Mendacity Antidotes for Profit & Protection

“The European Central Bank used the proceeds from gold sales to boost its U.S. dollar reserves in 2009, helping lift the dollar…

The ECB also confirmed it had not intervened in currency markets in 2009. The last time it intervened was in 2000.”

“ECB simultaneously confirms and denies currency intervention”
By Sakari Suoninen, London Reuters via GATA, 4/19/10

“The ranks of unemployed individuals grew by 134,000 last month from February, to 15 million, the Department of Labor's Bureau of Labor Statistics says. But it also is plausible, the agency says, that the number of unemployed rose by 500,000. Or, it could have fallen by 200,000.

In fact, at a time when high unemployment tops many people's worries about the economic recovery, the BLS can say only that it is 90% confident that the true change in the number of unemployed in March was somewhere between a drop of 243,000 and an increase of 511,000. In other words, it isn't even clear whether the number of unemployed rose or fell last month. The ranges are similarly broad for seven of the last 10 months—and for more than 75% of the time in the past decade.”

“It Is 90% Certain That Unemployment Rose… Or Fell”

Carl Bialik, Wall Street Journal, 4/17/10

The ECB simultaneously confirms and denies Currency Market Intervention, and Unemployment Rose…or Fell according to the BLS. Eh?!

Investors should seriously focus on the Misinformation, Disinformation and Outright Lies generated by Officialdom around the World. The capacity to identify falsehoods and obtain accurate data is essential to profiting and protecting wealth. Here we outline several challenges and then offer a few Guidelines and Sources to aid in that quest.

What do we know about currency Intervention? We know that (according to the Centrals Bankers own bank –The Bank for International Settlements) there are certainly enough Dark OTC (i.e. not Exchange Traded) Derivatives available to the Mega-Bankers to Manipulate currencies – over $48 Trillion Notional Value (as of June, 2009 - see www.bis.org, path: Statistics>Derivatives>Table 19) in foreign exchange contracts.

And we know the ECB simultaneously claims they do and do not intervene in the currency markets.

And we now know, in spite of repeated denials, that a Fed-led Cartel* has been and is

·         Suppressing Precious Metals Prices, and

·         Intervening in other Markets

(See Deepcaster’s Articles: “Defeating the Cartel... With Profit, Part 2” (06/19/2009) and “Is The Cartel Failing? What Next?” (04/16/10) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com)

Even the Mainstream Media has started reporting on the ongoing (for several years) Precious Metals price suppression, as the New York Post article we discussed last week indicates.

*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, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" 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 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.

And we know Official Statistics are often Bogus.

In order to make profitable investment decisions, it is essential to have the Real Data, such as that provided by Shadowstats.com, on the U.S. Economy. Shadowstats.com calculates Statistics the way they were calculated before Official Manipulation began in earnest in the 1980s and 1990s. For example, compare the recent Real Numbers with the bogus Official Numbers.

Official Numbers      vs.     Real Numbers (per Shadowstats.com)

Annual Consumer Price Inflation reported April 14, 2010

2.31%                            9.47% (annualized April 2010 Rate)

U.S. Unemployment reported April 2, 2010

9.7%                              21.7%

U.S. GDP Annual Growth/Decline reported March 26, 2010

0.06%                             -4.62%

And we know there would be cries of outrage, justifiably, if consumers knew that the Real Inflation rate was now raging at 9.47% (Shadowstats.com) rapidly diluting the purchasing Power of the U.S. Dollar and the value of U.S. Dollar-denominated Assets.

And now, of course, Major Financial Institutions have been accused of Lying to us. How could it be?!

Yet one other Major Challenge faced by Investors is the inordinate influence/control the Mega-Financial Institutions have over the U.S. Congress.

Just consider the Gift to the Mega-Banks which Mega-Bank Servant U.S. Senator Chris Dodd has put in his financial “reform” bill.

“* Dodd authored the Bailout bill of 2008

* Then he secretly inserted the AIG bonus loophole into the Stimulus bill of 2009

And Dodd's not done yet! His financial "reform" bill creates a $50 billion fund. If any of Wall Street's large financial firms is on the verge of collapse, the government will take it over and use the fund to pay off creditors.

Smaller companies will be shut out of the program. If they fail, they will go bankrupt and creditors will lose their money. But if a Big Boy firm fails, its creditors will be bailed out.

Potential lenders will see that the Big Boys are protected by the government. That's a HUGE and UNFAIR advantage.

We must fight this injustice! Tell Congress to oppose this bailout scheme…” (Emphasis added.)

“Senate Banking Chairman Chris Dodd has quite a track record protecting Wall Street's Big Boys at your expense.”

James Wilson, Assistant Communications Director, DownsizeDC.org, 4/22/10

Such an ostensible “reform” would not only be unjust, and another potentially huge liability for Taxpayers, but also is Moral Hazard in Spades!

Indeed, the Dodd bill grants unlimited Bailout Authority to the private for-profit Fed, as well as the power to take over “nonbank financial institutions” and to decide which institution those are. Outrageous!

So, what should an Investor do in the face of Market Manipulation, Bogus Statistics and Mendacity, Misinformation and Disinformation.

Consider the following to Profit and Protect.

The Prospect that we may not get any Substantial Financial Regulatory Reform from this session of Congress, AND that the private for-profit Fed will acquire even more power, creates both potential Crises and Opportunities.

Here we focus on one Private Profit Opportunity and one Public Policy Opportunity.

Consider that none of the Key Structural problems which led to the Fall, 2008 Market Crash has been solved, and most not even addressed in the  pending Financial “Reform” legislation. Indeed, Senator Dodd’s version would continue “Too Big to Fail”.

Consider also that the ostensible Recovery of the Past Year is mainly the result of Stimulus actions by Major Governments around the World – mainly Printing More Money and/or borrowing to create the Economic and Markets “Sugar Highs” we see today.

But Sugar Highs do not last. Especially this one, which has been considerably boosted by shifting Private (mainly Mega-Financial Institutions) Debt into the Public Sphere.

That is to say, the losses of Mega-Institutions have been socialized by shifting them to U.S. and other taxpayers around the world.

But the Profits of these Institutions remain privatized. The $12.9 Billion (per the N.Y. Times) of taxpayers’ money which Goldman Sachs received via the AIG Bailout is a case in point, and was in addition to the TARP funds which Goldman received (and subsequently repaid).

And the $1.7 Trillion of Toxic Instruments bought by the Fed mainly from Mega-financial institutions is another case in Point.

One need only look at the Eurozone to see that the push to commonize debts onto the taxpaying Public, while privatizing profits, continues.

If the foregoing Bailouts and Stimuli achieved fundamental improvements in economies around the world, perhaps they could be justified. But none of the Fundamental Problems has been solved. Massive Mortgage rate resets loom in 2010, 2011, and 2012, for example.

And the U.S. now has at least $108 Trillion! in downstream unfunded liabilities for Social Security, Medicare and Medicaid. And the U.S. Federal Debt will approach $20 Trillion by 2020.

Massive Unemployment (Real U.S. Unemployment is over 20% per Shadowstats.com) looks to persist for many months, and probably for a few years. And with Consumer Spending a huge chunk of GDP for Major Nations, this does not bode well for Corporate Earnings in the mid-and long term.

Considering all the aforementioned together, the Markets should be looking lower over the mid and long term.

Yet recently Bulls have been buying Equities with earnings yields of a mere 4% and a price/earnings ratio averaging just over 22 (per the S&P). Not a Strategy likely to result in Profits.

And not a logical policy given the Fundamentals, or Technicals, for that Matter.

Of course, this Market Bullishness has been “juiced” by The Cartel.

But the Prospective Crises provide a considerable Mid-Term Profit Opportunity, and mainly on the short side in the Equities Markets.

Fortunately, the advent in recent years of short and leveraged short Funds provides an opportunity to “go short” in Equities and other Sectors while reducing the risk of capital loss due to time and risk premium erosion. See Deepcaster’s 2010 Letters and Alerts available at www.deepcaster.com for specific recommendations.

But before actually “going short” (or long for that matter) it is important to consider certain Essential Caveats. (Note that we merely summarize the Caveats below, while providing supporting documentation in our referenced Articles.)

1.      Make decisions based on Real Data, such as that provided by shadowstats.com (see above), gata.org and deepcaster.com, not on bogus Official Statistics. See Deepcaster's articles: "Opportunities to Profitably Escape Paper "Wealth" in 2010" (3/12/10) and “Surmounting Deception, Distortion & Intervention” (7/17/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.

2.      Take Account of overt and covert Cartel* Interventions; that is take account of The Interventionals as well as the Fundamentals and Technicals.

See Deepcaster's articles: “Profit & Protection from Cartel Intervention” (12/25/2009) and “Gain from the Cartel Game Plan” (9/04/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.

IMPORTANT NOTE: As indicated in the referenced Articles, much of the post-March 9, 2009 Equities Rally has been Cartel-generated.

3.      Invest in Gold and Silver (and key Strategic Commodities), BUT, according to a Strategy designed to minimize the Effects of Cartel Price Suppressions of Gold and Silver (and key Equities Sectors and Commodities), and, indeed, to Profit. Deepcaster has designed such a Strategy described in the following articles: “Defeating the Cartel... With Profit, Part 2” (6/19/2009) and “Defeating the Cartel... With Profit, Part 1” (3/28/2008) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. And Deepcaster recently recommended a Precious Metals investment, which is resistant to Cartel Price Takedowns.

4.      Implement an Investment and Personal Protection Strategy designed to cope with, surmount, and profit from The Cartel’s ‘End Game’. See Deepcaster's articles: “Surmounting The Armageddon Scenario & Cartel ‘End Game’”  (2/26/2010), “Crunch Time for the Cartel“ (11/25/2009), “Surmounting the Cartels' 'End Game' Juggernaut“ (9/25/2009), and “Coping with Power Moves in the Cartel's 'End Game'” (4/24/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.

5.      Implement a Strategy Designed to Profitably Escape Paper ‘Wealth’. Deepcaster’s Strategy is described in “Opportunities to Profitably Escape Paper "Wealth" in 2010” (3/12/2010) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.

6.      Become involved in Political action designed to blunt the Cartel’s Superpower-Threat and derail the Cartel’s ‘End Game’. See Deepcaster's articles: “Surmounting Cartel Advantages” (5/08/2009) and “Coping with the Superpower-Cartel Threat!” (1/30/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game” in “Coping with Power Moves in the Cartel's 'End Game'” (04/24/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Clearly (and the recent U.S. Dollar bounce) The Cartel is sacrificing the U.S. Dollar over the long-term to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever. See Deepcaster’s July 2008 Letter in the ‘Latest Letter’ Archives at www.deepcaster.com.

7.      Become involved in Political Action to Audit the Fed (see below) and stop the Amnesty of 25 to 30 million Aliens now illegally in the U.S. A. When this Amnesty was proposed in 2007, Robert Rector of the Heritage Foundation calculated it would cost $100 billion annually (net of Taxes paid by the Illegals) for Health Care, Education, Infrastructure, and Support Services. The cost now would be higher due to increased Alien population growth and entitlements in the new Health Care Bill. Carrying Capacity Network (www.carryingcapacity.org) is a nonprofit organization which actively supports Auditing the Fed and opposes the Illegal Alien Amnesty. With 125,000 work visas being issued to Legal Immigrants each month American Taxpayers should not have to suffer the additional burden of supporting Illegals.

Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The Fed-Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets and/or Retirement Accounts only to have those assets effectively de-valued by Cartel Takedowns, U.S. Dollar Devaluation and other Cartel actions. 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 taking two steps:

a)     Become involved in the movement to Audit and then abolish the private-for-profit U.S. Federal Reserve as Deepcaster, former Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. The ‘Audit The Fed’ Bill is H.R. 1207 (and has over 280 co-sponsors) and S604 in the Senate; and The Abolish The Fed Bill is H.R. 2755.Unfortunately these bills have been watered down in this session of Congress. But the battle is not yet over. Insist on a stand-alone vote on these bills.

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 nonprofit organization, which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities.

8.      Develop an Investment and Trading Strategy designed to address all of the above. See Deepcaster's articles: “Avoiding Wealth Confiscation... With Profit!” (2/05/2010), “Profiting in "the whipsaw year" 2010” (1/08/2010), “Middle Class Outrage, Solutions, & The Markets” (12/11/2009), and “Protect and Profit Before the Coming Storm” (11/13/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.

In sum, 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 obtaining Superpower status, and aid in achieving wealth protection and profits as well.

Best regards,

Deepcaster LLC

Deepcaster.com

April, 17, 2010

Wealth Preservation - Wealth Enhancement

Financial and Geopolitical Intelligence

Gravitas, Pietas, Virtus