-- Posted 30 May, 2008 | | Discuss This Article - Comments:

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

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Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

That there is a Crisis in the Silver Market is clear.

Deepcaster recommends that all those who do not believe there is such a Crisis try to take delivery of Physical Silver.

Attempting to take delivery of Physical Silver will likely provide a dose of Reality Therapy.  Delivery delays are common, with delays for delivery of 100 oz. Bars running 6 to 8 weeks, for example.

Consider the following:

Already the U.S. Mint has sold twice the amount of Silver Eagle coins as it did last year, and 2008 is not yet half over.  The Mint is rationing the available coins to just a few dealers.

The demand for Silver Eagles is much greater than the supply.  Therefore, there are delivery delays, otherwise known as shortages.

Silver coin dealers around the world have depleted or exhausted inventories.

A major mint, the Perth Mint in western Australia, and a precious metal refiner, AGR Matthey, have, for example, made some disturbing disclosures (and thanks to Jason Hommel for identifying them):

• The AU $880 million of precious metals deposited deposited by Perth Mint Depository clients (note 17) was used in operations by Gold Corporation as inventory ($481 million – Note 8b) with the balance in the refining operations of AGR Matthey (Note 8a).

http://www.perthmint.com.au//documents/Annual%20Report%202007.pdf

page 81, bottom

(Does this not indicate that the Perth Mint has loaned at least some of its Clients’ metal out?)

• The Perth Mint owns 40% of AGR Matthey.

http://www.perthmint.com.au/about_us_the_perth_mint_group_structure.aspx

• “AGR Matthey has well-established relationships with the major bullion banks and regularly supplies to them on a contractual basis.”

http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/refinery/ value_added_bullion_product/

• “An innovative treasury is as important as refining efficiency.”

Http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/about_us/ about_agrmatthey/

• “Treasury undertakes a leasing program to either lend or borrow precious metals within the terms of a lease agreement between AGR Matthey and approved counter parties.”

http://www.agrmatthey.com.au/wps/wcm/connect/AGRInternet/agr/treasury/services/

Thus, not surprisingly, Perth Mint clients have experienced delays in receiving order of “Physical” from the Mint.  Perth Mint explains these delays as follows:

“NOTE

From:     Liselle Carroll

                             To:   XXX

                   Sent:  5/23/08

Subject:  purchase of silver bars

Hi  XXX,

Our metal is state government backed.  There isn’t a shortage and the delay is only in production. 

Kindest regards,

Liselle Carroll,

                   The Perth Mint, 310 Hayes St., East Perth, Western Australia 6004”

How can there be no shortage at the same time there are delays?  Could the delivery delays experienced from the Perth Mint be because the Perth Mint does not have on hand all of the AU $880 million in precious metals deposited by Clients?  Or perhaps because some of that “Physical” has been lent out to major bullion banks via … AGR Matthey?  Perhaps, ultimately, for Market Manipulation by The Cartel*?

And what are these “production delays” anyway?  If the Perth Mint actually has Silver on hand in the form it was sold to investors, (e.g. bullion bars) why would they need to be “produced?”

Or perhaps there are delays because they simply do not have The Physical?  We do not know the answers to these questions but we do know enough to seriously question whether The Mint actually has the full AU $880 million of physical precious metals on hand.

Consider moreover, in the face of the shortages and delays this year in delivering actual physical silver, whether bullion or coins, (and given the horrible fundamentals in the economy and the financial markets) what should be happening to the price of silver?  It should be skyrocketing, right?

But, on the contrary, however, the price of silver peaked in mid-March, 2008 at around $21 an ounce and was violently taken down in the last week of March, and appeared to bottom at nearly $16 an ounce in early May.

And yet all the while that Price Takedown was occurring, there were great and obvious shortages in the supply of physical silver around the world.

So what gives?  That dramatic two-month Takedown in the price of silver from mid-March to mid-May can only be adequately explained by one factor:  Intervention in the Silver Market via capping and taking down the price of Silver by The Cartel* of Central Bankers and their Allies.

________

*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers and Allies to read Deepcaster’s January, 2008 Letter containing a summary overview of Intervention entitled “Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast” at www.deepcaster.com>LatestLetter.  Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation.  Virtually all of the evidence for Intervention has been gleaned from publicly available records.  Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”

____________

Indeed, the price of Gold suffered a similar fate over the same time period.  Those who doubt the existence of manipulation of Gold and Silver prices by The Cartel, and of many other major markets for that matter, should consider the research provided by Deepcaster in the aforementioned article. 

But what of Silver’s (and Gold’s) fate in the near future?  At the beginning of May Silver (and Gold) began to stage a modest comeback.  Pre-Memorial Day, Silver appeared to bottom by finding support at the 200-day moving average, and then to break out and up. 

Yet, even given these technically bullish pre-Memorial Day breakouts, another Cartel* Gold and Silver Takedown appeared beginning Tuesday, May 27, 2008. These Takedowns were implemented even though the ragingly bullish fundamentals driving the price of Gold and Silver skyward are still dramatically in existence.

Just consider some Silver (and Gold) bullish fundamentals:  the rampant printing of paper currency (M3 increasing at over 16%/year), dramatic price inflation in the commodities markets, and high oil prices and food prices, the deepening U.S. housing crisis and Structured Investment Vehicle crises, and CDO crises, the intermittently frozen credit markets, and the pathetically weak U.S. Dollar.  The list goes on and on.

Yet, even as these crises came to a head in March (culminating in the collapse of Bear Stearns), Silver and Gold were dramatically taken down. And though these crises continue, Silver and Gold were taken down again (as Deepcaster earlier forecast) beginning May 27, 2008. Thus, those holding Paper Silver, at its highs in early March were understandably disappointed in the subsequent two months of price decline.

So what happens next?  And what is the Precious Metals investor to do?  Apparently The Cartel* has begun to implement another Takedown, but will they succeed? Or are the fundamentals and technicals simply too bullish, with the result being that Silver and Gold will soon launch to new levels?

And how can one profit from these (thus-far-successful) Cartel Interventional Actions?  [For a detailed response see Deepcaster’s Latest Alert posted at www.deepcaster.com and its Alert of 12/23/07, “A Strategy for Profiting From Cartel Intervention in Gold, Silver, Crude Oil and Other Tangible Assets Markets,” located in the ‘Alerts Cache’ of www.deepcaster.com.]

The Short Answer is that there is A Strategy for avoiding the Perils of Vulnerable Paper Silver and profiting both during Price Takedowns and Price Runups.

The basis of The Strategy lies in segregating one’s Precious Metals investments into two categories:  Core Position Assets and Speculative Position Assets.

One should add to one’s Core Position near interim bottoms of Cartel-generated Takedowns.  The bottoms are approximately determined by paying close attention to the Interventionals as well as the Fundamentals and Technicals.

In addition, one key to maximizing profit and minimizing loss is the timing and the character of additions to one’s Core Position.  That is, the form of Silver acquired near the interim bottoms of Cartel Takedowns is crucially important and should be very different from, for example, speculative short positions in Silver acquired near Interim Tops (see Deepcaster’s article above), or speculative long positions acquired near interim bottoms.

Regarding one’s speculative positions, the key is going long near interim bottoms of Cartel-generated Takedowns and going short near interim tops.  The interim tops and interim bottoms can be estimated by paying close attention to the Interventionals as well as the Fundamentals and Technicals.  Again, the character and timing of acquiring one’s speculative positions is key.

Finally, perhaps the most important key to protection and profit when adding to one’s Core Position in Silver is to acquire Physical Silver Only!

That is, when adding to your Core Position of Silver at interim bottoms:

1)     Add physical Silver only! (low-premium-to-melt coins preferred for most investors)

2)     Take delivery yourself, and

3)     Do not allow banks or other entities to store your Silver Cache for you!

The Silver Lining

Acquisition of Physical Silver Only, and taking delivery, and providing storage yourself, nullifies the possibility of some repository or other entity lending out, or otherwise playing other games with “your” silver.

Personal possession of Physical Silver also removes that Silver as a vehicle which can be used by The Cartel* for Price Manipulation.

Implementing such a strategy leaves you with a growing Silver Hoard with a Silver Lining!

The Silver Lining:  the more Physical Silver possessed by private owners, the less Silver is available for price manipulation by The Cartel.

In sum, The Crises of failed and failing deliveries in the silver market can be Profitable provided one adopts the aforementioned Strategy for coping with and ultimately defeating the biggest player in the Gold and Silver markets - - The Cartel.  [To allow the reader to compare the aforementioned “Silver Strategy” with the strategy for Gold, Deepcaster provides excerpts from his earlier published analysis of the reasons for holding one’s Core Position in Gold in Physical Gold**.  Note that The Cartel has over $1 trillion in derivatives (according to a recent BIS Triennial Report of the Bank for International Settlements - - the Central Bankers’ Bank) which are available for price manipulation of Gold alone.]

______

** So what about Gold held by banks and other financial institutions?  Many investors who hold Gold in unallocated accounts think that that Gold actually is physically present in that financial institution.  Well, it may be and it may not be.  Consider that “unallocated gold is the most widely traded form of gold in the world.  When this gold is in your name but unallocated to you, the regulator considers it part of a bank’s liquid reserve” (emphasis added) according to The Mogambu Guru.

So one net effect of unallocated Gold “ownership” is that the bank or other financial institution, which is the “custodian” of “your” unallocated Gold, is free to “count” it as part of its Reserves. 

Another way at looking at this stunning fact is “this makes unallocated gold an attractive way for the bank to maintain its regulated liquidity, because you have paid for your gold, and the bank is free to use your money, while it is also able to add your unallocated gold holding to its own reserve.”   http://www.dailyreckoning.co.uk/gold-investment/to-trust-or-not-to-trust.html.

And, even more outrageous, some Banks are apparently charging storage fees on clients’ Gold (and Silver) which has been counted as part of the Bank’s reserve, or perhaps on Gold (or Silver) which doesn’t even exist except on paper.

“I found it appalling that Morgan Stanley would claim to store silver that didn’t exist and even have the chutzpah to charge for the storage…In fact, in the court documents summarizing the proposed settlement, one of Morgan Stanley’s defenses was that they were not doing anything unusual by charging storage on metal that didn’t exist, as this is a widespread industry practice.”   Ted Butler in http://www.investmentrarities.com/10-23-07.html.

______

Given all this, one wonders why anyone would want to hold their Core Positions of Silver (and Gold) in any form other then Physical.

Deepcaster

May 30, 2008

DEEPCASTER LLC

www.deepcaster.com

DEEPCASTER FORTRESS ASSETS LETTER

DEEPCASTER HIGH POTENTIAL SPECULATOR

Wealth Preservation         Wealth Enhancement

Financial and Geopolitical Intelligence

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