Opportunity-Lifeboats for Investors on Today’s Titanic

“We are supposed to be two years into an economic recovery. Tell that to those with stagnant wages who have to fight against 10% inflation, which our government ingeniously tells us, is 1.9%. Some $900 billion or more will have been created out of thin air by the Fed and spent buying Treasury and Agency bonds, notes and bills and the $862 billion consigned to the economy in December will all have been spent…

The downgrade from AAA for US government debt is 100% surety over the next couple of years. It looks like it has been decided that European debt is to collapse first.

The ECB, eurozone IMF meeting in Athens in this coming week will decide that. We expect default but what the numbers will be no one knows. A default of 40 to 70 percent is in the cards… They could not see, as we predicted, a $4 trillion unpayable bill to bail out these victims of one interest rate fits all, a colossal blunder from the very beginning…

We do not believe Americans and most of Europe understand the impact of the European banking crisis. The meeting in Athens next week to restructure Greek debt probably will trigger a EU-wide banking crisis, which we have been warning about for the past two years. We do not see Greeks, Irish or Portuguese living in poverty for the next 50 years just to make sure the bankers get their money back, which the bankers created out of thin air. Greek debt to GDP is 150% and no country has ever survived such debt. There has to be default. In the wings Ireland, Portugal and Spain are watching intently to see which way they should fall…

Both the European, eurozone, and US banking systems are insolvent and nothing can be done to save them. Both systems have to default…

In this process European countries would return to their own central bank structures and the US could eliminate the Fed and return to constitutional money. No more slush funds and TARP for the favorite few elitists corporations. The great orgy of theft from the American people for the past 100 years would be over. Then it would be time for the show trials where the guilty would go to jail and all their family’s wealth confiscated…

For 28 months the owners of the Fed have chosen to keep interest rates near zero. That level has been wonderful for bonds, stocks and speculation. They have kept bank leverage at an all-time high, so that those financial institutions can try to fatten their bottom lines. As a consequence the economy and the world has been subjected to overwhelming excess liquidity at higher business levels. As a result this asset bubble has created much higher inflation and as QE3 become obvious 2-1/2 to 3 years down the line we could well be wallowing in hyperinflation. Another result of such policies is higher permanent unemployment…

Price inflation is already with us and the real rate is close to 10%. Our prediction of 14% by the end of 2011 now appears to be very conservative. Of course, the Fed tells us there is little inflation among many other lies they foist upon the public. Mr. Bernanke doesn’t relate that almost zero interest rates and quantitative easing are largely responsible for current high inflation. He also does not discuss how the Fed’s policies, really those of banking and Wall Street, have caused gas prices to rise and retail sales to rise. They are further manifestations of monetary policy gone wild…

…there are the elitists behind the scenes who not only have a profit agenda, but a social and political agenda as well. As a result of these machinations look where Greece and Ireland are today. Their leadership, the Bilderbergs all sold out their people to accommodate the bankers. They forced the public to assume the bankers bad debts. These are the same bankers that are destroying the financial and economic system.”

Bob Chapman, The International Forecaster, 4/30/11

“Just as the massive inflation that began in the spring of 2009 begins to drive up consumer prices, a Justice Department task force is formed to investigate the rapidly rising price of gasoline – a favorite whipping boy of the political class.

Says the Associated Press: "The Justice Department will try to 'root out' cases of fraud or manipulation in oil markets." The timing is perfect. The government, like a lazy hound dog, knows when to show up at the kitchen door. It's feeding time, gents.

But do you think the Justice Department will announce a thorough investigation into the activities of the Federal Reserve? Nope. Do you think they will bother to explain to the American people how the Federal government used all its powers and trillions of dollars in new money to save Wall Street's biggest banks, to bail out highly leveraged insurance companies, and to prop up our country's automakers? No, no, and no.

Do you think anyone will explain how, by creating trillions in new money and credit, the government gave commodity speculators a risk-free one-way bet – practically forcing them to build up massive speculative positions? Absolutely not.

Instead, the boys (and girls) at Justice will round up the usual suspects – small-time oil traders and market makers. It's all their fault, don't you know?

….

there are the President's comments last week about these matters, which, to me, were simply surreal. In reference to the soaring price of gasoline, OBAMA! told a group of supporters in Reno, Nevada: "We are going to make sure that no one is taking advantage of the American people for their own short-term gain."

I'm assuming this line was delivered with a straight face... and to a cheering crowd.

But... maybe not. Did anyone in the crowd understand the irony of the President's position? OBAMA! just explained the essence of capitalism – the factor that makes it work – but used it to define criminal activity. Even a 10th-grade economics student understands capitalism works because, through the miracle of free exchange, private vices (short-term gains) are converted into public virtues – goods and services people want.

It's surreal to watch the President of the United States say things like this... things that could have been lifted from the speeches of Hugo Chavez.

…

Even if you collected 100% of the income of all the people who make more than $250,000 a year, the U.S. government would have still run a deficit last year. Even if you doubled the entire amount of income taxes collected, the Federal government would have run a deficit last year. There is no way to balance our budget, no way to prevent the literal bankruptcy of our country and the runaway hyperinflation that would result, unless we dramatically cut the government's budget. We have no choice, as you'll see.”

“Where you want your money when the chaos hits”
Porter Stansberry, growthstockwire.com, 4/30/11

“Remember, we have lost about 9 million jobs over the past 11 years, as well as 440,000 businesses due to free trade, globalization, offshoring and outsourcing. Tariffs would level the playing field and leave no advantage to cheapening one’s currency, because it would be accounted for in their tariff structure. Having lost our export markets we have a jobless recovery that can never improve, nor can our balance of payments deficit and our increasing debt cause not only falling revenues, but falling job creation. This is just another artifice to try to stave off the inevitable. Lowering the dollar is not the answer. Having a level playing field is the answer.

…Even though higher numbers show sales growth they are misleading and only a reflection of higher pressing inflation. This is not economic growth; it is price inflation. Such an exercise is geared to keep people and business solvent, but in the long term it accelerates inflation and leads to worse problems down the road.”

Bob Chapman, The International Forecaster, 5/4/11

Given all the Negative Fundamentals, and the recent Brutal Takedown of Gold and Silver, where are Investors to turn for Wealth Protection and Profit? This question is addressed here with the following Observations, and our conclusion: Treat the Takedown as an Opportunity!

Greased by over 2 years of Ongoing QE, until very recently Equities-in-general have continued to move upward in a Geyser of Fed provided liquidity. Is increasing one’s allocation to Equities therefore the correct Strategy?

The only problem with this “Strategy” is that Geyers have Tops before the Water Falls.

And, adjusted for Real Inflation** (e.g. U.S. Real CPI at 10.2% as we write – see below), Equities-in-General have shown a Negative Return over the past Decade.

In just under 2 months, formal QE 2 will end and Overt QE will ostensibly diminish to the amounts of matured securities which are “reinvested”.

Of course, predicting the Course of Ongoing Covert Q.E. is harder, but doable if one researches intensively (see “Profit, Protection Despite Cartel Intervention – Update (12/22/10)” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com), one can often detect trends and developments.

But no matter, the Financial Shipwreck still approaches as the belated S&P Outlook and Downgrade of U.S. Sovereign Debt, Rocketing National Debt, continuing high Unemployment, and many other Facts confirm many other earlier Warnings, from Deepcaster and Others.

The private-for-profit Fed and allied Mega-Bankers have put us all in a no win situation – More QE and Food and Energy Inflation run even wilder. No more QE and the Economy and Markets Crash.

Until a couple of weeks ago, an Investor relatively new to the Markets would likely have said “Buy Gold and Silver for Wealth Protection and Profits”.

Today, after the Brutal Cartel Takedown of Precious Metal prices in the last two weeks, that Investor might have “Sworn off” Gold and Silver as Safe Havens altogether.

What a pity! Such Takedowns provide Great Opportunity to buy Gold and Silver “on the cheap” and in doing so to buy their Wealth Protection and Profit Potential as well.

So the following are some Guidelines indicating how Investors may take advantage of the Opportunities presented, and help avoid at least some of the risks and losses:

1. Understand that a Cartel* of Central Bankers and their Mega-Bank Allies have for years been suppressing Precious Metal prices.
   
   *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 profitably.
   
   
2. Understand that it is now harder for The Cartel to successfully suppress prices, because there is an increasingly severe supply shortage of Physical Gold and Silver, especially of Silver, because ever more investors are becoming aware that certain Mega-Banks do not have the Physical Gold and Silver they claim and thus these wise Investors are taking physical possession, and delivery.
3. Nonetheless, The Cartel’s Price Suppression Regime is still Potent as the last 2 weeks show, once again.
4. Realize that these Price Suppression Interventions form Patterns and reveal tendencies, aka Interventionals, which are useful in forecasting the next Intervention. They facilitated Deepcaster’s earler correct forecast that Precious Metal prices would be taken down as they have been in the last two weeks (And that is why Deepcaster recommended taking profits on Silver twice earlier this year)
5. Develop a Strategy for Buying at Interim Lows during takedowns (see below) and taking profits (at least partial profits near interim highs)
6. If one chooses to liquidate a portion of one’s Paper Gold and Silver, do so before the Takedown begins in earnest
7. Use Takedowns as an Opportunity to Convert Paper Silver and Gold into Physical Silver and Gold. Not only do you get to buy these Precious Metals “on the cheap” but you also give the Mega-Bank Market Riggers Fits, because they have a greatly diminished supply of these Physical Precious Metals, but unlimited quantities of “Paper Gold and Silver”. Deepcaster has recommended a particular Physical Form of these Metals which is resistant to Takedowns.
8. Read Deepcaster’s weekly Alerts with the aim of getting Advance Warnings
9. And if you want to trade the Precious Metal Markets, here is a suggested Strategy.

A Strategy for Traders

Fortunately, the following considerations and guidelines help enable Investors to Profit and Protect in spite of Cartel Intervention, and particularly Intervention in the Precious Metals Markets.

1. Although The Cartel is still Potent, it is significantly less potent than it was even a few months ago due primarily to:
   
   a) The years-long efforts of the leaders and members of GATA in exposing Precious Metals Price Suppression
   
   b) The stunning Allegations that Major Gold and Silver Repositories do not have nearly as much Physical Gold and Silver they say they do. See the allegations regarding GLD and the London Bullion Market Association in Deepcaster’s April 9, 2010 article (“Climacteric for The Cartel; Opportunity for Investors (04/09/10)” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com).
   
   These reports are doubtless leading Major Gold and Silver Investors to demand Delivery and possession of Physical Gold and Silver – 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. 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. Raising Margin Requirements is a time-honored Tactic for Suppressing Precious Metal prices, as we have recently seen with Silver.
2. Thus we recommend that Investors follow their lead with a significant portion of the funds allocated to Precious Metals purchases committed to purchasing, and taking Personal Delivery of (no Banks Vaults please!), Physical Gold and Silver.
   
   Indeed, because Physical held in one’s personal possession is so precious, some forms of it trade at as much as a 20% (or more) premium to the spot price of “paper” Gold.
   
   But not all forms of Physical are Equal, as it were. Some forms are much more liquid than others, and some are much more susceptible to counterfeiting, as e.g. by Tungsten-lacing.
   
   Deepcaster a few months ago recommended Purchase of One Form of Physical Gold (and Silver), that is quite liquid, not easily susceptible to counterfeiting, and commands a considerable premium over the spot price of Paper Gold (and Paper Silver). See Deepcaster’s Alert – "Cartel Failing? Precious Metal Buy Reco! Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & Bonds" (week ending April 16, 2010) in the ‘Alerts Cache’ and the December, 2010 Letter – “Gold with Income; Muni Bonds ALERT! Investor Protection via Dollar Salvation; Forecast: Gold, Silver, Equities, Crude Oil, U.S. Dollar, and U.S. T-Notes & T-Bonds” in the ‘Latest Letter’ Cache at www.deepcaster.com.
3. Do not give Short Shrift to Gold and Silver Miners.
   
   But purchasing shares of these should be done with particular care, because, being “paper” (or, usually, electronic entries on some remote server) Miners shares are especially vulnerable to periodic Cartel attacks and Price Takedowns.
   
   Thus, they are most profitably accumulated near Interim Lows resulting from Cartel Interventions.
   
   In order to estimate these Interim Lows one needs not only to consider Fundamentals and Technicals, but also Interventionals.
4. Accumulate Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
5. 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.
6. 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. The “Physical” and “Juniors” are for holding for the long-term as a Core Position. However, liquidating half of one’s holding at a double in price is certainly a Rational Strategy. It allows one to remain in the other half of one’s position, “for free” as it were.
7. Then, to the extent one wishes to speculate on the next “long” move, one buys the major producers or long-term options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
8. Indeed, there will be a time when 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.
9. Near the next Interim Top, liquidate the long options and Majors.
10. For Speculators, at that Interim Top, sell short, buy shares of a Short ETF, 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.
11. 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.
12. Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of the Fed-led Central Banker 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 Takedowns and Fiat Currency Purchasing Power Degradation. 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.

And be sure to Buy More Physical on the Dips.

There is yet one more Life Boat Opportunity, in addition to the Precious Metals, not to be missed.

The World’s Population is increasing by some 80 Million/Yr. with Much of that increase coming from the BRICs whose increasing affluence is increasing demand and, therefore, the Price of Food. But in the past few months, The Primary Factor in the dramatic Food and Energy Price Spikes we have seen is neither Oil Price Spikes nor increasing demand (though they have been and will be Major Causes over the long haul).

Indeed, The Major Cause of recent Food Price Spikes has been the Feds Money Printing (QE 1 and 2). Yes, we know much of that money has gone into Increased Reserves to help Banks’ Balance sheets rather than being lent to Main Street, but those reserves have provided the capital to make increased speculation possible. Leveraged Positions are just about as high now as they were before the 2008 Market Crash.

While that QE (via e.g. POMO-pumping) has kept Equities Markets inflated, it has launched Food and Energy prices UP also.

But Food Demand (and to a lesser Extent Energy Demand) is relatively Inelastic, compared with, say, demand for, say, Vacation Cruise Ship Bookings.

People must eat and need some (but somewhat variable) amounts of energy.

And (mainly because most quality arable land is already in Production and requires increasing fossil fuel inputs merely to sustain current levels of production) the 80 Million annual World Population increase tends to Drive up Food Prices. For example, consider specifically what this means for the USA, which is growing by some 4 Million Plus/Yr. 90% of which comes from Immigration.

And when this Factor is coupled with dramatically increased Fed-facilitated money printing and borrowing, prices for Essential Food and Energy Skyrocket.

In sum, unlike Equities Markets Levels, which have been and are subject to Price Manipulation, Food and Energy Price levels are in large part (but notwithstanding) a Function of Real Demand in the Real World. As QE degrades the Purchasing Power of Fiat Currencies like the U.S. Dollar, Food and Energy Prices Soar.

To put this in perspective consider that every 0.6 Tonne (six tenths tonne) of Grain produced requires one Tonne of Oil.

Here, it is essential to note that Official Figures do not give us an Accurate Picture of Real Price Inflation or Related Key Indices. Indeed, in many important respects Official Figures are Bogus.

For example, Shadowstats.com calculates Key U.S. Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. See Note below.

In sum, more than Energy or Even Precious Metals, Food and Potable Water must be at the top of Consumer Shopping lists everywhere around the world. With demand increasing from the 80 million plus annual world population increase, and increased resources of a growing Middle Class, especially in BRIC countries, to buy more and better Food, Food Producers are in the Catbird Seat. The Problem is exacerbated by the fact that most of the World’s best arable land is already under cultivation.

Bottom Line: Gold and Silver Investors should also invest in selected Food Producers at the Right Time, because the Factors which help cause Gold, Silver and Crude Oil Prices increases, will also impel Food Price increases.

Thus, Deepcaster recently recommended two such Food Producers and one Water Producer and Management Company, all of which we believe to be deeply undervalued (one is trading at under $6/share and the other two under $2/share), in our Letter and Alerts.

One is China’s largest producer and Seller of Fresh Fruits and Vegetables. It also grows Rice and breeds and sells livestock and has over 20,000 employees.

It recently had a P/E Ratio under 4 and profits have grown over 20%/yr.

As we write it is trading at around 60 cents per share U.S. or just below $5 HK, near its 52 week low.

To Consider these three “Best of the Best” Food Sector Core Position Investments, read our March Letter – “Main Gold, Silver & ‘Sleeper’ Sector Price Movers; ‘Sleeper’ Buy Reco.; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar, and U.S. T-Notes & T-Bonds; March 2011 Letter”, and our Alerts – “Golden Green Opportunity Buy Reco.; Forecasts: Commodities, Gold, Silver, Equities, Crude Oil, U.S. Dollar, and U.S. T-Notes & T-Bonds” (week ending February 4, 2011) and “Eye of the Storm; ‘Liquid Gold’ Buy Reco.; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar, and U.S. T-Notes & T-Bonds” (week ending February 11, 2011) in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com.

We reiterate, keep Buying Physical Gold and Silver on the Dips. You may need them some day to buy Food.

Best regards,

Deepcaster
May 5, 2011

**Note: Shadowstats.com calculates Key U.S. Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider

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

Annual U.S. Consumer Price Inflation reported April 15, 2011
2.68% / 10.2% (annualized March, 2011 Rate)

U.S. Unemployment reported April 1, 2011
8.8% / 22%

U.S. GDP Annual Growth/Decline reported April 29, 2011
2.28% / - 2.60%

U.S. M3 reported April 17, 2011 (Month of March, Y.O.Y.)
No Official Report / - 0.87%