|
The
“full force of the economic crisis will hit us next year… The
problem will get bigger before things can get better…”
Angela
Merkel, German Chancellor, November 11, 2009
Well-informed Realists
know that we face at least one and perhaps two Great Waves of the Coming
Perfect Storm in the Economy and the Financial Markets. Thus Deepcaster
provides Guidelines for Protection and Profit in anticipation.
The evidence that
there will be such a Storm is quite convincing for those who bother to
consider the Realities beneath the MainStream Media Hype.
Since Deepcaster
and others have made that case already, we will not make it again here,
except to state a few points and reference key articles** providing that
evidence below under “Fairy Tale Antidotes”.
As regular
readers know, Deepcaster and other notable pundits view the post-March 6,
2009 Rally as mainly a Cartel-generated Liquidity Fueled Goldilocks Rally,
one that we expect to begin to come to an end soon.
We need only a
passing glance at a few key Fundamentals and Technicals to reconfirm our view.
-- The
Consumer/Taxpayer and, often Mortgage Holder, Sector – 70% of U.S. GDP
-- is increasingly stressed and unemployed. (But, ominously, mortgage rate
resets will balloon again in 2010 and 2011.)
-- This has
already resulted in greatly diminished Tax Revenue, and will likely be
reflected in diminished 4th Quarter Earnings.
-- Real U.S.
Unemployment, per Shadowstats.com, is 22.1%, and still rising. (see below)
-- Recent Equity
highs have been on decreasing volume.
-- A Rising
Bearish Wedge in Equities is confirmed and breaking down.
-- A Key Momentum
Indicator for the Major Equities Indices, the MACD (Moving Average
Convergence Divergence) is curling over, typical of Highs.
-- The S&P
Relative Strength Index is trending lower, creating a Bearish Divergence with
equities prices.
-- And the
foregoing are just a few of many.
We conclude,
Based on Fundamentals and Technicals, that an Equities top is very near.
BUT, will The
Cartel* catalyze, or allow, such a Takedown VERY SOON?
*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.”
Throughout this
past summer, when Equities were about to Tank, The Cartel* bought the Market
heavily, generating liquidity rally after liquidity rally. But Sugar Highs do
not last.
Indeed, The
Interventionals now indicate a major “Interventional Turn” is
coming in key Sectors.
Thus we provide
the following Guidelines for protecting and profiting from the Coming Storm:
1.) Protect Against
the U.S. Dollar’s Demise, but be Alert to Timing
The
United States National Debt (now about $12 Trillion) and downstream unfunded
liabilities now (some $70 Trillion) are still increasing. Realistically, they
can only be “repaid” by further degrading the purchasing power of
the U.S. Dollar. Eventually this Degradation will likely mean the end of the
U.S. Dollar as the World’s Reserve Currency.
But
this Degradation will be at least a multi-month and likely even a multi-year
process.
After
all, it has taken 7 years for the U.S. Dollar to lose over 35% of its
Purchasing Power basis the USDX. (This is the “Stealth Tax”
imposed on Americans by the private for-profit Fed.)
And
the Degradation will not be a smooth linear process. Indeed we think a U.S.
Dollar Bounce is coming (See our latest Alert “"Forecasts; Major
Moves Imminent With This Trigger" (11/10/09), regarding timing).
But an
Investor’s long-term goal should be to systematically exit U.S. Dollar
Denominated Assets.
Into
What?
2.) Buy Physical Gold
and Silver on Dips
The
History of Fiat (i.e. not backed by Gold or Silver) Currencies (they fail) is
the harbinger of The Future.
Only
Gold and Silver have withstood the test of time as the Ultimate Store and
Measure of Value, the Safe Haven in spite of Wars and Economic and Financial
Disasters.
And
with the U.S. Dollar’s position as the world’s Reserve Currency
weakening, Gold and Silver’s price appreciation prospects (in Fiat
Currency terms) are better than ever.
But as
regular readers know, the Price of Gold and Silver in the Markets is vulnerable
to Takedowns by The Cartel*.
The
Cartel’s motivation for periodically Taking Down Gold and Silver prices
is easy to understand. Increasingly widespread acknowledgement of Gold and
Silver as the Ultimate Stores and Measures of Value would delegitimize The
Cartel’s Treasury Securities and Fiat Currencies.
That
would threaten The Cartel’s Wealth and Power. [But Deepcaster has
developed a Strategy designed to protect and Profit from these Takedowns. See
“Defeating the Cartel...With Profit” (03/28/2008 (part 1) and
06/19/2009 (part 2)) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.]
Unfortunately,
we expect at least one more Cartel Takedown, near the bottom of which we
would recommend buying physical Gold and Silver, plus selected top quality
“juniors” and producers (see our Latest Alert -- "Forecasts;
Major Moves Imminent With This Trigger" for forecast Takedown Timing
in the ‘Alerts Cache’ at www.deepcaster.com).
A key
point to recognize is that the price of Paper Gold and Silver (e.g. Futures,
Securities, including ETF Shares) is much easier for The Cartel to manipulate
than the price of the physical metal.
Indeed,
during the last significant Precious Metals Takedown, the Price of Physical
Silver fetched a 20 to 25% (or more) premium over paper Silver (e.g. Futures
prices).
We
expect such a premium will be available in the future as well.
3.) Avoid The Fatal
Flaw
In the
Fall, 2008, Portfolios whose Managers were wedded to the ‘Buy and
Hold’ Theology suffered the Most. Deepcaster, on the other hand, had
recommended his subscribers have positions in 5 Short Funds as of early
September, 2008, before The Crash. Those positions were all subsequently
liquidated showing quite a nice profit.
If one
considers that the Dow was trading around 10,000 just over a decade ago, just
where it is trading now, (and that the dollar-value represented by that Dow
level is a dollar-value with much less purchasing power than a decade ago)
one realizes the Bankruptcy of the ‘Buy and Hold’ Theology.
4.) It is essential
to consider the Interventionals as well as the Fundamentals and Technicals
Consider
the articles cited below as well as Deepcaster’s “Defeating the
Cartel...With Profit” (03/28/2008 (part 1) and 06/19/2009 (part 2)) in
the ‘Articles by Deepcaster’ cache at www.deepcaster.com, for
observations regarding coping with Cartel Interventions.
5.) Get
the Real Data
As
many Investors suspect, Crucial Official Government and Agency Economic and
Financial Data are of questionable validity. The Data set forth above
from shadowstats.com is a good starting point. Consider
Official
Numbers
vs. Real Numbers
Annual
Consumer Price Inflation reported October 15, 2009
-1.3% 6.1%
(annualized October Rate)
U.S.
Unemployment reported November 6, 2009
10.2% 22.1%
U.S.
GDP Annual Growth/Decline reported October 29, 2009
-2.33% -5.71%
Educate yourself about the realities of the
marketplace using Alternative Data Sources such as Deepcaster, Gold
Anti-Trust Committee (www.gata.org), and shadowstats.com as indicated above.
Gathering and staying attuned to authentic information regarding the marketplace
can save one much financial grief as well as positioning one for profit.
6.
Derivatives
Risk, and “Market Magnetism” Militate in favor of Sector Investing
The demise of Lehman Brothers, Bear Stearns, AIG and
CIT are only a few of the indicators that OTC (i.e. not publically traded and
thus “dark”) Derivatives can bring down any individual
company.
The Fall, 2008 Crash reduced the Notional amount of
OTC Derivatives outstanding by “only” some $91 Trillion.
There still exist, as of the latest BIS report (www.bis.org,
path: Statistics>Derivatives>Table 19), some $592 Trillion in
Toxic or Potentially Toxic Derivatives World Wide.
But short of a total systemic collapse, OTC
derivatives risks threaten some companies more than others. Unfortunately,
these risks are often not visible, even in the most detailed SEC Filings and
Financial Reports.
Moreover, even the strongest securities often get
pulled down with a general Market Downdraft. This “Market
Magnetism” also militates in favor of Sector investing on both the
short and long side.
7.
It
is very important to be quite willing to go both long and short Major Market
Sectors
-- long near the bottoms of Interim Takedowns and short near Sector Tops. The
Interventionals are essential to helping identify these tops and
bottoms. In Deepcaster’s view, it will be increasingly difficult
to achieve a net profit for one’s portfolio if one is unwilling and/or
unable to “go short” as well as “long”.
The
Blossoming of the 200% 300% (and other) leveraged ‘short’ and
‘long’ ETF’s provide a superb opportunity to go short and
long with ease, but not without risk.
8.
Be
aware of the overall Geopolitical Landscape in order to gain
an adequate understanding of how that Landscape might affect the present and
future direction of the Markets. It is essential that one understand the
motivations of the major players in the market and the resources at their
disposal.
9.
Take
Account of both Overt and Covert Cartel Intervention.
Many of these same investors who suspect Official
Statistics also rightly suspect that the private-for-profit U.S. Federal
Reserve and/or Central Banks and their Favored Financial institutions overtly
and covertly manipulate Major Markets. But they might not be aware
that covert Market Interventions and Data Manipulation are likely far
more pervasive than generally believed, as detailed in Deepcaster’s
articles mentioned above. Fortunately, some Covert Interventions “leave
tracks” which can be read by astute Investors.
Attention
to the foregoing Guidelines can help investors prepare to Protect and Profit
from the coming Storm. Deepcaster has recommended specific short positions
designed to Protect and Profit in his latest Alerts which can be found in the
‘Alerts Cache’ at www.deepcaster.com.
Psychologically,
it might be easier to engage in wishful thinking about the future of the
economy and the markets. Indeed the post-March 6, 2009 performance of the
Equities market (with a stunning 62% run-up in the S&P) provides an apparent
basis for optimism.
But
anyone who honestly consider the Realities beneath Appearances, will likely
realize there is a Coming Perfect Storm in the Economy and Financial Markets,
and will take steps to protect and profit.
** “Fairy
Tale Antidotes - Springboard for Garnering Gains” (10/30/09)
“Exorcising
Deflation Delusions is Essential to Wealth Enhancement” (10/23/2009)
“No
Armageddon... Yet! Gaining From Time” (10/16/09)
“Warning
Signals Flashing! Prepare to Protect and Profit” (10/2/09)
“Surmounting
the Cartels' 'End Game' Juggernaut - An Overview & Update of Cartel
Strategy” (9/25/09)
“Climacteric
Coming! Protecting Profits; Deflecting Threats” (8/28/09)
The articles
above can be found in the ‘Articles by Deepcaster’ cache at www.deepcaster.com
“September Annual
Inflation -1.3% (CPI-U), 6.1% (SGS)
CPI-U Inflation
Spike Due by Year-End
No Recovery:
September Real Retail Sales Continued Bottom-Bouncing
At Low-Level
Plateau
10 Years of
Retail Sales Growth Gone”
John
Williams’ Shadow Government Statistics, October 15, 2009
“Con Job in
the Financial Markets Continues”
John Embry,
Investor’s Digest of Canada, Vol. 41, No. 19, October 23, 2009
“Roubini:
Huge Asset Bust Ahead”
Julie Crawshaw,
Newsmax.com, November 5, 2009
Best Regards,
Deepcaster
LLC
Deepcaster.com
All the other articles by
Deepcaster
Wealth
Preservation - Wealth Enhancement
Financial
and Geopolitical Intelligence
Gravitas,
Pietas, Virtus
| 
