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"Gold Reality Charts Update"

Stewart Thomson
July 20, 2010

1. “Sell everything, it’s 2008 again”. – a growing number of investors in the gold community, July 19, 2010.

2. A rally is coming, how long it will last, nobody knows, but we shall be selling into that strength from the most recent trading buying.” – GoldLion, world’s greatest juniors gold stock trader and substantial gold bullion dealer and trader, July 19, 2010.

3. GoldLion’s lowest fill into the July 7th lows of $1185 was around $1188. His highest sells as I wrote my article “rushing the $1215 line” were in the $1217 area.

4. Now we have new lows of 1178 (barely) and new buys for us, and new “sell everything” calls from many investors outside the community, and from within, sadly.

5. Strategy wins wars. Not panic or price plopped paranoia. I said yesterday, “It’s too late to short gold. Now is the time to cover shorts and buy longs, not enter new shorts or sell long positions.”

6. Even in the asset destruction vortex of 2008, there were massive rallies. Using my pyramid generator, you could have bought and sold right through the fall, starting at the top, and arrived at the bottom in a very solid position. Would you have felt discomfort as you bought? Yes. Pain? No.

7. If you believe gold is going to thousands of dollars an ounce, and you are 100% invested in gold, is that rational? That depends on what actions you engage in when gold falls or crashes. If you liquidate, or get mentally broken, or feel terror, then you hold too much gold. If gold is going to $2000, $3000, $5000 or whatever, if you hold 70% of the gold items you hold now, surely you must be satisfied with the gains you would make with such a position?

8. Don’t get enveloped by the Greed Demon. Because that’s what greed is, demonic. Greed is one of the most destructive forces in markets. Look at your portfolio. Are you ruling your portfolio, or is the greed demon ruling you? Hold a solid amount of gold and gold stock. Not a demonic amount, or you will destroy yourself. My view is that July 19th was more about the banksters taking positions from the fund and gold community, than about chart sell signals given on the breaking of $1185.

9. Two of the best volume experts in the gold community have noticed the dwindling volume as gold falls. Selling volume is drying. The risk in buying gold is decreasing. The lower the price of gold, the less risky it is to buy, and there are simply less sellers pressing on that price now, so the odds that gold is near a turn to the upside are growing, not falling. Gold has now declined approx $88 from the high. Those who buy only physical gold should be looking to make a move on the buy side here and now, as we’re near the $100 price sale that is a “mandatory” buy for physical players.

10. Instead of buying the sale, there’s a growing mob standing outside the gold store chanting, “raise those prices, then we’ll buy, raise those prices, then we’ll buy!” Madness. Look at all the grandmothers walking past you into the store to get their gold on sale. Get in there!

11. I’ve talked about the “gold plank”. The pirates used to have those they didn’t want around anymore walk a plank they extended off the pirate ship. The plank walkers walked over the edge and drowned.

12. Technicians are looking at the gold chart the same way. They see gold and silver like a long plank, a trendline, and it has broken so we’re all about to die in a repeat of 2008. We’re all supposed to get down on our knees in front of the paper money photocopier God, and worship it by handing over our gold because the paper money print rate might have slowed for a microsecond.

13. Here’s the gold chart with a look at the gold investors walking over the edge of the plank and bailing. By the way, I believe this is a cartoon painting created by the banksters, not reality. The banksters are master chart painters. I’ll show you reality in the next chart, but let’s first take a look at how most investors see the gold chart right now, and their gold investments, which is how the banksters want you to see the chart.
Gold Trendline Break Chart

14. The implication of the chart is that the uptrend is dead, so you should ignore the fact that the trillionaire banksters are buying all that is sold by the funds and the gold community (where did you think all the gold is going, into the garbage?), and ignore the fact that the gold store is holding an 88 dollars off gold sale. Just liquidate all your holdings now, or at least a big chunk of them.

15. Here’s my picture of chart reality, the one the banksters don’t want you to look at:

16. Gold Trendline Reality Chart Do you see where price is? 1180 is a key trendline buy point for gold. There is no broken plank. The chartists are too focused on the short term, drawing micro lines. The fact is that the trendline from 1045 is a key buy point now, and that’s leaving aside the fact that I don’t sell uptrend line breaks. I buy them. If the uptrend line from 1045 breaks, I’m an even bigger buyer, not a member of the mob in front of the gold store demanding higher prices before I’ll buy. The mob that broke out of the insane asylum?

17. The gold community needs to get a grip on the difference between fundamentals and market tactics. When price is rising, all we hear about is China, China, China. I’ve called the Chinese Gman a disgrace to gold. Unlike the relatively short “lifespans” of the Western World gov'ts, the Chinese gov't has been around for thousands of years. Yet all they have to show for those thousands of years is a few thousand tons of gold. Western gov'ts arguably have an excuse for being “gold babies”. Not China. Sadly, I wouldn’t be surprised if the private vaults of the leading Chinese bankster and Gman families have a mountain of gold in there, ripped off from their citizens. The game of keep the average citizen away from gold, and diluting your money out of gold, is not a Western gov't invention. It goes back thousands of years. The Western banksters are quick learners, however. Leaving all that aside, the fact is that the price of gold can be moved $500 in either direction, up or down, regardless of the underlying fundamentals, and that’s all the banksters need to separate most investors from their gold. We know all the bullish fundamentals for gold are not just intact, but stronger than ever. But what good are those fundamentals to you if you are whipped out of your gold on price weakness by the banksters? I know people who cheerlead gold as price rises, telling me all about how Chinese Gov't is so pro gold, how perfect and wonderful their gold juniors are, how everything is gold, gold, gold, forever! Then when gold falls, a bit, they are liquidating like there is no tomorrow, prostituting their gold, and themselves, to the paper money pimp.

18. 2010 is the time of the gold punisher. Not the paper money punisher. Sorry, but this is not 2008 and the Gman’s photocopy machine is not my God. British Petroleum may have an OTC derivatives portfolio similar to Lehman, but if it is allowed to implode with no quantitative easing, then the whole financial system shuts down and the gold community’s put options on the Dow make nothing. BP is more likely to be bought out by Exxon or another major, or by a consortium, and the OTC package shoved down the taxpayers’ throat, which is a gold ultra-positive, not a negative. Here’s another look at the gold chart, again highlighting the importance of gold 1180.
Gold Fibonacci Gridline Buys

19. Those are fibonacci retracement lines of the move up from 1045 to 1266. We’ve retraced 38% of that move. The bottom line is that 1180 is both a trendline and a key Fibonacci buy point. Add in the fact that gold often bottoms in july, and the $88 sale price fact, and you have four very simple reasons to buy some gold now. Four very solid reasons to buy some gold now.

20. I’ve been thru 2008. I bought junior stock into the day of the low, while at the very same time, personal friends of mine drove with their “couldn’t fail” junior stock certificates to their brokers and begged them to sell it all at the market, at 90% losses, without waiting to have the certs verified. That’s a prime reason why my junior stock is all in the black, while my own personal friends were wiped off the map. Picture a bankster sticking his boot out while my friends were on their knees. “Lick my boot”, says the bankster. Out came my friends’ tongues. How horrible, and how real. When you chase price, that’s where you end up, a bankster boot licker.

21. I’ve talked about the importance of managing your emotional state, and nothing works better than ringing the cash register on that front. The ETF SPDR Gold Trust (symbol GLD-nyse) may or may not be a fraud. Many in the gold community say it IS. I say: talk is cheap, action is everything. The SPDR gold trust might be a fraud, but it is highly liquid, featuring after and pre-market hours trading.

22. I stopped trading SPDR on the long side quite a while ago. With so many unanswered questions, the risk began to outweigh the reward. On the short side, that’s not the case. If it is a fraud, and is revealed as such, you could collect bigtime if you are short. On days like today, as you buy physical gold, gold stock, and high quality gold funds into gold $1180, your short SPDR component answers the question, “what happens if the gold trendline at 1180 fails?” with the answer, “you ring your SPDR cash register and use the profits to add to your physical gold position. It’s free gold!”

23. The gold community thought they could stop the bankster games in the comex if they took delivery of some bars. The problem with that strategy is twofold. First, the banksters have the most gold, so just because you place an order to buy, doesn’t mean they will sell. Sorry. Second, since they have the most gold, they make the rules. Their recent rule is that if you want delivery of gold, they can give you SPDR shares instead. So much for plan “gold delivery”. Strong in emotion, weak in performance.

24. What about the gold stocks, aren’t they finished if the Dow collapses? First off, there are many instances where the Dow has collapsed for years, and gold stocks have rallied against that collapse. Second, there is no evidence of an impending Dow collapse, quite the opposite in fact. The Dow moves on liquidity flows. The reality is that institutional money managers are warming up to the idea that the mid-term Elections are going to result in the status quo being locked in place. They view “more of the same” as more quantitative easing and higher stock prices. Gold stocks collapsed in 2008, and I made money in them out of that collapse. If it happens again, and I put odds at 20% at maximum of it occurring, I’ll make money again, and so will you this time. Last time I was buying gold stock after it dropped 15%, and that’s where the GDX is now, down about 15% from the highs. The GDX, here and now, has to be bought, not sold. The theme of the week, let’s not forget, is: Stay Rational !


July 20, 2010
Stewart Thomson
Graceland Updates
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