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November
23
2013
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Two Great Bubble Threats, One Great Opportunity 
Very smart Investor Carl Icahn is right to call “a lot of” corporate earnings a “mirage” because by reducing borrowing costs via ongoing QE, The Fed has artificially elevated earnings. Thus Corporate Earnings are yet another Dangerous Fed- created Asset Bubble. With Janet Yellen’s appointment as Fed Chairman nearly a Slam Dunk (albeit a Bad One) we can expect Easy Money Policies including Bond Buying via QE to continue indefinitely. This will likely keep rates on the 10 year below 3% for a little while more but cannot keep them from rising indefinitely. There is simply too much Fed-created Hot Money in the System. Hot Money Bubbles are inflating because Fed QE suppresses interest rates, which lowers borrowing costs, which artificially elevates corporate Earnings. These earnings are thus Hot, i.e., artificially created, money. Remove or lessen the QE and the Bubble Bursts. Carl Icahn is therefore correct to call corporate earnings “a mirage.” And such a Mirage is a Dangerous Bubble!
But this Bubble creates a Great Opportunity, as we explain. Prospectively, the Fundamental pressure (via the increasing amounts of Hot Money) for higher rates will eventually overwhelm Fed action therefore, we expect rates to continue to rise slowly, then very rapidly suddenly (see our Timing Forecasts). That is because at some point ongoing Hot Money creation crashes the Purchasing Power of the $US. Clearly, China is already working to displace the $US with a Gold-Backed Yuan as the New World Reserve Currency. When Investors and Sovereigns see this clearly there will be a Massive Flight from the $US. As well, ongoing Fed QE not only creates an ever-more- Dangerous Bubble in the Equities Market, but also a Great Bubble in the artificially elevated Bond Market (resulting, for the past few years, in artificially suppressed interest rates). This Bubble too will break. So where to turn for Profit and Protection? In a Non-Manipulated Market, The Massive Monetary Inflation generated by ongoing QE would generate Great Price Increases in non-Fiat (i.e., Real) Money – Gold and Silver. But as regular Readers already know, Fed and other Central Banks, i.e., The Cartel (Note 1) have for years been conducting ongoing suppression of Paper Gold and Silver Prices, creating a Reverse Bubble, if you will. But this Suppression is creating a Great Opportunity to buy Physical Gold and Silver at Bargain Prices. But one should invest with one’s eyes open as to the likely course and timing and results of Cartel Intervention attempts. Consider that ‘James Mc,’ writing at LeMetropoleCafe, has become depressed because at the very likely prospect of a Takedown, but we see it as an Opportunity.
But even if that Prospective Takedown occurs, the Great Opportunity to buy Physical is enhanced. This is because stockpiles of Physical available for Delivery are rapidly depleting. Indeed, Gold shipped from Hong Kong to the Mainland nearly tripled to 855 tonnes in this year to September. And that is just one entry point to Mainland China. Looking ahead, the Prospects for The Great Launch Up beginning soon are increasingly bolstered by the fact that Physical Bullion Supplies available for Delivery continue to Deplete – A recent report from the Comex shows the Registered (Physical Available for Delivery) has shrunk to about 630,000 ounces. If only 2% of “longs” stand for Delivery, Comex Physical would be exhausted. And India is starving for Physical Gold
In sum, soon (see our Forecasts) we expect The Great Launch UP (of Both Bullion and the Mining Shares) to begin. In sum, these Bubble-Threats and Opportunities are the result of The Private, For-Profit Fed’s self- interested policy of protecting their Owners/Mega-Bank Clients above all. Thus it is no surprise that former Director of the OMB, David Stockman recently said (11/14/13) that the “lunatic” policies of The Fed were engineering a global “collapse”. But that Prospective Collapse begets a Great Opportunity. Best regards, Deepcaster Note 1: 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. |
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