1. Five thousand. That's a big number. That is the approximate number of trading days of the 1980-2000 bear market in gold.
2. 5000 days. That's a mighty long time. Most gold investors never made it thru the 5000 days. Those that did had mostly held onto gold they bought at 700-880. Gold priced at 300 after five thousand days of torture.
3. What separates the women from the girls, we're told, is the price of their toys.
4. I would say what separates the women from the girls is the profits generated on the LONG SIDE of gold during that bear market. And the ability to make money during declines in a bull market without shorting gold.
5. What I've done is study every single one of those five thousand trading days. As I said I would. And as I did that, I asked myself one question: What action would my subscribers have taken on each and every one of those days?
6. What action could the gold community have taken on each and every one of those days? Could an investor march thru all 5000 days playing only the long side of the market, and emerge with Victory? Seems impossible. Gold fell from 887 to 300 over 20 years.
7. Daily consistent action is how the bankers make money. Buying weakness and selling strength systematically day in and day out, week after week, month after month, year after year.
8. If you are a business owner with significant assets, I would read what I am writing here very slowly, very carefully.
9. It is my view that hardcore business owners have a vastly superior understanding of risk and reward than 99% of money managers, financial advisors, and market traders. You know that every deal breaks down into a series of risks versus rewards. When placing your money, you know that those promoting "the deal" may think they have identified all the major risks, but that is never the case. The less money you have on the line in a deal, the lower the risk. Period. Each time you buy something, your total risk is the money you put on the line and no less. Your total risk is not the failure of the company to find or produce gold. Your total risk is not the failure of the US dollar to lose its reserve currency status.
10. Your total risk is: The total money you invested in the deal.
11. If you buy Jimmy's action-packed stock at price A, that is one deal, agreed? If you add a second stock, Jake's action-packed stock at price B, that is a 2nd deal, agreed?
12. Now I ask you to think about this: If you buy gold bullion at 900, that is one deal, agreed? If you then buy gold bullion at 890, do you have one deal or two? You can answer whatever you want, the answer of the bankers is: It is two deals.
13. Now, as a business owner, you tell me: What is more risky, buying $1000 of Jimmy's stock, and $1100 of Jake's stock, or buying $1000 of gold bullion at $900, and $1100 of gold bullion at 890?
14. If you can make money in the worst bear market in the history of gold, on the long side, buying and selling gold hundreds of times over a five thousand day period, you know what you have is not just a track record, but: Something Solid. Something where you can seriously consider placing some of your safe money. Not just your action money.
15. What we have now is the greatest bull market in gold in history. It may turn out to be the greatest bull market in anything in history.
16. What you want to think about, right now, is the fact that if you follow the bankers, instead of the fundsters, you are positioning your assets in a rock solid way. Using their tactics, you can look back over 5000 trading days of the worst bear market in gold, and see how you were standing there in January 2000 holding the flag of Victory.
17. I'm not even talking about shorting gold. Simply buying gold bullion using the tactics of the bankers over 20 years, a period of five thousand trading days. You know gold has the lowest risk of anything on the planet of going to zero. So your total risk is the lowest of anything you can invest in.
18. Now you know you can not only survive, but book vast profits in the worst bear market of all time for gold. Armed with confidence that even if the best gold analysts turn out to be dead wrong, you have nothing to fear from a gold bear market that could start today, or not for 50 more years. Nobody actually knows when the next bear market will begin.
19. I'm not interested in predicting bull or bear markets, I'm interested in preparing for them. With tactics that ensure that I am in a solid position, in full control of my emotions and money, each and every day of that bull or bear market.
20. Because the odds support vastly higher gold prices in the years to come, you can be highly confident of placing significant assets into gold bullion using professional tactics. Starting right now.
21. I built my pyramid generator to generate the systematic buy and sell points to carry you thru any and all bull and bear markets. My web app. fellow, who I call superman, is the one who has done all the technical work on it. He has a very substantial portfolio himself that he operates using the PGen.
22. The evolution of the PGen is only beginning. Superman is beginning tests now on all major markets. Very soon, we're going to be providing an ultra low cost service where you will be able to do it for almost any stock you want, backtesting the daily trades for many years.
23. Every day, there are a zillion deals for the business owner to choose from. You can try all you want to find a better deal than buying gold bullion in a pyramid formation. Go ahead, because that is exactly what the bankers want you to do. They want you to try buying gold. They want you to buy it in a price chased frenzy, then give up on it when it falls. Once you have a losing experience, they know you won't be back again.
24. She who controls the gold makes the rules. Not "she who controls the dot com stocks makes the rules." Not "she who flip flops in and out of gold like a hot potato makes the rules". Mr. Potato Head doesn't make any rules, ever.
25. For a business owner to place assets into a deal, that deal must be the best. It must offer the lowest risks and have those risks professionally managed.
26. Stoplosses are a risk management tool. They are not risk eliminators. Just ask any of the price chasing fundsters that watched 15,000 Comex gold futures change hands in 15 minutes at the open of the New York session Tuesday morning. In a bank-engineered smackdown. Change hands, yes. From the fundsters to the bankers.
27. The bankers buy gold on weakness. The fundsters and the specsters bail on gold weakness.
28. Who are the real gold traitors, is it the bankers or the fundsters? You tell me. Look at people's actions, not their words.
29. The gold speculators and funds talk a great gold talk. When it comes time to walk, well:
30. The latest COT report showed the fundsters and specsters busting out of gold as it fell to the supposedly disastrous level of 865, the "it's all over in our minds" level. Here are the facts for the latest COT report: The fundsters bailed on 3500 longs as gold careened into 865, and added 3500 shorts. The specsters bailed on about 2000 longs.
31. And the bankers booked profit on about 4500 shorts and added 4500 longs.
32. What happened next? Gold rallied $50, that's what happened. Do I think the bankers are thieves, users, scumbags, liars, frauds, and 500 other similar metaphors? Absolutely. But the cold hard fact is they supported gold at 865 while the gold community bailed in terror. If the bankers hadn't bought what the funds and specs bailed on, who knows how far the price would have plunged. I'm talking about hundreds of dollars an ounce.
33. The same thing the bankers did at 865, is exactly what they did with millions of 100 ounce gold contracts they traded over the 5000 day bear market, a 20 year period from 1980-2000.
34. Is your gold guru really a true friend of gold? Do you really know what their actions are in the market when gold falls? Look at the COT report. That is the real gold actions of most speculators and fund managers. Maybe your advisor wasn't one of the bailers. Maybe they were the exception. I wouldn't bet too much money on that. It is said that a picture speaks a thousand words. Here's a picture of a leading gold fund manager explaining his master back up the truck buy of gold, at 865:
35. And here's Jim Sinclair's view of the real actions of the fundsters and specsters in action on gold price weakness:
36. Back up the truck. Yeah, sure. More like: Load up the truck in a price chased frenzy, then on any real weakness race the truck to the cliff and drive off.
37. There's an old saying, "your enemy is your friend your friend is your enemy". You may want to keep that in mind when it comes to the actions of your "friends" in the gold market.
38. Many in the gold community are confusing the Chinese government with the Chinese people. You can join the Chinese govt fan club if you want. Don't send me a membership card, because I'll make it into a paper airplane and let the kids throw it into the fireplace.
39. Chinese people own gold because they don't trust govt. Their govt. The US govt owned 20,000 tons of gold in world war two, and I think that was too little. The population was 130 million at the time.
40. With a population of 1.3 billion, the Chinese govt holds one thousand tons of gold.
41. So, with a population of 10 times the US of ww1, and 20 times less gold, that gives them a commitment to gold that is 1/200th the commitment to gold that America's govt had in ww2.
42. Let me take this a bit further. One gold community rant chant is "Go China go. Dump all the US govt bonds, yeah! Those stupid Americans spent too much money, now their T-bonds are gonna be worthless!" Funny, I didn't hear the Chinese govt objecting to all the zillions of dollars Americans poured into China to buy all their products with that borrowed money.
43. I'm not joining ANY govt fan club, sorry. Especially a fan club that cheers on a machine that forced their own citizens all to ride bikes for 50 years. Oh but I forgot, the Chinese govt is the new and improved govt machine! It won't turn on us. It will never be like all the other govt machines that without exception have made their own citizens targets for 10,000 years, right?
44. You want a gold hero, go ahead, make it the Chinese govt. Here's my gold hero:
46. The price of gold falls, I BUY. The price rises, I SELL.
47. Be your own gold hero. You don't need the Chinese govt, to make you money in gold. Govt is a machine. And the bigger the machine, the more dangerous it is. The very last thing on the minds of the Chinese govt is your commitment to gold. They will destroy the Yuan the same way the US govt has wiped out almost 99% of the value of the US dollar, and the bankers will make hundreds of trillions doing it. All that is happening is the sign on the world's largest photocopy machine is being changed from "US dollar" to "Chinese Yuan".
48. The more things change, the more they stay the same.
49. Call me when the Chinese Yuan is backed by 100,000 tons of gold. Not 1000. Then I'll believe they are serious about a gold-backed currency. And call me when they do it in a gold bear market on price weakness, instead of wasting their taxpayer money chasing price in the biggest bull market of all time.
50. "Redeemable in gold" means ALL Yuan must be redeemable in gold. The entire supply. Not 1.6% of it. That's not a professionally applied gold standard.
51. The American Constitution is the greatest mechanism ever created to stop the evils of govt. It totally failed. The Chinese govt has no such mechanism. And their turn to ride the lead horse of power is only just starting. Better not get in the way, because you will be trampled like a cardboard box hit by a steamroller. The Chinese people are pro-gold standard. Not the Chinese govt.
52. Think about OPEC. And think about what the Chinese govt is doing with base metals like copper, zinc, nickel, aluminum. Picture OPEC times 500. Now you have the picture of the Chinese govt's "great plan". The plan is "Gimme it, it's mine!"
53. Soon we'll hear how the Chinese govt is going to protect their own citizens from themselves by "managing" the "peak metals" just like OPEC "managed oil".
54. Notice how all the space programs are being ground to a halt? Why open up mining in space with an unlimited supply when you can first play OPEC with the base metals on earth?
55. Let's see, we can allocate $10 trillion to the bankers' pockets, but we can't allocate 1 cent to mining in Space. Oh I forgot, there will be mining in Space, but 100 years down the road. And it will be with money loaned to us by the bankers. Money we give them to loan to us. How smart we are.
56. A note on T-bonds, another source of confusion. Ben Bernanke is not printing money and buying US govt T-bonds because "China is selling, nobody wants our bonds!" He is buying the bonds to maintain low interest rates. This is additional buying on top of the regular market buying of bonds, not a panic buy of the US govt bonds. Although, that is likely coming. If it comes full force, get ready for bread lines. Mr. Bernanke is trying to drive down the price of the US dollar, not the price of the T-bond. Believe me, you don't want to cheer for a real bear market in bonds. If you think you've seen a bear market in real estate and the stock market up to this point, you will get a spiritual experience if a real bond bear market happens.
57. In regards to the track record of the 700-1 pyramid during the gold bear market, here's one example: Applying $1M to a trading pyramid from 1980-2000, and that's not counting any interest payments from the vast amt of free cash, there was never more than $500k invested, and that generated about $130k in profits.
58. During a bear market that saw gold melt 60%. Add in the interest payments off the free cash, well, I'll get superman to look at that next. You might need a spaceship to see the numbers.
59. While the Chinese central bank is not a major driver of the gold bull market, there are some real drivers that are. Only a few websites in the world sounded the real alarm on OTC derivatives. If you are reading this article, you are on one of them. Back in the 2000-2003 period, OTC derivatives seemed like a non-issue. The OTC derivatives took the gold price to $1000, and may take it far beyond that level.
60. The next major driver of the gold price, which is arguably just as important as the OTC derivatives driver, is Pakistan. The issues there sit like a massive iceberg just below the surface of the water, with the good ship "Rose Colored Glasses" carrying thousands of stock market "expert" passengers for a direct hit. China, Israel, Iran, and India all may become major players as this drama unfolds, players in the ultimate game of high stakes gold poker. Who is the ultimate loser of the game is unsure. Analysts are bitterly divided. Will it be Israel? Others say the Taliban from Pakistan itself will be the Victor. Others say China is playing both hands and they will be the winner. My pick for the winner? Of course, there can be only one winner, and the winner I can tell you in advance, the winner is...
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Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am. The newsletter is attractively priced and the format is a unique numbered point form; giving clarity to each point and saving valuable reading time.
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