as of June 2011 – the latest BIS Report date) that total was at about $708 Trillion which exceeds the all-time pre-Crash (June, 2008) High of $684 Trillion, according to the Central Banker’s Bank, the Bank for International Settlements (www.bis.org, path: Statistics>Derivatives>Statistical Tables, Table 1). As of the latest BIS reported figures in March, 2012 the Outstanding Derivatives Total stood at over $700 Trillion. Clearly, a Conclusion that Systemic Risk (generated by Derivatives Exposure which existed, e.g., at AIG) has somehow been substantially lessened by the actions of the private for-profit Fed, the European Central Bank, the U.S. Government, or any other source, is wrongheaded. Given the Massive Size and Impact of the $700+ Trillion in Dark OTC Derivatives, Investing or Trading without addressing the issue of likely Cartel* Market Interventions is a recipe for disaster. Thus, we offer the following Overview and Update regarding The Interventional Universe to provide a Springboard for the Profits and Protection Strategy which we describe below. And in our 2011 and 2012 letters and Alerts, we offer a Buy Recommendations designed to profit from impending Forecast Mega-Moves. As our regular readers know there is clear and convincing evidence that The Fed leads a Cartel* of key Central Bankers and favored Mega-Financial Institutions in an ongoing Regime of Overt and Covert Manipulation of the Precious Metals, Equities, Strategic Commodities and other Markets, as we demonstrate below.
This March, 2012 Article is the twelfth in a series of Deepcaster’s work originally entitled “Juiced Numbers”. It provides an Updated Overview and Summary of Market Intervention and Data Manipulation. It reflects Analysis of key recent Releases from (and actions of) the BIS (Bank for International Settlements – The Central Banker’s Bank), BLS (Bureau of Labor Statistics) and The U.S. Federal Reserve, as well as Highlights of recent Interventions, and updates regarding The Cartel* “End Game.” For the sake of Brevity, we refer to our earlier articles in this series. Bailouts and Stimuli have afforded The Cartel a whole panoply of additional tools for Market Intervention which they did not possess even five years ago. These tools make tracking “The Interventionals” ever more challenging. In sum, this report provides even more evidence of continuing Risk of Hyperstagflation and/or Systemic Collapse, and of the beginning of the attempted implementation of The Cartel’s Nefarious “End Game” (see “Saving Investments, Sovereignty, & Freedom from the Cartel ‘End Game’ (1/13/11) in the ‘Articles by Deepcaster’ cache at deepcaster.com). Moreover, it provides evidence that the private for-profit Fed’s and its allied Mega-Banks’ Policies and Actions are the Primary Cause of the Economic and Financial Crises from which we suffer today. Therefore, Deepcaster suggests below a Systemic Solution and a Strategy for profiting and protecting from the Interventional Regime’s actions and policies, and coping with its ‘End Game’ Strategy.
Deepcaster is periodically asked to explain, and provide evidence for, our view that a U.S. Federal Reserve-led Cartel* (apparently composed of the U.S. Federal Reserve, Major Central Bankers and key Primary Dealers manipulates a wide variety of markets. [Apparently one “Operational Vehicle” through which The Cartel works is called “The Working Group on Financial Markets” established after the 1987 crash, and which is often informally and widely referred to as “The Plunge Protection Team” or PPT.] Essential to maximizing profits and to avoiding losses is to recognize that the Fed-led Cartel* manages two complementary Interventional Regimes – - one quite public, and the other dark one, at least as powerful, covert. Thus, a critical key to profit and loss is tracking the “Dark Interventionals” (which leave “Tracks” so to speak) as best one can, as well as the public ones. Moreover, whether an Intervention is Overt or Covert is often a matter of degree. Overt Intervention often has a Covert aspect (e.g. how was that TARP Bailout Money used and who received it?), and Covert ones are often difficult to detect, but nonetheless can often be tracked using publicly available information. Consider for example, the Graham Summers Quote above. It is important to note also that by “Cartel Intervention” we do not (usually) mean that the Cartel totally controls prices in any particular market, at all times. Various markets are affected in varying degrees, at varying times, by Cartel manipulation attempts. In markets such as the (relatively) Small Cap markets for Gold and Silver Bullion and especially Securities, Cartel manipulation attempts can have much more impact and are, at times, and for certain time periods, tantamount to control. But although the Cartel’s ability to manipulate certain of these Markets has been significantly weakened in recent months for reasons we explain in our Spring, 2010 and later, Letters, Articles and Alerts (e.g. “Profit from a Weakening Cartel, July, 2010 Letter”) it is far from Insignificant – note the $90ish one day February 29, 2012 Takedown of the Gold Price e.g. Here we do not focus on the Overt Interventions since they are described at length in various mainstream financial publications.
Covert Direct Intervention to manipulate a variety of markets appears to be accomplished primarily via three categories of vehicles:
[For fuller Explanation, see Deepcaster’s Article “PROFIT & PROTECTION FROM CARTEL INTERVENTION -- Including New Interventional Tools Description “ (12/23/09) in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com and for details regarding Cartel use of Repos, Derivatives, Bailout Monies and other Vehicles see the July, 2009 Letter.]
The challenge for Investors and Forecasters is to determine where (i.e. in what Sector/s) and how (immediately, in increments, etc.) the Repo-backed funds and/or TARP/TSLF/Bailout QE/LTRO Funds and/or OTC Derivatives (“Interventional Funds”) etc. will be employed. Deepcaster and those very few others, who monitor the Interventional Funding (and related Cartel and Allies’ actions) to the extent that is feasible, make educated Forecasts of where and how such funds are likely to be used based on patterns, tendencies, and judgments virtually all of which can be gleaned or inferred from publically reported information. But no outsider can know for sure. Those who doubt whether the Cartel has the capacity to manipulate the markets (and especially the larger markets like the multi-trillion dollar currency and bond markets) are invited to inform themselves about the U.S. $70 Trillion plus of OTC Derivatives at Fed Primary Dealer J.P. Morgan Chase, or U.S. $40 Trillion plus (each!) at Fed Primary Dealer Goldman Sachs and Fed Primary Dealer Citibank. Indeed both Opportunities for and Threats to Investors are generated by Cartel Policies and the Massive OTC Derivatives positions. Consider:
For further details see our July, 2009, Letter, and 12/23/09 Article, Ibid.
Key Statistics continue to be gimmicked by Official Sources much to the detriment of American Citizens and Investors Worldwide. One result of this is that the extent to which Mega-Bank Policies result in the confiscation or devaluation of Investor Wealth, is hidden. Investors and citizens-at-large are misled by Official Statistics which have been gimmicked, as shadowstats.com demonstrates. All of the following Real Numbers for the USA are calculated by shadowstats.com, which calculates them according to traditional methods used in the 1980s, and early 1990s, before The Political Adjustments currently being utilized began in earnest. As the Real Numbers mentioned below demonstrate, our ongoing economic and financial crisis is not merely a “normal” business cycle Recession, but a System-Threatening Crisis. Indeed, we are on the Threshold of a Hyperinflationary Depression. (See below) Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported February 17, 2012 U.S. Unemployment reported February 3, 2012 U.S. GDP Annual Growth/Decline reported February 29, 2012 U.S. M3 reported February 20, 2012 (Month of January, Y.O.Y.) Knowing these Real Numbers facilitated Deepcaster’s recommending “Opportunities in the Impending Perfect Storm” – - the title of his early September, 2008 (pre-Crash) Article warning of the impending Crash (available in the Articles Cache at www.deepcaster.com) and his making five short (and subsequently quite profitable) recommendations to subscribers at about that time. To understand the motives for Fed and Cartel Policies and actions consider:
Indeed, the Profit Motive lies behind Fed Actions. Even the most causal student of Economic History knows that the United States’ Federal Reserve system, or “The Fed” as it is called, is not a U.S. Government owned or controlled entity. Various international private banks, several of which are headquartered in Europe, own “shares” in the “United States” Fed. Moreover, this “United States” Fed leads a Cartel of Central and Private Banks* who collectively intervene in a wide variety of markets, as Deepcaster demonstrates here. All this is obviously quite financially incestuous. These International Bankers, acting through their “U.S.” Fed, profit both by creating money out of “thin air” and by collecting “interest” from U.S. Taxpayers on the Treasury Securities it has bought with U.S. Dollars (Federal Reserve Notes) it has created out of thin air. The Dean of the Newsletter Writers, Richard Russell, eloquently describes all this:
[Historical note: recall that President John F. Kennedy was unhappy with Fed policy and therefore caused U.S. Notes to be printed by the U.S. Treasury as Constitutionally Authorized and as a substitute for Federal Reserve Notes. The issuance of these Notes ceased shortly after President Kennedy's Assassination.] The one conclusion that one can make from the foregoing is that the failure to take account of the power, force and pervasiveness of Fed-led Cartel Manipulations (i.e. The Interventionals) is an invitation to financial and investment suicide (see 12/23/09 Article, Ibid).
Clearly, The Cartel has created a Financial System subject to ever-greater Systemic Risk. Why? Harry Schultz, the Eminence Grise of the Financial Newsletter writing fraternity, puts the question in this way – - “what is the reason for this seemingly random monetary mess that multiplies its momentum every day? The answer, in one word, control. The elite/insiders already have control of the financial system, but they wanted more, much more…and it was not random, it was planned.” (emphasis added) Ibid. 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 increasingly be seen as the Ultimate Stores and Measures of Value rather than their Fiat Currencies and Treasury Securities, in other words, as money. Thus they will continue attempts at Takedowns of Gold and Silver prices.
We issue a word of caution to our readers. So long as The Cartel is in a very active interventional mode (e.g. as in taking down the price of Gold and Silver periodically) one should not be lured into thinking that the periodic up spikes in the prices of Gold and Silver necessarily present a “breakout” or a buying opportunity. As a practical matter, technical breakouts are sometimes a lure designed to suck in more “longs” prior to a subsequent deeper Takedown. Consider the parabolic spike up in both Gold and Silver prices in the hours before the February 29, 2012 Takedown began. However, the Cartel’s ability to sustain Takedowns has been considerably weakened recently largely because of increasing demand for delivery of Physical Metal (as opposed to “paper” e.g. Certain ETF shares) – See Below. Nonetheless, it is essential to study the Fundamentals and Technicals even though the Interventionals can temporarily override the Fundamentals and Technicals. One must study the Fundamentals not only for all the usual reasons but also because Fundamentals somewhat constrain the timing and effectiveness of Interventions by The Cartel. Similarly, one should study the Technicals for all the usual reasons and, in addition, because it is in The Cartel’s interest to make its actions seem technically plausible in order to continue to “run mainly under the radar.” It is not in The Cartel’s interest to make its Interventions any more visible than they already are. Indeed, there is powerful evidence that The Cartel often uses and/or helps create technical patterns (aka “Painting the Charts”) which lure certain investors (such as hard asset investors) into getting “off sides” before Cartel actions such as taking down the price of Gold or Silver.
Clearly, the fact that Intervention occurs is amply documented, but Intervention appears not to be limited to the Gold and Silver Markets nor to the Equities Markets, as the Graham Summers Quote above indicates. Fed Chairman Bernanke’s statement in his academic paper “Zero Rate Bound Economies” can reasonably be taken as a justification for the Fed purchasing the government’s own paper, otherwise known as monetizing the debt. Specifically, regarding long bond purchases, the purpose of this would be to boost the 10 and 30-year bonds, and, therefore, reduce long-term interest rates. In The Fed’s Fall, 2011 Operation Twist, The Fed bought 91% of 20-30 year U.S. Treasuries! The Inflation generated by such Fed (and ECB 1 Trillion Euro LTRO) purchases shows up first in other areas like Food and Energy, and already has, with more to come. Consider that in light of increasing Real Consumer Price Inflation as of March, 2012 at over 10.57% annually (per shadowstats.com – - see “Indirect Manipulation” above) one can reasonably ask: So why haven’t the storied “Bond Vigilantes” pushed interest rates (and especially long-term interest rates) up to account for the massively expansionary monetary inflation of recent years? That is because the Fed-led Cartel* of Central Bankers and Allies has quite apparently been using “interest rate swaps” and other Derivatives (via their Chosen Primary Dealers) and outright Bond purchases itself to suppress what would otherwise be dramatically rising interest rates, both short and long term, according to Rob Kirby. Consider that there were over $554 trillion in Outstanding Dark OTC Interest Rate Contracts as of June, 2011 according to the BIS, up from $262 trillion in June, 2006. Kirby’s excellent paper, “ The Elephant in the Room,” demonstrating how interest rates (which would, if there were no suppression, be dramatically rising) have been suppressed by The Cartel, was presented at the Spring 2008 Washington, D.C., GATA (Gold Anti-Trust Action Committee, www.gata.org) Conference.
For a full discussion of the following Interventions and Tools, see Deepcaster’s July, 2008, December, 2008, July, 2009, December, 2009, July, 2010, December, 2011, and 2012 Jan-March Letters & Alerts posted in the ‘Letters’ & ‘Alerts’ Archive at www.deepcaster.com:
In particular it appears that The Private for-Profit Fed has used the Primary Dealer Credit Facility (PDCF) as a Prime Tool for manipulating Equities Markets as ‘Tyler Durden’ of Zerohedge.com describes while putting Taxpayers at risk:
[For fuller Explanation, see Deepcaster’s 12/23/09 Article] See also “Gaining from Gargantua” posted in ‘ Articles by Deepcaster Cache ’ at deepcaster.com . The Fed is responding to claims their money pumping is inflationary by proposing an ostensible “sterilized QE”. The Fed would digitized new money, buy long-dated Treasuries and Mortgage Bonds from banks and then sequester the money thus created by borrowing it back from the Banks. Of course, this in no way diminishes hyperinflation risks because, of all the massive amounts of hot money already in the system and continuing obligation of Taxpayers and Investors to pay interest on Treasuries and Bonds. Thus, the net-result of Fed/Treasury actions have been to increase long-term Systemic Risk and Taxpayer Liability rather than diminish it.
A key point is that the Fed/Treasury Actions of 2008, 2009 and 2010 are not long-term fixes. One reason they are not long-term fixes is that they “fix” a liquidity problem in a way that allows insolvent or nearly insolvent financial institutions to have liquidity that would allow certain normal but often deleterious operations (i.e. the continuation of even more lending based on borrowed liquidity) to continue temporarily. Deepcaster has previously demonstrated the perils inherent in an economy increasingly relying on “borrowed liquidity” (i.e. debt) as a result of Fed policies rather than the traditional “earned liquidity” (i.e. savings) – see Deepcaster’s January, 2008 Letter. Thus, the “borrowed liquidity cure” is worse than the disease. At about 100% of GDP, the USA’s debt cannot ever reasonably be repaid nor the debt of other countries (e.g., Japan where debt is 220% of GDP, and several Eurozone countries where debt exceeds 100% of GDP). Thus, what The Fed and ECB have given us is a flawed Financial Band-Aid, and only a Taxpayer guaranteed Band-Aid for the Mega-Bankers (and profit for The Fed and its Shareholders which make more money as borrowing increases) at that. The FASB is complicit in this Deception because it continues to allow Mark to Myth rather than requiring Mark to Market accounting. We must not forget another fundamental factor which demonstrates that The Fed Actions are neither a long-term, nor an adequate, remedy. Consider McHugh’s comments regarding the Bail Out:
A Systemic Solution Allowing the International Economy to be based on a Fiat Reserve Currency managed by a Private For-Profit Central Bank, The Fed, is unsustainable. No Fiat Currency Regime in history has ever survived indefinitely. Many have ended in Disaster. So The Systemic Solution is apparent. We outline it as follows:
Thus if The Cartel leaders know what they are doing what is their ‘End Game’? For details regarding The Cartel ‘End Game’ see “Investor Advantage: Revisiting the Cartel’s ‘End Game’” (3/6/09) and “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It (09/23/10)” in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
Fortunately, the following considerations and guidelines help enable Investors to Profit and Protect in spite of Cartel Intervention, and particularly regarding Interventions in the Precious Metals Markets.
These reports are doubtless leading Major Gold and Silver Investors to demand Delivery and possession of Physical Gold – a wise decision. But 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 temporarily (witness the 2/29/12 Takedown). 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.
Note: 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 Cartel 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:
Finally, in early March, 2012 Deepcaster indentified a Mega-Opportunity in the Precious Metals Arena. See his Buy Reco in his Alert for the week ending March 9, 2012. Best regards, Deepcaster
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