“Many members [of the Federal Reserve rate-setting committee]
judged that additional monetary accommodation would likely be warranted
fairly soon unless incoming information pointed to a substantial and
sustainable strengthening in the pace of the economic recovery…”
Minutes from the Fed’s recent policy meeting, released 8/22/12
Rarely do the Fundamentals, Technicals, Interventionals and
Actual Share Values line up so Favorably as now, but only for a very few
Why? Consider one of the Wise Old Timers
of Market Forecasting – Richard Russell’s observation that these
Markets are “as Difficult and Puzzling as any that I’ve ever had
to wrestle with.”
Russell notes that while Key
Fundamentals are Lousy, and Dow Theory is signaling we are in a Bear Market,
(both True) the Equities Markets have nonetheless been bullishly approaching
recent highs. Russell has recently expressed Puzzlement at that too. We do
There are 4 Main Reasons that certain Markets and especially Gold and Silver (as we
earlier forecast) have been increasingly signaling “Bull.”
1) The Massive
and Ongoing Liquidity Injections, plus the (repeated!) prospect of more QE
(e.g. per above quote) into the Markets by Major Central Banks such as the
Fed and ECB have temporarily lifted the Prices of certain Risk Assets,
even though The Actual and Prospective Fundamentals do not Justify
elevated price levels (except in the Commodities Arena – see
President’s Working Group on Financial Markets has the Power to Boost,
or suppress, various Markets. We are approaching the
Election. Enough Said!
3) The Major
Economies are still slowing and they are all (U.S., Eurozone and China)
over-indebted, with (so far as the U.S. and Eurozone are concerned) debts
that cannot be repaid given any Reasonably likely Economic Scenario
And that Debt
is Compounding, thus Further Weakening Economies going Forward.
Analysis has it right
On Wall Street nobody knows anything -- and nobody is doing anything
-- because nobody knows what to do. Volume has sunk to ridiculously low
levels. The hour glass for trouble is running out -- and what I mean is that
debts are compounding, and the balance sheets are looking worse
every day. And this is happening with the current low interest rates.
The US MUST do something about its deadly compounding debts.
The US dollar must be devalued in order to shrink the destructive power of
And on a
hopeful note for equities Bulls, Russell adds:
Finally, a hopeful signal. Yesterday, amid all the low volume and
sluggishness, the Transports gave us just a hint of something hopeful. It was
a breakout of the declining trendline, as you can
see on the chart. The Transports have been the laggers
all year, and it seemed as though if the Industrials closed above their May
peak, the Transports would not confirm. Now with this little upside breakout,
the Transports are giving us a ray of hope. Maybe, just maybe, the Transports
will add on a few more point, and get in the game.
“The Trend is your friend – until it ends.”
(Jim Dines) Richard Russell, Dowtheoryletters.com, 08/16/2012
4) The Major
Central Banks continue to repeatedly Dangle the Hope/Prospect of further QE
in front of The Markets to juice them up.
So consider how all this is likely to
note well that Volatility has been Near Record Lows, but given the
foregoing Challenges, this cannot last, for long, though relatively
low levels may last through the November Election.
Tone in Equities in recent weeks (The Dow has been
bumping against its May Highs and even the Trannies have been showing a
little Upside Breakout) is entirely inconsistent with the underlying Economic
and Market Fundamentals. But that is not surprising given, especially, #1 and
However, none of the foregoing changes
the fact that we are in a primary Bear Market, and therefore subject,
at any time, to Events causing Market Takedowns. This is primarily because
the Real Economy is still quite unhealthy in the US, Eurozone, and
especially, in China. (Recent Chinese export and PMI Numbers have been quite
Therefore it is no surprise that Dow
Theory confirms we are in a Primary Bear Market. The Trannies have not
confirmed the Dow’s recent surge up and the post-Fed-minutes-release
Market Action suggests they may not. Moreover, a recent confirmed and
reconfirmed Hindenburg Omen – reflected in an Ominous Jaws of Death
Pattern on the Charts -- indicates the probability of a Major Market Crash in
the next four months is substantial – at least one in four.
Realistically, were it not for Overt
(and Covert) QE, and the prospect/hope for more, it is highly likely the
Equities Markets would have crashed already.
We do not have a healthy Economy or
Markets when Equities performance is reliant mainly on QE.
remains that Neither the U.S. nor Eurozone has solved their
Debt Saturation and other Problems and China is slowing. This is bound
to adversely impact the Equity Markets going forward. One can exploit the
coming Equities Market Crash by going short (such as we recommended with five
leveraged short positions before the 2008 Market Crash); at the right time.
Debt and Interest
But all the massive Q.E. and Easy Credit
of recent years has created a Bubble of Excess Debt which is now beginning to
Indeed, The U.S. Treasury Securities are
starting to deflate, albeit slowly at first. Over the next few months, and
very few years, the Treasuries Securities weakening should accelerate into an
eventual bursting with consequent sky-high yields, interrupted only by The
Coming Storm – The Great Equities Crash of 2013.
Even longer term, U.S. Treasuries are a
Dead Man Walking, at anywhere near current levels.
Gold and Silver
Until just this week, The Cartel (see
Note 1) had been able to hold Gold Price in its Consolidation Zone just above
But in recent days, the Technicals have been signaling ever more strongly what
the Fundamentals have been telling us for years. Gold, Silver and their
mining shares are likely to explode upward very soon, as we earlier forecast.
Indeed both Precious Metals exhibited a nice breakout this week.
Both Equities and the Precious Metals
have been trading together off Liquidity Injections and Expectations in
recent months, but with the Precious Metals upside action has been hamstrung,
until just this week, by The Cartel.
The Gold Price has recently broken out
and up through the 90 day MA confirmed by a MACD Buyers Cross and A/D line
signal of Share Accumulation.
While we see much more upside to Gold
and Silver, mid to long term, this does not preclude Gold and Silver being
taken down very temporarily by a Cartel attack with Gold dropping
perhaps to $1525 and Silver to $25-26ish (a great Buying Opportunity, by the
way); however, there is an increasingly robust floor under these
Precious Metal Prices due mainly to robust Asian buying, with the Buyers
actually taking delivery of the Physical Metal.
As usual, Crude Oil is the “Truth
Teller” in this era of Manipulated Markets. Our following Crude Oil
forecast has been right on.
The key point is that since we already
have Real QE-generated Inflation (9% in the U.S. already for example per
shadowstats.com – see Note 2), which Officialdom tries desperately to
hide, WTI Crude continues to slowly trend upward, approaching
As well, when and to the extent
we get “Risk-on” Equities Rallies, that
should impel a very modest Crude Price Rally and a somewhat stronger Energy
So long as Risk-On Equities Rallies
Continue the Crude Price is likely to Trend Modestly higher. When Equities
tumble, Crude is likely to drop again too, [but not proportionally as
much – This is because, recall, we still have Ongoing Real Inflation].
Caveat: a wider Mideast War would send Crude to the Moon.
Key Commodities and Q.E.
The Central Bankers ongoing Q.E. is
boosting the Prices of Commodities, especially those which get used up.
(Recall the “Arab Spring” uprisings were sparked by rising Food
The recently higher-trending Crude Oil
Price (as we forecast) and uptrending Copper prices
are not the result of Drought in the US. And Higher Prices for Corn,
Wheat, and Soybeans are only partly caused by Drought. Note well, the Cargill
CEO’s recent forecast, that Food Prices could rise 40% to 50%.
Given population growth pressures, and
limitations on productive arable land, we do expect Food Prices to continue
increase dramatically over the mid to long term. On dips, we expect to
recommend additional purchases in this sector, so stay tuned.
In sum, even though the Markets have
been remarkably quiet and with low volume for several weeks, this has led to
select spectacular opportunities. One is clearly in Gold and Silver.
And if another one which we just
recommended were “merely” to return to its 52 week high that
would generate about a 4,500% Return (that’s a four thousand five
hundred percent Return) (see Note 3).
Moreover, (while it is not likely to
move all that way in the next 52 weeks) there is good reason to believe it
will make a major move in that direction in the next few months.
Low Volume Markets generate
Opportunities which can be exploited in The Coming Storm.
August 25, 2012
Note 1: There are
Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising
Unemployment, negative Real GDP growth, over 9.0% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.
One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High Yield Portfolio is aimed at
generating Total Return (Gain + Yield) well in excess of Real Consumer Price
Inflation (9% per year in the U.S. per Shadowstats.com).
For those who find The High Inflation Reality hard to believe,
consider Adrian Douglas’ point:
“There are frequent claims that the U.S.
economy has entered a period of “deflation.”
These claims are totally unfounded and are
false. Deflation can only be a persistent state of general price decline. In
fact, in examining price trends, the U.S. is experiencing shocking price
increases of over 15% per annum. To illustrate this, (consider) …the
Continuous Commodities Index, CCI over the past ten years.”
“Deflation – Nowhere to be
Seen,” Adrian Douglas, Market Force Analysis, 7/7/12
Thus Monetary and Credit Inflation (courtesy
of the Central Banks) continues to drive Price Inflation of essential Real
Assets. While this is the most important factor determining the Crude Price
(and the price of other Real Assets) there are four other factors which help
determine Crude Price (and Energy sector) moves, which we discussed in our
To see which Asset is about to explode upward,
as well as the Factors essential for successful Energy Investments, and our
latest Forecasts, read our recent Alert “Impending Launch & Crude
Secrets; Forecasts: Gold, Silver, Crude Oil; Equities, U.S. Dollar/Euro, U.S.
T-Notes, T- Bonds, & Interest Rates,” recently posted in ‘Alerts
Cache’ at www.deepcaster.com.
To consider our High-Yield Stocks Portfolio with Recent Yields of 18.5%,
8.6%, 10.6%, 26%, 6.7%, 8%, 10.6%, 14.9%, 10% and 15.6% when added to the portfolio;
go to www.deepcaster.com and click on ‘High Yield Portfolio’.
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
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