Great Beta Opportunities & Threats

“Beta usually Trumps Alpha.”

Deepcaster

“Inflation steals money from Savers and gives it to Bankers.”

Jim Rickards, Bloomberg, 08/28/15

“We fully expect the S&P to decline 40% to 55% over the current market cycle… The only question is the Triggers.”

John Hussman (Hussman Fund), 08/27/15

As we are now just passing through the August Mini-Crash, it is essential to consider Beta (Major Trend, Sector, and Economic) Realities, in order to Profit and Protect going forward.

The first Reality is that, Economic, Market, and Technical Realities all indicate we are now in a Bear Market. And One Key Rule for Beginning Bear Markets is that simply “Buying and Holding” is usually a Recipe for Short, Medium and sometimes even Long-Term losses.

Just look at most any Historical Chart of the Beginning of Most any Major Bear Market in most any Sector. Indeed, otherwise Excellent “Alpha” Profit Opportunities become scarce in Bear Markets.

Another Reality is that, in a beginning Bear Market, and just after a Crash, many Sectors exhibit Violent Bullish Rallies — witness the violent Rebound this last Full Week of August before the Bear starts to Growl again.

So consider these and the following Key Realities for Profit and Wealth Protection going forward.

Fed QE and other Actions have served mainly to artificially boost the Stock Market (and to help The Private, for-profit Fed’s share-holders — the Mega Banks) It has certainly not helped the Middle Class or Main Street. This is reflected in the Real Statistics for the U.S. (Shadowstats —Note 1) not the Bogus Official ones.

Consider the following cogent analysis:

“…The entire stock market, has lost $1.77 trillion since the June 22nd, 2015 top at $22.527 trillion. …

“Think about this: In just a few weeks, one-third of the $5.0 trillion total of all QE programs from the Fed has been wiped out! A third of all that monetary printing out of thin air that the Fed gave to Wall Street in exchange for interest bearing securities held by Wall Street, some of those securities not so good, in QE 1, 2, and 3 has now disappeared from a stock market collapse. Instead of placing that $5.0 trillion in the real economy through a tax rebate to Main Street (Individuals and small businesses) in conjunction with the U.S. Treasury,… the Fed chose to give it to Wall Street to drive up the stock market artificially. … All it accomplished was a temporary levitation of the stock market and a huge rise in the cost of living for Main Street.”

Robert McHugh, 08/24/2015

Indeed! But the Key Point, as the recent Sell-Off shows, is that there is an intensifying Threat to Long Equities positions in general. Conversely, there is a Great Profit Opportunity if we intelligently play the downside and a Great Threat if we fail to do so and stay long.

The Technicals, Fundamentals and Interventionals indicate it is highly likely Equities have topped (on May 19) and have begun a Multi-Year Chopping Decline ending at Dow 6000ish within the next 18 months to 2 years.

Therefore, one provident and likely profitable Strategy going forward is to sell interim tops and let Big Beta take care of the rest.

Among the many reasons for the Equities Sell-offs present and prospective are

The U.S., Chinese and Eurozone Economic Fundamentals — all lousy (see Shadowstats note) with disinflating or deflating economies, and unpayable Debt in many Major Nations
Technicals — Two Hindenburg Omens on the clock.
Multi-year Jaws of Death Pattern Topping
S&P just within 1 point of all time high a few weeks ago, but 10% of NYSE stocks generated new 52 Week lows, at the same time — very Bearish
Industrials forming a completing “Rounding Top” — Classically Bearish
A break below the Bottom Boundary of a declining bearish Wedge
A Death Cross in the Dow
Chinese Shares keep dropping despite Central Bank Intervention
Equity Volumes Crash on Up Days — Very Bearish
Walmart’s Negative Guidance reflects the Reality that Consumers are hurting
Commodity Price Decline
Unpayable Sovereign and Consumer Debt Abounds
And several More.

Consider that the Chinese A Shares (Shanghai) dropped by nearly 50% at one point recently — a Harbinger for U.S. and Eurozone Markets — until they were rescued (albeit only temporarily) by Massive Government Intervention which damaged the Credibility of those “Markets” as Markets. Indeed, Short Sellers were threatened with Jail, and large Shareholders were (and still are) forbidden to Sell. Thus, the Chinese Markets are stabilized for a while, but have fallen again, showing The Central Government is ultimately powerless to support the Markets. Thus, in desperation, they have resorted to Currency Devaluation and interest rate and Reserve Requirement Reduction, which won’t work over the middle or long-term either because they have not solved their structural problems, e.g., too much Debt.

And consider that the U.S. and Eurozone Markets and Economies are greatly affected by what happens in China, the World’s Second largest economy.

Moreover, Credit (i.e., Debt) can not be expanded much more, if any.

Total Sovereign + Commercial + Consumer Debt to GDP Ratio

USA 370%

Greece 353%

Germany 302%

Britain 506%

China 250%

Japan 646%

Ireland 1000%

Courtesy of The Aden Sisters, adenforecast.com

Therefore much of the Trillions in debt outstanding worldwide will eventually be defaulted on probably mainly by Hypermonetary (and therefore by Price) Inflation. Puerto Rico and Greece and Chicago are expected to lead the Way!

Nonetheless, we think it is quite likely there will be one or more mini-bounces back before The Full Fury of the Crash materializes because initially in this Building Crisis Investors will want to rush to the perceived Safety of U.S. Equities and the $US. Indeed, a Bounce began recently after the Mini-Crash.

So we are in for some Major Chopping in the Equities Markets but with a downtrend beginning. Note the fact that The Big Boys Investors (alleged “Smart Money”) have been and still are “distributing” to Smaller “Retail” Investors and their Talking Heads in the Main Stream Media are thus touting “Recovery”, and “Buy the Dips”.

But Greece is the Template for what is coming to several Major Sovereigns. Whatever happens with Greece in the near future (and it appears Bailout #3 is being implemented), we think Greece will eventually leave both the Eurozone and the Euro Currency — its Debt can not be paid and the Debt of other Sovereigns is ultimately unpayable also. Thus, Greece may or may not be the catalyst for the Major leg down of The Coming Crash, But there are other Triggers coming like the Eurozone Peripheral Countries and Puerto Rico, Chicago and the contracting U.S. Economy, and especially China, whose economy is Decelerating.

Thus, China will be no Salvation either. China’s rate of growth is far less than the official 6 to 7% and may even be 0% according to Marc Faber. And Chinese stocks listed in the U.S. have helped to suppress the U.S. Markets Bounce and accelerate its Fall. For the long run, China’s recent Equities Crash and Devaluation is more significant.

The Bottom Line is that this Global Economic Contraction is only beginning, so there is much more downside to come. Credit Expansion has about Maxed Out and QE helps mainly Mega-Bankers and Wall Street.

And Fed (and other Central Bank) Policies have created a Series of Bubbles in recent decades, and the Biggest ones are about to pop. Equities First, then Sovereign Bonds a few months later.

The Markets have now chopped down with The Mini Crash already hitting our first forecast Downside Targets 16,000ish on the Dow and a corresponding % down on the S&P and NASDAQ. (Of course, very short-term, there may be bounces — e.g., perhaps the Dow could rise to 17,700ish but the Bounces will not last.)

In this regard, Deepcaster’s forecasts have been remarkably Prescient lately. They enabled those who followed our Recommendations to take approximately 40%, 65% and 110% Profits after only 4, 2, and 3 days respectively in August alone. (See Note 2 — Recent Profits Taken)

And, as we forecast, the Tech Sector should be among those hit the hardest (and was in the recent Mini-Crash) because it is likely its currently high earnings expectations will be slashed later this year. And many of the Tech stocks, especially in Social Media, are quite overvalued anyway.

We reiterate, The Great Deception is that Investors have been encouraged to believe that Great Asset Bubbles generated by Fed and other Central Banks’ Policies are/reflect Genuine Economic Recovery and Growth. They will learn differently The Hard Way and soon.

And Deepcaster’s forecasts reveal more Mega-Moves coming very soon and thus more quite Extraordinary Opportunities for Profit, … and Great Losses for the unprepared.

The sudden Chinese Yuan Devaluation was no surprise. China is in trouble, with massive unpayable internal debt and a decelerating, if not contracting, economy.

So when the IMF recently announced that China’s admission into the IMF and ascension to Reserve Currency Status of the Yuan would be delayed a year, that was the last straw.

China joined the Currency Wars and devalued the Yuan, thus Joining the Race to the Bottom which thereby intensified.

Of course, the impact on Companies doing business with China will be severe. And we have already seen that with, e.g., Apple’s stock fall recently — it is only the beginning of the downturn for such companies, especially those doing business, or hoping to do business, with China.

Recent $US weakness and the implementation of another “Extend and Pretend” deal with Greece, has thus temporarily boosted the Euro — this trend should continue a few more weeks.

But, speaking of Mega-Risks, consider The Overview of the U.S. and other Sovereign Debt markets, another Key Reality.

The International Sovereign Bond Market ($58 Trillion) is in a Bubble. Greece is not the only Country that can never repay its debts. Neither can Italy, Spain, or Brazil or, probably China and the U.S. though the latter two can Print their way into HyperPriceInflation, and probably will as their Economies continue to slow.

But every $1 Million in Sovereign Bonds is “backstopping” $20 Million or more in Derivatives.

(And we reiterate the Global Sovereign Bond Market is $58 Trillion.)

That is, Sovereign Bonds backstop over $700 Trillion in Derivatives as reported by the Bank for International Settlements — the Central Bankers’ Bank (see bis.org Statistics—Derivatives).

In sum, the financial system is more leveraged than it was in 2008!

And the U.S. alone has 30% more debt than in 2008.

Therefore, Every Sovereign Bond Default or Threatened Default, risks a Domino Effect leading to Collapse (think AIG, which U.S. Taxpayers bailed out for $180 Billion because inter alia it guaranteed Bond/Interest Rate Derivative Contracts). And in the event of collapse, many Counterparties will not be able to pay.

In sum, so our overview/forecast is:

The U.S. Economy is contracting/disinflating as is China’s and, yes, the Eurozone’s.

The recent Mini-Crash and/or one more Bad U.S. Jobs Report (which is likely in September) and/or other Negatives will make The Fed constrained not to raise rates in September or even in December.

And, Real GDP Growth is slowing in the Eurozone and in China as well.

But Price Inflationary Pressures are building thanks to The Fed’s and other Central Banks’ Monetary Inflation Policies.

This Economic slowing plus the weakening, then Crashing, Equities Market will eventually cause The Fed to launch another Round of QE thus further weakening the Exchange Rate Value of the $US and launching serious Price Inflation. Then Gold and Silver and Certain Agricultural Prices will Skyrocket.

We expect this to occur soon after our forecast Next Equities Crash runs its course.

In sum, keep the Realities in mind and consider investing in the Precious Metals and Big Beta Positions for Profit and Protection.

Best regards,

Deepcaster

August 28, 2015

Note 1: Shadowstats.com calculates Key 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 August 19, 2015

0.17% / 7.77%

U.S. Unemployment reported August 7, 2015

5.26% / 23.0%

U.S. GDP Annual Growth/Decline reported July 30, 2015

2.32% / -1.20%

U.S. M3 reported August 7, 2015 (Month of July, Y.O.Y.)

No Official Report / (e) 5.57% (i.e., total M3 Now at $16.865 Trillion!)

Note 2: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*

• 110% Profit on Russell 2000 Puts on August 21, 2015 after just 3 days (i.e., about 13500% Annualized)

• 65% Profit on Russell 2000 Puts on August 20, 2015 after just 2 days (i.e., about 12000% Annualized)

• 40% Profit on a Retail Sector ETF Put on August 7, 2015 after just 4 days (i.e., about 3630% Annualized)

• 80% Profit on a Retail Sector ETF Put on July 27, 2015 after just 6 days (i.e., about 4850% Annualized)

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Crisis Signals, Triggers & Opportunities

“Liquidity Loss Flashes are Harbingers of Crashes.”

Deepcaster, 06/22/2015

“There’s not a lot of depth in the Market right now.”
Jim Combias, Treasuries Trading Manager,

Mizuho Securities, 06/19/15

Indeed!

Reminds Deepcaster of The Old Saying “Liquidity dries up just when you need it Most.”

Yes, the “Thin” Liquidity in that Sovereign Bond Market in recent weeks and the ensuing Panic, are only two of Several Harbingers of The Coming Crisis. (See “Maximizing Gains & Wealth Protection from The Coming Crisis,” in Articles at Deepcaster.com.)

So we summarize here Key Crisis Signals, Triggers and consequent Opportunities.

The Fundamental Problem has been caused mainly by The Private, For-Profit Fed and other Mega-Central Banks themselves. They have kept Rates artificially so low and thus (with the help of QE) Equities etc. artificially High that the World is awash both in Excess Debt and in Bubbles.

And now the Debts can not be repaid (and the Bubbles will Burst) and Greece is only the First of many Casualties to come. Consider Puerto Rico, Portugal, Spain, Italy… and Chicago!!

Consider a few of the Major Signals, several of which will also likely serve as actual Triggers and/or Timing Indicators for the onset of The Crisis, and indeed of several Crises to come.

¾ One Key Signal/Trigger is the aforementioned Sudden loss of liquidity in one or more Key Sectors, such as we saw in The Sovereign Bond Market recently. Sudden Liquidity Loss is a characteristic Harbinger of, or (Worse Case) Trigger of crashes. Profitable positions turn suddenly unprofitable, or, often worse, can not be exited at any price. In sum, Liquidity loss flashes are Harbingers of Crashes. And they are Harbingers of Potential Counterparty Failure as well.

¾ Fundamental Economic Indicators — The Real Ones (see Note 1 Shadowstats), not the Bogus Official Ones, indicate today, we are still in Recession, and that it is worsening despite Massive Central Banks Stimulus. Of course, The Primary Aim of that Stimulus is to support the Mega-Banks (some of whom, by the way, are Shareholders of the Private, For-Profit Fed) — not the Economy, or the Citizenry.

¾ The Cartel (Note 2) Interventions increasingly obviously are seen to Keep Many Markets (e.g., Equities) artificially elevated as well as suppressing Gold and Silver (Paper) Prices. But The Cartel is finding Precious Metals (Paper) Price Suppression increasingly difficult, since China, India and Russia are Taking so much Delivery of Physical! Deepcaster thus forecasts the Prospects/Timing of the Relief from this Price Suppression.

¾ And we note four recently reported Fundamentals (among several Key Indicators) which help explain why the prospects for Equities are not positive:

1) U.S. Retail Sales slowed to 0.9% Year On Year in April;

2) U.S. Durable Goods slowed to –2.3% Year On Year in April;

3) Chicago PMI tanked in May to 46.2 from 52.3 in April.

4) The U.S. Labor Force Participation Rate continues its Declining Trend and is at its lowest level in 38 years.

¾ Key Technicals are signaling “Crises Coming”. Indeed, Crises are coming closer and closer, and that means that Key Sectors are closer to crashing.

Consider the following:

a) We now have a confirmed Hindenberg Omen signaling an Equities Market Downleg or two and then a full-blown Crash.

b) The NYSE Advance/Decline line has diverged bearishly versus Stock Prices

c) A Jaws of Death (Multi-Year Expanding Bearish Megaphone) signals a Major Crash.

d) A Shorter Term Pattern, a Rising Bearish Wedge, signals an Equities Crash soon, becoming full-blown in a few weeks or very few months.

e) The VIX has closed back above the bottom Boundary of its 2 Standard Deviation Bollinger Bands.

Of course, an Equities Crash will affect different Sectors differently, for example, short-term to medium-term (During and immediately after The Crash), U.S. Treasuries should Strengthen (Yields Down) as an Ostensible Safe Haven. But, Longer Term, U.S. Sovereign Bonds, and probably Eurozone and Japanese Bonds, also will Crash.

And predictably, the Crude (and Copper) Prices are likely to Crash again when Equities do, since an Equities Crash would confirm that Economic Growth in the USA, Eurozone, and China has been slowing or contracting.

[For Deepcaster’s Forecasts re which Sectors The Crisis is likely to affect First and Buy Recommendations for Profit and Protection, read our latest Letter and recent Alerts.]

Regarding Greece, even if a deal is done in the next couple of weeks, it should provide only a very brief, temporary boost to the Markets. But whatever the outcome, Greece cannot pay and therefore there will be an Eventual default or Haircut Deal. If a Haircut Deal, then other Heavily Indebted Nations will want the same Deal, and Chaos ensues.

In other words, Important to consider is that the significance of Greece extends far beyond Greece. Consider that whatever happens in Greece could be template for what happens re the Debts/Economies participation in the Euro and Eurozone of the far larger Spain and Italy.

And Spain and Italy have €1.78 Trillion and €1.87 Trillion in external Debt respectively and far larger Economies than Greece!

And there is also the “Wild Card” — the Distinct Possibility that Greece has the (as yet unseen) Financial Backing of Russia/China, if a Deal with the Eurozone fails.

And If a Greek Deal Fails at any Point, then a Debt Default Domino effect could begin which could Explode the $505 Trillion of Interest Rate Based Derivatives Monster (see bis.org for stats).

Do we have intimations of that already, with the recent Departure of the Deutsche Bank (with $Trillions of Derivative Exposure) Co-CEOs? Could these have been because of a recent Hidden Derivative Event??

Whatever the case, we will likely see more Derivatives-related Negative “Events” because the aforementioned Derivatives are highly levered and thus vulnerable to Untoward Events — “Weapons of Mass Destruction” Warren Buffet rightly called them.

This prospect plus the prospect of More Fed QE (as the “smart money” already knows) has already caused Bond Yields to spike this month. In other words, the aforementioned have caused Big Investors to increasingly doubt the ability of Central Banks to continue to Control the Bond Market. And we doubt it too.

In sum, any more Growth-Negative Reports from Major Economies will likely cause Major Equities Dips and Volatility Spikes. But we expect more Growth-Negative Reports.

Longer term, we agree with Shadowstats’ John Williams who says

“Significant upside Inflation pressures are building, … a process that should accelerate rapidly with the eventual sharp downturn in the Exchange Rate Value of the $US.”

Indeed, the Central Banks’ reckless Monetary Inflation will increasingly turn to visible Price Inflation.

Longer term, the Euro and Yen too will likely weaken along with the $US vis à vis the stronger Currencies (CHF and Canadian and Aussie $s and the Gold-backed [de facto] Chinese Yuan) and the Precious Metals.

Thus, Opportunities for Profit and Wealth Protection NOW(!) present themselves in Gold, Silver, quality miners, agriculture, and in carefully selected inverse ETFs.

Best regards,

Deepcaster

July 2, 2015

Note 1: Shadowstats.com calculates Key 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 June 18, 2015
-0.04% / 7.55%

U.S. Unemployment reported June 5, 2015
5.51% / 23.1%

U.S. GDP Annual Growth/Decline reported May 29, 2015
2.73% / -1.31%

U.S. M3 reported June 6, 2015 (Month of May, Y.O.Y.)
No Official Report / 5.05% (i.e., total M3 Now at $16.668 Trillion!)

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 July, 2014 Letter entitled "Profit, Protection, Despite Cartel Intervention" 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, including testimony before the CFTC, for information on precious metals price manipulation, and manipulation in other Markets. 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.

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DEEPCASTER LLC

www.deepcaster.com

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Financial and Geopolitical Intelligence

Maximizing Gains & Wealth Protection from the Coming Crisis

June, 2015

“Texas … following the lead of Germany, Austria, and Holland …(has) decided to repatriate the gold that it has stored at the New York Federal Reserve. ... Upon completion of the facility, Texas will pull $1 billion in gold bullion from the Fed’s vault.

“Texas Wants It’s Gold Back,”

Joshua Krause, 06/13/15

“On June 7, 2015, The Financial Times’ John Authers observed: This has been a very dramatic week…. The real action was in the bond markets…the cost of borrowing, the cost of money within Germany over the long term more than doubled in the space of four trading days….

“On the same day, CNNMoney warned: ‘Pay Attention To The Chaos In The Bond Market - Bond Market Selloff Continues’

“That hissing sound you just heard is more air coming out of the bubble in the global bond market. From Germany to the US, fixed income prices tanked last week, sending yields way up…Investors are yanking cash out of the fixed income market. Government bonds experienced a sixth-straight week of outflows, according to Bank of America Merrill Lynch. Emerging market debt, a big beneficiary of extremely low U.S. interest rates, suffered the biggest outflow in nearly five months.

“The same week, Michael Snyder in Investors Start To Panic As A Global Bond Market Crash Begins, asked:

“‘Is the financial collapse that so many are expecting in the second half of 2015 already starting?’

“Many have believed that we would see bonds crash before the stock market crashes, and that is precisely what is happening right now. …. And it isn’t just German – bond yields are going crazy all over Europe. So far, it is being estimated that global investors have (already suffered) “… a cumulative loss of [$1.2 trillion] in last three months…. In the end, the overall losses could be well into the trillions…”

“Panic in the Bond Markets,” Darryl R. Schoon,

via lemetropolecafe.com 06/17/2015

To Identify The Major Culprit behind the impending Crisis of the Bond and several other Markets, we need to look no further than the private-for-profit U.S. Federal Reserve. Collapse of the Bond and other Markets could, of course, lead ultimately to the Implosion of The Fed.

“Noted investor Jim Rogers says outgoing Federal Reserve Chairman Ben Bernanke has set the stage for the collapse of the U.S. central bank within the next decade, and had turned the nation’s fiscal balance sheet into ‘garbage.’

“In a recent interview with the British financial website Mineweb, Rogers said Bernanke and his fellow central bankers in other countries have brought the global economy to the brink of disaster….

“Rogers predicted that history will remember Bernanke as ‘the guy who set the stage for the demise of the central bank in America.’

“‘It’s not a possibility,’ Rogers said, ‘it’s a probability. People will realize that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last five years, and a lot of it’s garbage.’…”(emphasis added)

“Jim Rogers: The Federal Reserve’s Days Are Numbered,”

Moneynews, 01/06/2014

Master Investor (Billionaire) Jim Rogers’ Negative view of the private-for-profit Fed is echoed by former Director of the OMB, David Stockman, who has said that The Fed has created “The Mother of All Bubbles.”

Deepcaster agrees, and would add that analyzing the ongoing and prospective Effects of Fed Policy and Market Interventions are the Most Essential Actions (among several) for Maximizing Real Gains and Wealth Protection going forward.

First one must realize that Fed Actions are primarily aimed at aiding Mega-Banks, and not the Citizenry.

Consider the following little Exposé from the Establishment The Wall Street Journal of all places.

“Foreign banks are collecting billions of dollars in interest from the Federal Reserve, analysts said, a sum that stands to rise when the central bank ultimately begins raising interest rates.

“In 2014, the Fed will pay … an estimated $3.37 billion headed to foreign banks specifically, according to an analysis from J.P. Morgan, which used Fed data.”

“Foreign Banks Collecting Billions from the Fed,” Mike Cherney

Blogs.wsj.com, 05/08/2014

Ah yes, $3.37 billion in printed $US “paid” to Non-US Banks for “Interest.” Such a deal!

Nonetheless, it is very Important to Understand Fed Policies and their Effects in order for for Investors and Traders to Profit and Protect.

One Key is to Track and Heed Signals from Fed and other Central Banks’ Interventions, as well as Fundamentals and Technicals Tracking these Interventionals has facilitated Deepcaster’s recent Profitable Recommendations as well as those profitable ones (see Note 3 below) made before the 2008 Market Crash (see Note 2 below).

Another Key is to Track the Pace and Effects of various Central Banks’ ongoing Competitive Currency Devaluations (i.e., Purchasing Power Destruction) via the so-called Currency Wars.

Consider that Purchasing Power (Wealth) Destruction has been going on since The Fed’s Founding.

“Since its inception in 1913, The Federal Reserve Board has been responsible for almost 95% devaluation of the U.S. Dollar. All this has been achieved through its ability to continually inflate the money supply.

“And, between 1985 and 2005, the Federal Reserve Board has increased the money supply by five times. This extraordinary money creation is merely the catalyst for debt creation. In a fiat money system, money is debt…there is absolutely no way this money can ever be repaid except by continued inflation. But, now that the credit bubble is blown up, inflation is no longer an option; bankruptcy looms.”

“The Federal Reserve…What Has It Done For You Lately?”

Ian Gordon, December 29, 2007, www.axisoflogic.com

Indeed, a few months after Ian Gordon correctly announced “the credit bubble is blown up,” it (the housing Bubble), burst and the 2008-2009 Market Crash ensued.

Thus another Key is to Track Real Gains (in Purchasing Power Terms) and losses and not just Nominal ones.

The Proper Measure for Gains is “Purchasing Power.”

For example, consider the effect of Real Inflation from the March, 2009 Equity Market lows to the June, 2015 highs. Inflation has averaged about 8% per year during that period, per Shadowstats. (Shadowstats measures Inflation the way it was measured in the 1980s before the Official Figures became Politicized and therefore Bogus (see Note 1 and Chart).

In other words, Purchasing Power losses must be taken into account by factoring in Real Inflation. Real Inflation in the U.S. for example, is still high 7.38% (as of May, 2015) per shadowstats.com. The Bottom line is that from March, 2009 to the present, no Asset has had a Real Gain unless it has appreciated in nominal $US currency terms by more than an average of 8% per year.

Why is performing a “Purchasing Power” Analysis so Crucial? Because the Private-for-Profit Fed, the ECB, and other Central Banks have for years been, and increasingly are, Printing/Digitizing Fiat Money and Credit into existence ($Trillions in recent years—including The Fed’s $4 Trillion Balance Sheet!) well in excess of any increase in Global Production of Goods and Services, thus diminishing Fiat Currencies‘ Purchasing Power and devaluing the Real Value of Bonds denominated in those Fiat Currencies. Ongoing Excess Money Creation is why the Purchasing Power of the U.S. Dollar (Federal Reserve Note) has declined by over 95% since The Fed was founded in 1913 and why Bond Market Volatility has increased dramatically recently.

And that is the Primary Reason a Bond Market Crisis and probable Crash is likely in the next few months.

Another Key point is that, considering all the Major Central Banks in toto, this Fiat Currency Creation out of Thin Air continues to increase at an accelerating rate and thus is a sure Precursor to Price Inflation (see Note 1).

But why have the Prices of the Ultimate Safe Haven from Fiat Money Printing — Gold and Silver — not recently reflected this Monetary Inflation. Historically, indeed they have, with the Gold Price increasing four-fold in decade prior to September 2011. But owning Gold and Silver is challenging.

This is because the prices of the aforementioned Precious Metals, are periodically the victims of Interventional Price Suppression Action by a Fed-led Cartel (see Note 2) of Central Bankers and their Allies and Agents. The Cartel’s motivation for ongoing Price Suppression Actions of Gold, Silver, and other Tangible Assets is clear: they do not want the further legitimization of Gold & Silver (or Tangible Assets in general, for that matter) as Measures and Stores of Value (i.e. Real Money) to compete with their Fiat Treasury Securities and Fiat Currencies.

As an historical example, nearly $470 billion in OTC (i.e. Dark, not Exchange Traded) Derivatives were available to suppress Gold prices alone as of June, 2011 (as reported by the BIS, the Central Bankers’ Bank based in Switzerland - www.bis.org. (Path: www.bis.org>statistics>derivatives>statistical tables). Indeed, were it not for active Gold Price Suppression by The Cartel, Deepcaster (and other independent Analysts) believes Gold would have exceeded $3000/oz. by now.

Clearly Gold and Silver Prices were and still are subject to capping attempts, as they seem to have been nearly every time negative economic data or market developments are revealed. See the Gold Anti-Trust Action Committee website gata.org for many specific Examples

However, the Cartel is finding it increasingly difficult to successfully and sustainably cap paper prices because of huge drawdown of available Bullion, Bullion which is increasingly being shipped to China (e.g., recent 360% increase year over year), India, and Russia. And Germany, Holland, Austria and now Texas are now wisely demanding return of their Gold they believe is stored at The New York Fed.

But Cartel Price Suppression Attempts continue.

Thus, for example, the price of Gold and Silver on any given day may not reflect anything near their Ultimate Value. See Deepcaster‘s March, 2012 Article “Profit, Protection Despite Cartel Intervention” in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.

Unfortunately too, there are also ongoing Interventions in Major Markets other than the Gold and Silver markets. They are especially visible in the U.S. Equities Markets via, for example, the (nearly daily) Repo injections. [However, on the positive side, our attention to Interventions and related signals facilitates Profitable Recommendations.

Importantly, this fact of Ongoing Intervention is one major reason a mere “Buy and Hold” strategy increasingly fails. A Holder of the S&P through the last decade would have lost substantial value when Real Inflation is considered, and will likely lose more as Fiat Money Printing intensifies. And it Surely will.

Thus, it is essential to consider the Interventionals as well as the Fundamentals and Technicals when making a Market Forecast or Buy or Sell Recommendation.

And the Central Banks must keep printing/digitizing to maintain and increase the Bubble … until it Bursts.

“QE to Infinity is set in cement in the ‘European Stabilization Mechanism Treaty‘. This is the new European Union and the euro. It will be in place and operative by July of 2012.

“The European Stability Mechanism (ESM) is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism in the 17-member Eurozone. The ESM is due to be launched as soon as Member States representing 90% of the capital commitments have ratified it, which is expected in July 2012.”

Jim Sinclair, Mineset, 04/19/2012

The Fed, of course, maintains that it will soon raise interest rates because the economy is (ostensibly) recovering. We doubt that seriously because any Raise in interest rates could Trigger the Collapse of $555 Trillion (Trillion!) in Interest-Rate based Derivatives. Instead, we expect another round of QE as does Jim Sinclair.

But QE to Infinity results in Unpayable Sovereign (consider Greece) and other Debts, and, along the way creates the Opportunity for Mega Banks to engage in Massive Wealth Transfers.

Consider

“Taxpayers are paying billions of dollars for a swindle pulled off by the world’s biggest banks, using a form of derivative called interest-rate swaps; and the Federal Deposit Insurance Corporation has now joined a chorus of litigants suing over it….

“Derivatives . . . have turned into a windfall for banks and a nightmare for taxpayers…. While banks are still collecting fixed rates of 3 to 6 percent, they are now regularly paying public entities as little as a tenth of one percent on the outstanding bonds, with rates expected to remain low in the future. Over the life of the deals, banks are now projected to collect billions more than they pay state and local governments – an outcome which amounts to a second bailout for banks, this one paid directly out of state and local budgets.

“It is not just that local governments, universities and pension funds made a bad bet on these swaps. The game itself was rigged,…

“On March 14, 2014, the FDIC filed suit for LIBOR-rigging against sixteen of the world’s largest banks – including the three largest US banks (JPMorgan Chase, Bank of America, and Citigroup), the three largest UK banks, the largest German bank, the largest Japanese bank, and several of the largest Swiss banks. Bill Black, professor of law and economics and a former bank fraud investigator, calls them “the largest cartel in world history, by at least three and probably four orders of magnitude.”

“IBOR (the London Interbank Offering Rate) is the benchmark rate by which banks themselves can borrow. It is a crucial rate involved in hundreds of trillions of dollars in derivative trades, and it is set by these sixteen megabanks privately and in secret….

“The rate-rigging banks have been caught red-handed, but the greater manipulation of interest rates was done by the Federal Reserve itself. The Fed aggressively drove down interest rates to save the big banks and spur economic recovery after the financial collapse. In the fall of 2008, it dropped the prime rate (the rate at which banks borrow from each other) nearly to zero.

“This gross manipulation of interest rates was a giant windfall for the major derivative banks. Indeed, the Fed has been called a tool of the global banking cartel….

“Bill Black concurs, stating, ‘Our system is completely rotten. All of the largest banks are involved—eagerly engaged in this fraud for years, covering it up.’”…

“The Global Banking Game Is Rigged, and the FDIC Is Suing,” Ellen Brown, webofdebt.com, April 13, 2014

And Ellen Brown also eloquently described the profitable consequences of the ESM bailout coup for Private Mega Banks, some of which are shareholders of the private, for-profit U.S. Federal Reserve.

“The Goldman Sachs coup that failed in America has nearly succeeded in Europe—a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers”

“The European Stabilization Mechanism, or How the Goldman Vampire Squid Just Captured Europe,” Ellen Brown, webofdebt.com/articles, 04/18/2012, via LeMetropoleCafe.com

Quite apart from the covert Wealth Transfers exposed in the foregoing, one important Takeaway is that there is now yet another Great Bubble, a Credit/Debt Bubble, a Bubble destined to loudly Pop with Seriously Negative Consequences for Citizens around the world.

As long as the private-for-profit United States Federal Reserve and ECB and Bank of Japan and others continue to profligately expand the supply of money and credit, we will see continuing debasement of the U.S. Dollar and Euro and Yen in Purchasing Power Terms and this virtually guarantees eventual Price Inflation and an increase in size of that other Bubble, a Financial Assets Bubble which caused Billionaire Carl Icahn to correctly call over a year ago (on 3/1/2014) levels of Stock Prices a “Mirage.” Thus much of the Financial Asset Appreciation, in terms of U.S. Dollars, which we have seen in recent years, is really only dollar depreciation. Indeed, the U.S. Dollar depreciated over 30% (in purchasing power) between January, 2002 and July, 2008, for example, though many Assets nominally appreciated.

In sum, therefore, if one holds appreciated (in dollar terms) financial “assets” one must consider "appreciation (or depreciation) vis-à-vis what?” Depending on one's choice, one may find that the ostensible appreciation is really depreciation. [And especially so, if one factors in the tax consequences of being taxed on a larger number of U.S. Dollars which have a substantially decreased Purchasing Power.]

Specifically, for example, measured (as of May 1, 2006, just to pick a salient date) against Gold or even other currencies, the ostensible appreciation of financial assets from late 2002 through the end of April, 2006 is arguably only a delusion. That is, it is arguably only an artifact of the Fed's profligate printing of paper money and increase of credit — enabling an unhealthy “borrowed liquidity” as opposed to a healthy “earned liquidity” (e.g. savings) to use the late Dr. Kurt Richebacher‘s (R.I.P.) superb distinction. Given this Reality, the ostensible appreciation reflects mainly the Increasing depreciation of the Purchasing Power of the U.S. Dollar. That is we have Prices Inflation which The Cartel and its Mainstream Media Allies and Agents try to hide from us.

John Brimelow, a savvy long-time observer of Markets has written,

“Bloomberg, which in JBGJ‘s informed opinion is exceptionally top-down directed on an ideological basis even by American mainstream Media standards, has apparently been mobilized to counteract inflation fears: CPI Conspiracy Theories Fail to Die with Banana-to-Haircut Check. The invocation of the ‘Conspiracy Theory’ concept in the context of 21st Century America polemics is the most extreme form of anathematization. “Excommunication of this severity suggests alarming inflation data at least at the anecdotal level is looming.”

JBGJ LLC, 04/18/2012

In light of the foregoing, it is important to consider, over decades and centuries, one can find no better “Safe Haven” and Measure of Value than in the Precious Monetary Metals, Gold and Silver, and selected other Tangible Assets, like basic Foodstuffs, and interests in Food Producers and Distributors.

BUT, we must reiterate that one essential Caveat regarding finding a “Safe Haven” and Measure and Store of Value in Precious Monetary Metals: in the short run they continue to be subject to the considerable price manipulation Suppression Attempts by The Cartel of Central Bankers (Note 2). Of course, this Price Suppression has since the Highs of September, 2011, been “helped” by the International Economic Contraction which has suppressed prices of nearly all commodities, but not for much longer due to Central Bank Money Printing.

However, there is increasingly reason for optimism. The Cartel‘s ability to implement and sustain Takedowns has been considerably weakened recently largely because of increasing demand for Delivery of Physical Gold and Silver to China, India and Russia (as opposed to the manipulable “Paper” shares of Certain Precious Metal ETFs.

Moreover, other Central Banks are increasingly Acquirers of Physical as well as (the aforementioned) demands to return their Physical Gold “stored” at the U.S. Fed.

So the question is, in the next round, will The Cartel price suppressors win out when it comes to Precious Metals and other Tangible Assets prices, or will increasingly Bullish fundamentals propel them further up? Deepcaster provides his most recent Forecasts in his latest Letter and Alerts posted at www.deepcaster.com.

In sum, the mounting evidence is that the Fed-led Cartel is knowingly creating conditions designed to force the U.S (and, indeed, the entire industrialized world), to eventually choose between a Hyperinflationary Stagflation and The Cartel‘s ominous “End Game,” which Deepcaster has described in its Alert of 8/13/07 “Massive Financial-Geopolitical Scheme Not Reported by Big Media” and June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” and in 9/23/10 Article “Gold-Freedom versus The Cartel ‘End-Game’ & A Strategy for Surmounting It” all available at www.deepcaster.com. In light of this “End Game,” it is no surprise that several Mega-Banks are increasingly discouraging their Customers from using Physical Cash. This is yet another Power Play designed to make the public more dependent on those Banks. Therefore, in a very real sense, cash under the Mattress and Gold and Silver in one’s basement Vault are a helpful guarantor of one’s independence.

Jim Rogers and David Stockman and Richard Fisher and Mohammed el Erian point out, Fed Policy is impelling us to such a Major Climax.

(This situation is) “a Ticking Time Bomb,”

Richard Fisher, (Former Fed Governor) (05/21/15)

“By suppressing Rates, The Fed has borrowed Growth and Returns from the Future.”

Mohammed el Erian, 5/21/15 (Former PIMCO CEO)

"‘Now we've had the weakest recovery in post-war history and what has happened? The Fed has simply reflated the bubble to an even more gigantic proportion.’

“And it's not just stocks that are in trouble. Stockman sees some troubling signs in the bond market. ‘It's not possible that the interest rate on the 10-year German bond (NYSE Arca: BUNL) should be 70 basis points when it was 5 just a few weeks ago-or even that the U.S. Treasurys [sic] (U.S.:US10Y) should be trading at 2 percent on the 10-year when we have taxes and inflation.’

“To Stockman, the message is clear, "everything is totally distorted and there is a day of reckoning coming down the pike.’ "

David Stockman, Former OMB Director, via Yahoo Finance (05/22/15)

Consider therefore Deepcaster‘s prescriptions for achieving Real Gains and Wealth Protection:

1. Locating one‘s capital primarily in Tangible Assets which are in great and relatively inelastic demand in a Stagflationary Future, including in

2. The Essential Agricultural Commodities, Production and Distribution Sector and in the

3. Precious Monetary Metals (e.g., Gold and Silver) but, preferably when acquired near the interim bottoms of Cartel-generated Takedowns. Timing and Selection here are important. For further details see Deepcaster‘s 12/23/07 Alert entitled “A Strategy for Profiting From Cartel Intervention in Gold, Silver, Crude, & Other Tangible Assets Markets” at www.deepcaster.com.

4. Financial Assets (e.g., Stocks) could and should be acquired when the timing is right, but also disposed of when the timing is right. “Buying and Holding” for the (Multi-Year) Long-Term will increasingly lead to losses for Many Assets.

5. Stay informed, daily, as much as possible, regarding “The Interventionals” as implemented by the Major Central Banks and Governments as well as the Fundamentals and Technicals.

6. Know the Real News and Real Statistics. Do not rely on often-spun Main Stream Media “News” and Bogus Official Data.

7. Monitor the Exchange Rate Value and Purchasing Power Value of the $US and other Major Currencies. Monitor Real Price Inflation.

Ultimately, the authentic stores and measures of value are Gold and Silver and other key Tangible Assets, not paper Fiat Currencies and Treasury Securities. But with the Intervenors extremely active it behooves investors to regularly attend to the Interventionals as one acquires, and disposes of, and reacquires Key Tangible Assets.

Deutsche Bank indicates that the Worst is yet to come

“The worst may be yet to come in the global financial crisis as the central bank spending that kept defaults low runs out, according to Deutsche Bank AG.

Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments including Spain and Italy jumped 26 percent in the past month as the region‘s crisis flared up.

“’If these implied defaults come vaguely close to being realized then the next five years of corporate and financial defaults could easily be worse than the last five relatively calm years,’ the analysts in London said.

“Much may eventually depend on how much money-printing can be tolerated as we are very close to being maxed out fiscally.”

“Deutsche Bank: Worst of Global Crisis Yet to Come as Rescue Cash Runs Out,” Bloomberg, 04/18/2012

Deutsche Bank’s analysis, written over three years ago, is even more strongly applicable today.

Be Prepared!

Best regards,

Deepcaster

June 19, 2015

Note 1: *Shadowstats.com calculates Key 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 May 22, 2015

-0.20% / 7.38%

U.S. Unemployment reported June 5, 2015

5.51% / 23.1%

U.S. GDP Annual Growth/Decline reported May 29, 2015

2.73% / -1.31%

U.S. M3 reported June 6, 2015 (Month of May, Y.O.Y.)

No Official Report / 5.05% (i.e., total M3 Now at $16.668 Trillion!)

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 profitably.

Note 3: Our attention to Key Timing Signals has facilitated Recommendations which have performed well lately. Consider our six most recent:

60% Profit on a Telecommunications Company on March 11, 2015 after just over 3 years (i.e., about 20% Annualized)
45% Profit on a Double Short ETF on January 22, 2015 after just 9 months (i.e., about 59% Annualized)
23% Profit on a leveraged ETN on the Volatility Index on January 6, 2015 after just 119 days (i.e., about 70% Annualized)
85% Profit on a REIT on December 31, 2014 after just three years (i.e., about 25% Annualized)
105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)
70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)
70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)

__________________________________________________________________

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS, HIGH POTENTIAL

SPECULATOR & HIGH YIELD PORTFOLIOS

Wealth Preservation & Wealth Enhancement

Financial and Geopolitical Intelligence

Bubbles—Profit and Protection

(This situation is) “a Ticking Time Bomb,”

Richard Fisher, (Former Fed Governor) (05/21/15)

“By suppressing Rates, The Fed has borrowed Growth and Returns from the Future.”

Mohammed el Erian, 5/21/15 (Former PIMCO CEO)

"‘Now we've had the weakest recovery in post-war history and what has happened? The Fed has simply reflated the bubble to an even more gigantic proportion.’

“To Stockman, the message is clear, "everything is totally distorted and there is a day of reckoning coming down the pike.’ "

David Stockman, Former OMB Director, via Yahoo Finance (05/22/15)

Despite Main Stream Media Spin, Savvy Investors are beginning to Realize that The Fed and other Major Central Banks have created Dangerous Bubbles.

And one Key Market is already beginning to reflect that Realization.

And, yes, this increasing Realization indeed reflects a “Ticking Time Bomb” / Bubble.

So consider the “Ticking Time Bomb” / Bubble.

And consider the Actions which can be taken to Profit and Protect.

In just the eight days prior to May 22, Yields on 10Yr German Bonds were up over 500%. As of 5/21 they had reached .75% (from Negative Yield Territory a few weeks before). Similarly, yields on French bonds have shot up with a one day jump of 14bps on 5/21 to 1.05%.

But European Central Bank President (Goldman Sachs Alum) Mario Draghi said he was going to keep rates low for “as long as it takes” and has initiated another round of QE so the Eurozone Economy will recover.

But the Eurozone economy is not recovering.

And despite QE and Low Rates, The Fed policies are not helping the U.S. Economy either. A clear Multi-Quarter Downtrend in Official GDP (5% to 3%, to 2%, to -.7%) is now confirmed. The Central Banks’ policies have only served to temporarily boost paper Asset Prices, but not economies.

So what gives?

The Great Delusion that Many Investors still (but decreasingly) entertain is that The Central Bankers “have everything under control and have not created any Bubbles, and that, therefore, the Economy is recovering.” But those Main Stream Media and Central Bank Narratives are increasingly being exposed as Delusions. And the Bubbles became increasingly evident, and Dangerous. The Central Banks have and are engaging in “Currency Wars” — competing to Devalue the Purchasing Power of their currencies. That cannot continue, and is a recipe for disaster.

In sum, in the USA, despite Multiple Rounds of Fed QE, the lousy Economic Numbers show that Economy is not recovering. Indeed, since the Obama presidency began in 2009, the annual wage of the average American worker has dropped about $6,000 from appx $58,000 to appx $52,000. No wonder consumer spending, which is 70% of the U.S. Economy, is lagging.

And in the Eurozone, the ostensible Stimulative Effects of European Central Bank QE, are muted because Eurozone Banks still have $1Trillion in Nonperforming Loans on their Books, and Unemployment Rates are stunningly High. A Possible Grexit is neither the only, nor the most serious, problem the Eurozone faces.

The Economic Circumstances of the Middle Class in the USA and Eurozone are in fact weakening.

And in large part because of the aforementioned, the Market is beginning to drive rates up (on German Bonds, e.g.) because it anticipates, rightly, that all the Central Banks’ Hypermonetary Inflation is beginning to increase Risk and create Price Inflation.

Similarly, the Price of WTI Crude, another Inflation Harbinger, has recently bounced up to, and is now bouncing around $60/bbl, notwithstanding adequate above-ground supplies, and recently lower Rig Counts.

Further, regarding the Real State of the U.S. Economy, the BEA has just recently admitted it has a problem in calculating GDP for the USA. Typically, this sort of Mea Culpa means they don’t like the result politically, so they are going to recalculate it (in the same manner as the BLS has changed the way they calculate inflation nine times since 1997). Of course, real U.S. GDP is Negative and has been for a while, as Deepcaster and Shadowstats.com (Note 1) have been saying for months.

In sum, the Reality that the U.S. (and other Governments) are trying to hide is that we have a Contracting Economy with accelerating Price Inflation — i.e., that we are headed for Stagflation and a consequent Bursting of The Bubbles.

And thus we reiterate that The Great Delusion that the increasing visibility of this Stagflation trend is dispelling, is that The Central Banks’ policies have everything under control. The fact is they do not, and we are sitting on a “Ticking Time Bomb” of Asset Bubbles, which have been generated by Central Banks’ QE and easy Credit policies, coupled with Major Governments’ failures to get their Fiscal Houses in order.

Of course, this will at some point sooner than later wreak Havoc on the Equities Markets, first and then on the Bond Markets, and especially the Markets for U.S. and other major countries (e.g., the ECB and Japan) long-dated Treasuries. Deepcaster has already made specific recommendations aimed at Profit and Protection from what is impending. And we note we correctly forecast the 2008 Takedown and recommended Profitable Positioning for our Subscribers (Note 2) and have since then as well (Note 3).

As to both Protection and Profit, we do recommend considering the Asset that has historically been the most Wealth Protective and now offers excellent Profit Potential — Physical Gold (with Physical Silver a close second) and Quality Mining Shares. So it is not an accident that Gold price has bounced stubbornly around $1200 and Silver around $17 despite ongoing Cartel Price Suppression Attempts.

And certain Agricultural Assets provide Profit and Protection in a Stagflationary Environment as well.

Nota Bene, Investors.

Best regards,

Deepcaster

May 29, 2015

Note 1: *Shadowstats.com calculates Key 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 May 22, 2015

-0.20% / 7.38%

U.S. Unemployment reported May 8, 2015

5.44% / 23.0%

U.S. GDP Annual Growth/Decline reported May 29, 2015

2.73% / -1.31%

U.S. M3 reported May 9, 2015 (Month of March, Y.O.Y.)

No Official Report / 5.40% (i.e., total M3 Now at $16.634 Trillion!)

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 July, 2014 Letter entitled "Profit, Protection, Despite Cartel Intervention" 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, including testimony before the CFTC, for information on precious metals price manipulation, and manipulation in other Markets. 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.

Note 3: Our attention to Key Timing Signals and Interventionals and accurate statistics has facilitated Recommendations which have performed well lately. Consider our profits taken in recent months in our Speculative and Fortress Assets Portfolios*

• 60% Profit on a Telecommunications Company on March 11, 2015 after just over 3 years (i.e., about 20% Annualized)

• 45% Profit on a Currency Double Short ETF on January 22, 2015 after just 9 months (i.e., about 59% Annualized)

• 23% Profit on a leveraged ETN on the Volatility Index on January 6, 2015 after just 119 days (i.e., about 70% Annualized)

• 85% Profit on a REIT on December 31, 2014 after just three years (i.e., about 25% Annualized)

• 105% Profit on a leveraged ETN on the Volatility Index on October 15, 2014 after just 36 days (i.e., about 1090% Annualized)

• 70% Profit on Russell 2000 Small Cap Sector Put on October 10, 2014 after just 2 days (i.e., about 12,275% Annualized)

• 70% Profit on Russell 2000 Small Cap Sector Put on October 1, 2014 after just 8 days (i.e., about 3215% Annualized)

*Past Profitable Performance is no assurance of future Profitable Performance.

__________________________________________________________________

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS, HIGH POTENTIAL

SPECULATOR & HIGH YIELD PORTFOLIOS

Wealth Preservation Wealth Enhancement

Financial and Geopolitical Intelligence

Opportunities in Impending Mega-Moves

“I told them the real 2014 deficit was $5 trillion, not the $500 billion or $300 billion or whatever it was announced to be this year. Almost all the liabilities of the government are being kept off the books by bogus accounting. … all the spending on defense, repairing the roads, paying for the Supreme Court Justice salaries, Social Security, Medicare, Medicaid, welfare, everything, and take all those expenditures into the future, and compare that to all the taxes that are projected to come in, then the difference is $210 trillion. That is the fiscal gap. That is our true debt.”

Lawrence Kotlikoff (economist, in testimony before the US Senate, a Professor of Economics at Boston University)

Unpayable Debts in the U.S.A., Eurozone, China & Japan virtually guarantee Mega-Moves in Key Sectors are coming.

“Financial assets now represent over 82% of the net worth of both households and US non-financial corporations (data: Federal Reserve Z.1 Flow of Funds). Except for periods where total net worth had itself retreated (for example, 2008-2010), the concentration of private net worth on financial assets, rather than real assets or productive capital, has reached the highest extreme in history in recent years. In our view, this is just temporarily overvalued paper masquerading as something durable. The previous extreme (again, outside of periods where net worth itself had retreated) was, not surprisingly, in Q1, immediately prior to The Tech Wreck.

— John Hussmann, 04/21/2015

Yes, indeed “Temporarily Overvalued Paper” accurately describes many “Markets.” And that which is Overvalued does not stay overvalued! Thus Mega-Moves are Impending and those who are prepared will Profit, and those unprepared will Suffer.

Recent below-expectation (except by Deepcaster and a few others) U.S. Retail Sales, Housing Starts, Business Equipment Sales, Jobs Reports and now GDP, among other indicators, show that the U.S. Economy is not recovering (as Deepcaster and a few others have been documenting for Months), despite the Happy Talk in the Main Stream Media (see Note 1, Shadowstats for the Real Numbers). Indeed, QE has mainly helped only The Private-for-Profit Fed’s Clients/Shareholders, the Mega-Banks, as well as creating a variety of Massive Asset Bubbles, including in Equities.

And Economies and Markets elsewhere reflect the same Economic Malaise and Bogus Official Numbers. The Equities Market in Indonesia is down over 7% in the last 3 days, as we write.

One Major Consequence of this Congeries of Bearish Real Data is that The Fed will be likely constrained to Keep Rates Lower Longer. Lower Rates Longer is only one of several Factors which signal a Weaker $US in the Months ahead.

No surprise to us as we wrote on April 29 when the $US was down a Massive 125 BPS to 94.80ish. (But, very short-term, we expect a Bounce.)

Indeed, we and others have documented the Reasons the $US is on the way to losing its Status as World’s Reserve Currency — a Mega Event to be sure.

We reiterate China’s Action in establishing an Investment Bank and New Development Bank and an Alternative Clearing System to the Western Bankers’ SWIFT System (Chinese International Payments System–CIPS), and its importing Massive Amounts of Physical Gold which we all can expect will serve to underpin a Gold-Backed Yuan as the next World’s Reserve Currency, and indeed for a Chinese/BRICS-led Financial System.

Of Course, the IMF has other ideas, namely to create a new Global Currency based on IMF Special Drawing Rights and controlled by the Globalist IMF and Bank for International Settlements.

Indeed, these Globalists (i.e., those opposed to National Sovereignty) have admitted as much in publications like the Rothschild’s controlled “The Economist” and articles like “Get Ready for The Phoenix”.

So much for National Sovereignty if IMF SDRs are allowed to become the World’s Reserve Currency.

Candidly, while the evidence is mounting that the $US will lose its World Reserve Currency Status — The Great Impending Mega-Move — we note that IMF SDRs would be yet another Fiat Currency.

And if, as we expect, the Gold-Backed Yuan emerges as The Competitor for World Reserve Currency we have little Doubt which will prevail.

Thus the Question is not whether the Chinese will de-peg Yuan from its Trading Range Tie to the $US, but when — yet another Impending Mega-Move, one which will not only mortally wound the U.S. Dollar, but also greatly injure U.S. and Western-Focused Equities Markets — a True Mega-Shift in Political as well as Economic Power— Mega-Events with Concurrent Mega-Moves, for sure.

And there is recent Precedent. Consider that when it was to their Advantage, The Swiss de-pegged from the Euro, without Warning, and, indeed, the De-Peg occurred only a few hours after the Swiss National Bank issued contrary Signals.

Moreover, considering the aforementioned Real Numbers, the U.S. is already in recession.

When this fact of a U.S. Recession (i.e., More Negative Economic and Market Data) becomes widely acknowledged, the present slow flight away from the U.S. Dollar will soon become a Rout. And that will create a Panic far beyond the Currency Sector. The run on the $US is probably weeks or a very few months off, but it could begin at any time.

And after that, U.S. Treasuries will take a Big Hit also.

Short-term, (next few weeks) however, U.S. Treasuries have been on a Strengthening Trajectory (See our recent Buy Recommendation) notwithstanding the recent weakness resulting from the Chinese Stimulus (lessening the Reserve Requirement Ratio [RRR] for the Banks), Weak GDP Numbers, and an ample supply of relatively high yielding corporate bonds and on April 30 – May 1 Rout in the German and other Eurozone Bond Markets resulting in Higher Yields, thus making them less uncompetitive with Higher U.S. Bond Yields.

Moreover, the Bubbles created by the Central Banks Money Wars are Huge — consider that Total Credit Risk in the U.S. is at Record Highs, i.e., higher than in Pre-Crash 2007.

Worldwide, there is $57 Trillion more Debt than 2007! A Massive Unpayable Debt Bubble Waiting to Pop, yet another Impending Mega-Move.

Yes, indeed, Another “Crisis will Hit” — the only questions are “When?” and “In which Sector First?”

No one can know the Exact Date The Crash Starts — it could be Triggered at any time by a “Black Swan” Event.

But one can evaluate Probabilities and make forecasts based on them as Deepcaster does and successfully did before the 2008 Crash (Note 2). And consider how Deepcaster’s Focus on Interventionals as well as Fundamentals and Technicals has facilitated forecasting the 2008 Crash as well as recent Profitable Positions (Note 3).

In the next few months, we expect the International Economic Contraction will worsen through 2015 and into 2016. For example, Japan’s QE is not helping — Japanese Retail Sales are down 9.7% Year-On-Year.

All the foregoing means that U.S. Treasuries should strengthen even more but only short- to medium term (in the next very few months) with the 10 Year Yield possibly eventually spiking down to 1.5%.

But after the $US Crash, U.S. Treasuries are the Next to Fall (and their yields skyrocket), ending in “a very bad way” according to Investment Legend, Julian Robertson, with whom Deepcaster agrees. Excess Debt and Fed and other Central Banks’ Monetary inflation will have taken their toll. At some point after that (2016?) the Chinese will likely de-peg the Yuan from its $US trading range, and the Yuan (Gold- and BRICS-backed!) will then be the World’s Reserve Currency. We are Depressed by this prospect of that Authoritarian Government controlling The Reserve Currency, but is it better to know the Reality so one can cope, than to remain in Denial.

We reiterate that, because the Real U.S. Economic Data are Worsening, The Fed will likely not raise rates until much later this year or early next, unless Market conditions force them to, which is possible, but just not likely.

Indeed, we reiterate our earlier Forecast that, later this year or early next, The Fed will initiate another Round of QE to Bolster its Shareholder/Client Banks and Equities Values.

But while more QE will likely cause Equities to temporarily rebound, it also will weaken the $US even more as the Currency Wars intensify.

A Key Fundamental Problem is too much Debt worldwide (and especially in the U.S., Eurozone and Japan) — We reiterate, Global Debt is up $57 Trillion! since 2007, just before the Financial Crisis. And China’s Debt has quadrupled since 2007! with much of that money having gone into now obsolete infrastructure.

Eventually, Great Profits will be made if one shorts the $US and U.S. Treasuries at the right time. (Not yet!) We aim to forecast that Timing of the $US and Treasuries Bubble Bursting and to make Buy Recommendations. Stay tuned.

Going forward, consider as well, the ongoing increasing use of currencies other than the $US in International Transactions (see above) could spell a Sooner Doom for the $US (as World Reserve Currency, especially if increased significant Volumes of Crude Oil begin to be traded for Non $US Currencies.

Very long-term and when the $US Dramatically Tanks, the Precious Metals will Soar to Record Highs and Western Equities Markets Crash. This scenario could possibly launch at any time (but is probably still at least a few months away), on Black Swan Geopolitical Events. This $US Crash will shake Economies and Markets to the core, as the Economy transitions to a Yuan/BRICS based Gold-Backed World Reserve Currency. Looking long-term, the Swiss have recently already established a Chinese Yuan/Swiss Franc swap facility in Switzerland. Ominous for the $US long-term.

Couple all the aforementioned with the fact that Nominal Economic Growth Worldwide is Negative due to Economic Deflation — which creates a Disaster for Debt Repayment — and the Mess the Central Bankers have created looks increasingly likely to create a Nightmare including a Massive Equities Market Crash.

“Stocks rose Thursday, April 23rd. The S&P 500 hit a new all-time high intraday Thursday, and the NASDAQ Composite finally hit a new all-time high, exceeding its previous high of 5,048.62 back in March 2000. It only took a quadrupling of the money supply and hyperinflation that has lifted the cost of almost everything 5 to 10 times what it was 15 years ago for that index to get back to breakeven. If the same inflation affected the NASDAQ, it should be around 50,000 now, not 5,000. In real dollars, this index is lagging severely despite the nominal price achievement.” [Emphasis added.]

— Robert McHugh, 04/23/2015

In other words, the Central Bankers Monetary Hyperinflation (has and) is reducing the Purchasing Power of Fiat Currencies.

Ultimately, one Major Question is whether International Monetary Fund Special Depository Receipts are going to be the basis of the World’s Next Reserve Currency or the Gold- and Silver-backed Chinese Yuan. Since no Fiat Currency in World History has ever survived, the Answer is clear.

In sum, consider our Overview: we have increasing Economic Deflation which has been created primarily by years of Fed-led and other Central Bank Monetary Inflation. Even China recently opted for easier credit and Singapore and Sweden joined The Currency Wars via Devaluation, and Switzerland has recently indicated it will do the same!

These years of excesses of Monetary Inflation (primarily intended to protect the profits of The Fed’s and other Mega-Bank Shareholders/Clients) i.e. QE and Excess Credit, have been Capital Destructive (the more printed the less each Unit is Worth in Purchasing Power terms) thus we see the consequence – Economic Deflation around the World with the Middle Class and Working Poor and Savers and Retirees horribly squeezed.

And worse, the repeated rounds of Monetary Inflation will eventually lead to Hyper-Price Inflation and already have for Middle Class U. S. Citizens and Citizens elsewhere who have to pay increasing prices for Housing, Food and Medical Care. Result: Impending Stagflation, the worst of both worlds.

As far as Opportunities provided by the ongoing competitive Central Banks Monetary Inflation, i.e., Debasement, continuing and a possible Grexit and/or other nation/s exiting, plus more Eurozone QE, the Prospects for continuation of the Precious Metals thus-far-halting Launch up are excellent.

But the Cartel Precious Metals Price Suppression Efforts continue also and thus, The Launch will be accompanied by Takedowns.

But we reiterate, the prospect for lower rates for longer (and as a consequence of Weaker U.S. Economic Data) were and are a perfect recipe for Gold and Silver to move dramatically higher in $US and other Fiat Currencies terms. Just do not expect a Smooth Launch Up.

Best regards,

Deepcaster

May 1, 2015

Note 1: Shadowstats.com calculates Key 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 17, 2015

-0.07% / 7.51%

U.S. Unemployment reported April 3, 2015

5.57% / 23.1%

U.S. GDP Annual Growth/Decline reported April 29, 2015

2.99% / -1.31%

U.S. M3 reported April 3, 2015 (Month of March, Y.O.Y.)

No Official Report / 5.59% (i.e., total M3 Now at $16.605 Trillion!)