Profit, Protection Despite Cartel Intervention -- March, 2012 Update

"Our Products -- Forex and Gold Services > Interventions"

The Bank for International Settlements (BIS): An Introduction

Jean-Franois Rigaudy, Head of Treasury, June, 2008

Remarkably, The BIS, The Central Bankers' Bank advertised in June, 2008 that one of its "Products" was "Interventions" in the Gold Market.

This came as no surprise to the Gold Anti Trust Action Committee (GATA uncovered the BIS advertisement) nor to Deepcaster, nor to others of us who have for years contended that a Cartel* of Mega-Banks (including those who own the private for-profit U.S. Federal Reserve, and Key major Eurozone Bankers) is engaged in an ongoing campaign to suppress Gold and Silver Prices.

Market Manipulation (and not just of the Precious Metals Markets as we shall see) provides a Challenge to Investors, and a Threat to their Wealth, but also an Opportunity to Profit and Protect, as we explain.

First, reviewing several facets of Manipulation is crucial to understand the variety of effects, and how to Profit and Protect from them. (See e.g., Notes 1 and 2 below) Consider...

"There is a whole mammoth industry out there - the big banks, hedge funds etc. - whose whole purpose is to make money from money and the more you have in the first place the easier it is to do. Not by producing anything useful, but through manipulation of prices through short selling in huge volumes to drive prices down, buying on the turn, allowing prices to rise back up, taking profits, then more short selling to drive prices down again and the cycle continues. This works better in a bull market, which gold has been in for the past ten years or so.

"The amount of money that can be devoted to such exercises is almost beyond belief - and the regulators turn a blind eye to such blatant manipulation that works strongly against the small or even medium-sized investor in favour of the really big ones. If there is anything that may bring the capitalist system crashing down it is, perhaps, the power of big money to rule all our lives...

"Sometimes they get it wrong... as happened with the subprime mortgage fiasco (basically another financial institutions' manipulation affair). But do the people who caused the problem in the first place suffer - for the most part no."

"Opinion: Gold price manipulation - probably. Conspiracy - a matter of semantics!"

Lawrence Williams, Mineweb.com, 6/29/10

Another Essential to understand is that The Fed is a private for-profit entity, owned by Global Mega-Banks, some of which are headquartered in Europe. David Stockman explains some of the Negative consequences of this mega-bank Cartel for Investor Citizens around the World.

"We have had a Fed engineered serial bubble, that has created the appearance of wealth, that has caused people to consume beyond their means through borrowing, and that has flushed the income and wealth of our society up to the top, as a result of the Fed turning the financial markets into a casino. These are pure casinos, they are not capital markets, they are not adding to the productive capacity of our economy, they simply are a bunch of robots trading with each other by the millisecond as a result of the Fed giving them zero cost overnight money, and giving them all kinds of hand signals on what to front-run.

"The Fed is destroying prosperity by funding demand that we can't support with earnings and productions causing massive current accounts deficits and the flow of funds overseas and the build up in China, OPEC and Korea of massive dollar reserves which is a totally unsustainable, unsupportable system, and we are coming near the edge of where that can continue to remain stable."

David Stockman, Former Reagan OMB Director, December, 2010

Among the Mega-Banks holding huge Precious Metals and other Derivatives Positions are familiar names (JPM holds a Derivative Portfolio of some $70 Trillion Notional value per a recent report).

"This report (Q1 2010 Bank Derivatives report -- ed.) contains more evidence that a flood of paper gold and silver instruments are being used to divert investor capital away from the purchase of the actual physical metals in order to suppress prices...

"Two bullion banks, JPM and HSBC, continue to dominate the precious metals derivatives market with positions that are outrageously oversized compared to the underlying metals markets..."

"Manipulative Gold & Silver Derivative Positions Continue to Grow!"

Adrian Douglas, Marketforceanalysis.com, 6/26/10

Other Negative Consequences of Massive Fed and other Mega-Bank QE (Money "Printing" and Credit Facilitation) are identified by Bob Chapman and Warren Buffet.

"Banana Ben, like his equally pernicious predecessor, Easy Al, is trying to paper over declining US living standards by orchestrating asset bubbles. Ironically, Ben has driven the public into bonds and his QE 2.0 is now bursting the mother of all bubbles, the bond market.

"Soon Ben will be at his Rubicon. He must then either monetize everything or allow short rates to explode higher. This of course would precipitate the dreaded debt deflation that solons have tried to avert."

Bob Chapman, International Forecaster, 12/18/10

"Charlie and I are of one mind in how we feel about derivatives and the trading activities that go with them: we view them as time bombs, both for the parties that deal in them and the economic system."

Warren Buffet, February 21, 2003

Indeed, Ben's Fed has arrived at his Rubicon. The Time Bomb to which Buffet refers has started to explode. And The Fed and other central Bankers Massively Monetizing (i.e. printing/digitizing Money and Buying) Sovereign and other Debt, and thus create another Asset Bubble.

In the December, 2011 to February, 2012 period The ECB injected One trillion Euros' into the International Economy on top of all the Fed QE and other injections. And it is this Immense and Ongoing QE which provides Great Profit Opportunities as well as Great Systemic Threats, as we explain.

But it is important to understand that it is not just the P.M. Markets that are manipulated but Equities, Bond, and other Markets as well. Consider:

"...All told, the Fed has bought $20 billion worth of Treasuries in this fashion, $11.15 of which it purchased last week alone. With this kind of weekly money pumping in place, Bernanke and pals don't need to continue their "behind the scenes" games (like the options expiration week money pumps).

"Or do they?

"Unbeknownst to most investors, last week Ben Bernanke pumped an additional $11.05 BILLION into the system ON TOP of the $11.15 pumped via the POMOs. In plain terms, the Fed juiced the system by $20+ billion in a single week, bringing its liquidity pumps RIGHT BACK to QE 1 LEVELS.

"If you want to know why stocks have rallied in the last month (September, 2010; Ed.) this is THE reason. The economy isn't improving and the European Crisis isn't over. Nothing has improved. All that has happened is the Fed funneled money into the Primary Dealers who ramped the market.

"This is also the reason why the latest rally has almost entirely consisted of gap ups: the Primary Dealers ramp the market and then the computer trading programs take care of the rest.

"In plain terms, the market is being juiced higher, plain and simple. There is no fundamental reason for stocks to be rallying. Moreover, we have numerous signs of a top forming (mutual fund cash levels, insider selling to buying ratios, negative divergence, etc). Those who choose to buy into the farce of a rally are going to get what's coming to them. And when they do, it won't be pretty."

"The Only Reason Stocks Have Rallied This Month"

Graham Summers, Seeking Alpha, 9/28/10

"Today's POMO has closed, with Brian Sack monetizing $6.8 billion of bonds. This is a 3.5x Submitted to Accepted ratio as PDs realize various blogs are on their POMO funding needs and thus moderate their Submission amount. Yet what is simply surreal is that the second most monetized bond was PJ3, due 11/30/2015 [1]. This is the same issue that was just auctioned off by the Treasury last week! There is no longer even a pretense of avoiding direct monetization. It is time for Bernanke to go out and just buy bonds at auction. A one week turnaround is nothing less than criminal fraud which if anything is unnecessary and pads the PDs pockets. The result was so stunning it was not even included in last week's frontrunning guide [2]as nobody had a clue that the Fed could be so brazen in its flaunting of direct monetization. For just holding the bond a whopping 168 hours, PDs made a few million dollars. This is criminal. But who cares. Eric Holder has still to prove that he is anything besides an organ donor." (Ed. Note -- PD=Primary Dealer) (Ed Note #2 -- Which of these Primary Dealers are also Shareholders of the private for-profit Fed?)

"6.8 Billion POMO Closes: Brian Sack Monetizes $1.1 Billion Of Bonds Issued Last Week"

'Tyler Durden', zerohedge.com, 11/30/10

See also "Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer" 2/20/2012, Bob Janjuah, Nomura International Strategist.

Near the end of the Fall, 2008 Equities Market Crash (i.e. as of December 2008) there were about U.S. $548 Trillion in Notional OTC (i.e. Dark, Not Exchange Traded; thus traded mainly by Mega-Banks) Derivatives still outstanding worldwide.

Yet two and one-half years later (as of June 2011 -- the latest BIS Report date) that total was at about $708 Trillion which exceeds the all-time pre-Crash (June, 2008) High of $684 Trillion, according to the Central Banker's Bank, the Bank for International Settlements (www.bis.org, path: Statistics>Derivatives>Statistical Tables, Table 1).

As of the latest BIS reported figures in March, 2012 the Outstanding Derivatives Total stood at over $700 Trillion.

Clearly, a Conclusion that Systemic Risk (generated by Derivatives Exposure which existed, e.g., at AIG) has somehow been substantially lessened by the actions of the private for-profit Fed, the European Central Bank, the U.S. Government, or any other source, is wrongheaded.

Given the Massive Size and Impact of the $700+ Trillion in Dark OTC Derivatives, Investing or Trading without addressing the issue of likely Cartel* Market Interventions is a recipe for disaster.

Thus, we offer the following Overview and Update regarding The Interventional Universe to provide a Springboard for the Profits and Protection Strategy which we describe below. And in our 2011 and 2012 letters and Alerts, we offer a Buy Recommendations designed to profit from impending Forecast Mega-Moves.

As our regular readers know there is clear and convincing evidence that The Fed leads a Cartel* of key Central Bankers and favored Mega-Financial Institutions in an ongoing Regime of Overt and Covert Manipulation of the Precious Metals, Equities, Strategic Commodities and other Markets, as we demonstrate below.

*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.

This March, 2012 Article is the twelfth in a series of Deepcaster's work originally entitled "Juiced Numbers". It provides an Updated Overview and Summary of Market Intervention and Data Manipulation. It reflects Analysis of key recent Releases from (and actions of) the BIS (Bank for International Settlements -- The Central Banker's Bank), BLS (Bureau of Labor Statistics) and The U.S. Federal Reserve, as well as Highlights of recent Interventions, and updates regarding The Cartel* "End Game." For the sake of Brevity, we refer to our earlier articles in this series.

Bailouts and Stimuli have afforded The Cartel a whole panoply of additional tools for Market Intervention which they did not possess even five years ago. These tools make tracking "The Interventionals" ever more challenging. In sum, this report provides even more evidence of continuing Risk of Hyperstagflation and/or Systemic Collapse, and of the beginning of the attempted implementation of The Cartel's Nefarious "End Game" (see "Saving Investments, Sovereignty, & Freedom from the Cartel 'End Game' (1/13/11) in the 'Articles by Deepcaster' cache at deepcaster.com).

Moreover, it provides evidence that the private for-profit Fed's and its allied Mega-Banks' Policies and Actions are the Primary Cause of the Economic and Financial Crises from which we suffer today.

Therefore, Deepcaster suggests below a Systemic Solution and a Strategy for profiting and protecting from the Interventional Regime's actions and policies, and coping with its 'End Game' Strategy.

The Covert Interventional Context -- Overview

Deepcaster is periodically asked to explain, and provide evidence for, our view that a U.S. Federal Reserve-led Cartel* (apparently composed of the U.S. Federal Reserve, Major Central Bankers and key Primary Dealers manipulates a wide variety of markets. [Apparently one "Operational Vehicle" through which The Cartel works is called "The Working Group on Financial Markets" established after the 1987 crash, and which is often informally and widely referred to as "The Plunge Protection Team" or PPT.]

Essential to maximizing profits and to avoiding losses is to recognize that the Fed-led Cartel* manages two complementary Interventional Regimes -- one quite public, and the other dark one, at least as powerful, covert. Thus, a critical key to profit and loss is tracking the "Dark Interventionals" (which leave "Tracks" so to speak) as best one can, as well as the public ones.

Moreover, whether an Intervention is Overt or Covert is often a matter of degree. Overt Intervention often has a Covert aspect (e.g. how was that TARP Bailout Money used and who received it?), and Covert ones are often difficult to detect, but nonetheless can often be tracked using publicly available information. Consider for example, the Graham Summers Quote above.

It is important to note also that by "Cartel Intervention" we do not (usually) mean that the Cartel totally controls prices in any particular market, at all times. Various markets are affected in varying degrees, at varying times, by Cartel manipulation attempts.

In markets such as the (relatively) Small Cap markets for Gold and Silver Bullion and especially Securities, Cartel manipulation attempts can have much more impact and are, at times, and for certain time periods, tantamount to control. But although the Cartel's ability to manipulate certain of these Markets has been significantly weakened in recent months for reasons we explain in our Spring, 2010 and later, Letters, Articles and Alerts (e.g. "Profit from a Weakening Cartel, July, 2010 Letter") it is far from Insignificant -- note the $90ish one day February 29, 2012 Takedown of the Gold Price e.g. Here we do not focus on the Overt Interventions since they are described at length in various mainstream financial publications.

COVERT DIRECT INTERVENTION

Covert Direct Intervention to manipulate a variety of markets appears to be accomplished primarily via three categories of vehicles:

1) "Repo" Injections from The Fed (TOMO's & POMO's though POMO injection have become more widely reported recently)

2) Over The Counter (OTC) Derivatives (reported at www.bis.org, see above)

3) "Bailout" monies and Authorizations which Congress unwisely gave the Fed without requiring full disclosure or Oversight and, in particular, the TARP and TSLF (Term Securities Lending Facility) injections by The Fed, QE1, QE2, and the ongoing QE3, and other Vehicles such as the Primary Dealer Credit Facility (PDCF)

4) Debt Monetization and Credit Facilitation by other Banks such as the ECB and its $1 Trillion Dec. 2011, February 2012 LTRO Operation.

[For fuller Explanation, see Deepcaster's Article "PROFIT & PROTECTION FROM CARTEL INTERVENTION -- Including New Interventional Tools Description " (12/23/09) in the 'Articles by Deepcaster' Cache at www.deepcaster.com and for details regarding Cartel use of Repos, Derivatives, Bailout Monies and other Vehicles see the July, 2009 Letter.]

The Challenge: Determining the Impact of The Interventionals

The challenge for Investors and Forecasters is to determine where (i.e. in what Sector/s) and how (immediately, in increments, etc.) the Repo-backed funds and/or TARP/TSLF/Bailout QE/LTRO Funds and/or OTC Derivatives ("Interventional Funds") etc. will be employed. Deepcaster and those very few others, who monitor the Interventional Funding (and related Cartel and Allies' actions) to the extent that is feasible, make educated Forecasts of where and how such funds are likely to be used based on patterns, tendencies, and judgments virtually all of which can be gleaned or inferred from publically reported information. But no outsider can know for sure.

Those who doubt whether the Cartel has the capacity to manipulate the markets (and especially the larger markets like the multi-trillion dollar currency and bond markets) are invited to inform themselves about the U.S. $70 Trillion plus of OTC Derivatives at Fed Primary Dealer J.P. Morgan Chase, or U.S. $40 Trillion plus (each!) at Fed Primary Dealer Goldman Sachs and Fed Primary Dealer Citibank.

Indeed both Opportunities for and Threats to Investors are generated by Cartel Policies and the Massive OTC Derivatives positions. Consider:

"With Key Mega-Financial Institutions around the World claiming in 2008 that they risked collapse if they were not bailed out, one must ask which ones benefited from the $15 Trillion plus Increase in Gross Market Value of their OTC Derivatives in the six mon

by: Deepcaster LLC

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