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Gold: Pros vs Amateurs. Are U Onside?

Stewart Thomson
Feb 9, 2010

1. Time to Rise and Shine Mr. and Mrs. Gold Community. Today is Translation Day. With a focus on: Liquidity Flows. George “Gold Bear” Orwell has been making the rounds in the media. I think the gold community, if nobody else, needs a translation of some of these statements. Here’s one: “Futures traders increased bets to a record level that the euro will decline against the U.S. dollar on concern budget deficits in Greece and other European nations will hamper the region’s economic growth…” -Bloomberg News. Feb 2010.

2. That is one side of the trade. The price-chased side. The over-leveraged side. The “positions funded by loans from the banksters” side. For every buyer there is a seller. The other side of the recent orgy of Euro shorting is held by the banksters. They also hold a record size position.

3. On the Long Side. You get to decide who is better capitalized, who has real inside information, who just had a 24 central bankster meeting with fighter jets for security. You get to decide which side of the trade you think is the better bet. Let’s see now, fighter jets and central bankster printing presses versus leveraged price-chasers. Sounds like a fair fight...

4. Secretary of the Treasury Tim “Tiny Kahunas” Geithner is probably correct that America will never lose its Triple A credit rating on the T-bond. They’ll just mark the rating to model and redefine AAA as what was formerly defined as Triple D. Good work, Tim. I’ll notify your boss, President George Orwell, that you continue to be a solid team player.

5. The banksters love pushing one side of a trade in the media, while they buy the other side. They love quoting statistics from the previous bear market, and saying that current statistics are “not average, so prices might revert to the mean”. They always “forget” to mention that was the previous bear mkt mean, not the previous bull mkt mean. The current game is to say, “what if the fundsters add to shorts, that is negative for gold, isn’t it, sell now!” Who is going long on the other side of the fundsters’ shorts? Yeah, that’s right: The Banksters.

6. Bloomberg notes that gold’s open interest at the comex hardly fell at all on Friday. We’re supposed to be little gold bear morons and march to the liquidation cliff and jump off. We’re supposed to assume the unchanged open interest is negative for gold. That’s the mindset the banksters want; a bunch of terrorized gold community lemmings in total liquidation mode while they operate like vacuum cleaners sucking it all in for themselves. If the open interest never fell, then what happened late last week was a massive handoff of gold long positions from the fundsters to the banksters, while the banksters handed the fundsters a whack of shorts to baghold. The banksters are dangling all kinds of gold bear analysts in the media to scare you out of your gold. “This is a downtrend from 1225!” “It’s going to $820 in 2014”. Really? Are you sure it isn’t 820.01 or 819.78? That guy doesn’t know where gold is going to be in 2014 anymore than you or I do.

7. A parade of bank analyst puppets are starting to step forward with “short gold now” recommendations. Thanks, but I already did, into strength into 1225, and now I’m booking profits. That’s what you do into price weakness: Buy. Whether it is buying back short positions or adding longs, you buy. The banksters are on the major gold buy here and now, and they are accelerating their actions, both in the market and in the media.

8. Reminder: I told you all into 1225 to get out of the fantasy that the gold correction would be enjoyable. I termed the feeling you and I would have as: “the banksters pouring a garbage can on your head”. Not the feeling of sitting in a gold restaurant ordering up a selection of “quality juniors” from a pleasant waiter. Buying involves discomfort, and to operate professionally, to operate profitably, you must buy less than you think is rational.

9. There are two main reasons not to buy pain, but to buy discomfort. First, you might liquidate if you can’t take the pain, even if you have no leverage. Second, even if you can take the pain, you might be severely wrong on your fantasy gold price bottom call. Huge price air pockets can then develop. Price drops way below your last buy, then rises up close to your last buy, or just above it. That, dear investors, is the banksters at the top of their game. Taunting you. How does that feel? You could wait for years, then price rises finally back to what you paid, and just sits there. You are helpless. In the end you are measured by your response to price, not your ideas or projections. The less ability you give yourself to respond, the weaker you make yourself. Live for today. Diversify over price, not over a thousand stocks, all based on the same price of the underlying asset. In this case the underlying asset is: Gold Bullion.

10. I see two clear “gold lines in the sand”. The bulls, in my opinion, are generally a little too obsessed right now with calling the exact bottom of this intermediate trend down. The bears on the other hand, are giving themselves way to too much credit for their “wisdom”, which is nothing more than “Me see gold price fall! Me predict price fall again!”. (“and me buy nothing while banksters dangle me as lobotomized puppet while they buy”, they forgot to add that minor detail, that minor reality.).

11. I’m getting emails about a lot of very minor positive action on the gold price, which is good, because we all need to do what is necessary to stay positive mentally, but let’s not take that dangerous step of making those minor positives anything more than they are: confidence boosters. Not final-bottom guarantees.

12. The only guarantee I’ll give you is that if you’ve bought zero gold or gold stock into this $180 of price decline you are not acting professionally.

13. Let’s take a look at the charts. Starting with gold’s relatives. The Blood Relatives. While gold land is focused on turfing their gold, I’ve been buying more bullion, including physical today, and buying food. I don’t mean packing food in a closet, although, yes, I’ve done that. I’m talking about buying the commodities of corn and wheat, either in the futures mkts with zero leverage or the ETF markets. "I’ve done both." If I write about something, I’m doing it myself - In The Market - not dripping a wet ivorytower noodle onto your dinner plate and telling you it’s the best apple pie in town.

14. You may be surprised to learn that the banksters are net long the wheat market. You shouldn’t be. Professionals buy weakness, they don’t call bottoms, and the banksters are the ultimate professionals in their market actions. Below is a look at the wheat chart. I bought into the lows, on the day of the extreme low. I’m prepared to buy all the way to zero. If the price of food goes to zero, it’s because: There isn’t any. Think about that before shorting wheat because the Gman tells you to. If you have the trading skills of a top pro, sure go ahead, play timer, play flipper. A few of you will make money, most will blow up. For the few that make money, I don’t believe you’ll accumulate any real wealth from the market with those tactics. One of you will. Congratulations to the lotto winner. For the rest, stay focused on buying wheat into weakness, with zero leverage, selling a portion into strength. But do not your core positions! Don’t sell your hard work for pennies.

March Wheat Chart

15. What I see in that chart is very very positive. Look at the momentum indicator. It’s not just a non-confirmation. It’s surging higher. The MACD is touching, verging on a buy signal.

16. Now, here’s the COT report. We all know the Monsanto boys are not banksters, right? Wrong. Rumours continue that Monsanto and Dupont and Dow chemical are on the major buy in farmland. Look at the long position held by the commercials in the wheat market. They are net long. And so am I!

Latest Wheat COT Report

17. The banksters are net long 50,000 contracts of wheat, wheat they bought in the discomfort zone, the zone of price weakness. Now we’re getting some very very positive technical signs. Are You Prepared, now, for upside price action, yes or no? I am. Prepared to ring the cash register!

18. The action is the same in the corn market. Banksters have been on the buy while the leveraged idiots have been on the bail and piling on shorts into price weakness. “The closer the price is to zero, the more risky it is. I should short it!” – Joe Leveraged Corn Trader. My message to the fundsters shorting corn: Hope you had fun, but here come the banksters’ kiddies: Time to be shucked.

19. Looking at oil, the commercials have been piling on longs into the current price weakness. Here’s the most recent cot report.

20. Cot Report For Oil

21. Here’s the oil chart for the past six months. Note the upturn in momentum there as well. Not the surge we see in wheat, but very very positive nonetheless. MACD is into the floor. Again, if you freaked out when the 72.50 support broke, now you are in flip-flop mode, “should I be short, long, out, who knows!”. There’s no possible way you can mentally sustain buying price when it blows out support levels and that weakness is accompanied by bigtime bear news, if you engage in huge price plops, bottom-calls. You have to buy the discomfort in a size you can manage. Six Month Oil Chart

22. Finally, it’s King Daddy time. You’ve heard from the pinhead deflationists. You’ve heard from the media. You’ve heard from your neighbours, your dentist, you’ve even had your dog tell you how the fact California cant properly raise 28 billion is a minor detail, while the Greece molehill is shown to you as the mountain of the financial universe, thru the Hubble Telescope the banksters just purchased, for your benefit of course. You’ve heard all about the “big” US dollar rally.

23. Now let’s hear from Doctor Reality: The COT Reports. The picture of the real-world liquidity flows into and out of the US Dollar, the KingDaddy of national govt toilet paper rolls. The COT report, to remind you all, shows record shorting by the banksters, record buying the leveraged fundsters, using money loaned to them by the banksters. Gee, it’s going to be real tough to figure out how the banksters want this trade to go. Here’s the USD cot report one more time: USD Cot Report

24. Gold is going to go parabolic against all the world’s toilet paper, and the only question is whether you are hanging on to your gold and buying more into price weakness, or whether you’ve defected to team “I want my mommy”, Team Gold Bears. The banksters are telling you all about the fundsters’ US dollar positions just put on, all about Timmy’s plan to have Moody’s mark the T-bond credit ratings to model A. Didn’t Ford stop producing that thing like a hundred years ago? What the banksters have “accidentally” left out of their non-stop media pump sessions is the minor detail that they themselves are maniacally shorting the US dollar. Here and Now. They are likely loading up on gold long positions at the same time. So am I, here and now. Focus on maintaining and adding to your positions. Leave the bears to hang out at the Gold Dump. Give gold a good dump, there they come, here come the bears. Leave the bears in the garbage dump. You stay with gold bullion. I am!


Feb 9, 2010
Stewart Thomson
Graceland Updates
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

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