The Great Gold Revaluation
Oct 5, 2010
1. Here we go again. Those who were shorting the stock market at Dow 6500 are now calling for a new bull market. Here’s my words to them:
2. You missed it. Dow stocks have tripled and even quadrupled off the lows of March 2009. For those who forgot: I bought Dow stocks hard into the day of those lows while 99% of the world’s investors were in the fetal position beating on the sell button with a hammer. Buy from the fetal position. Sell from the Friday Night at the club feeling you get when price is soaring.
3. This is crash season for the stock market, and for you, and it extends from the start of August to the end of October, approximately. Today is October 5th. Not Oct 31. I’m enjoying my financial holiday from the market while the market achieves zero. Are you?
4. Regardless of crash season, September is the worst month for the stock market in terms of monthly returns. So, what I do for you is perform a fast risk-reward analysis; I combine the low performance of September risk with the Sept-Oct crash season risk. Then I balance that risk against the potential reward of an average of half a percent to a 1% gain for you in that time frame in a good stock market year.
5. The bottom line? Well, you decide if a 20-40% possible blowout risk is worth taking, balanced against a solid 1% gain in your pension money.
6. The answer is clear. Waterford Crystal Clear.
7. When I was a broker I told my clients to take a financial holiday in Aug-Sep-Oct. Sit in T-bills, and if the market does tank, step in and buy, preferably using my pyramid generator to buy so your risk is professionally compartmentalized.
8. How many clients took the holiday? Almost none. Most gave me near-nonsensical reasons why Aug-Sep-Oct is actually buy season. Historically, the reason the stock market crashes has to do with farm crops. Today I would label the cause more of a bankster game than any crops factor, with the banksters enticing investors to chase price that has risen since the fall or January. By August stock market prices to infinity are “here to stay for the common man”, according to the banksters, who then, together with company insiders, hand off their stock market holdings to the proud new bag holders, who line up to buy, just in time to get obliterated after a few weeks of chest-puffing.
9. This year, the market has been effectively sideways since the start of August, and I find that I come back to the market extremely refreshed and vigorous after 3 months in near 100% risk-free mode. (Price risk-free, not system risk-free). Here’s a look at that sideways action: Dow HSR Risk Reward Lines. I’ve highlighted the horizontal support lines in blue, and the overhead horizontal resistance line in red.
10. Notice how little reward is offered buying now in size, particularly with the technical oscillators overbought and fading. Maybe we blast higher. If so, you should book more profit on trading positions bought into the lower blue demand line. If you are out, I don’t see the risk-reward ratio as skewed towards anything but high risk, so buys should be very very light, if you feel you “have to buy”.
11. I would argue that whatever trading or investing system you employ, the market game is 90-99% mental and emotional. Since 90-99% of the participants are lifetime market losers, that gives you a fairly good idea about the mental & emotional state of the average investor. It’s not good.
12. Debt was price-chased as well. “Home prices to infinity builds wealth” is like saying 1-1 = 1. Grade one math, and the answer is zero, not one. Wealth is purchasing power, plain and simple. When your home price is high, but your money fell more against all other items you need to live, you are not richer, unless you sell your house and downsize. You are poorer. Technology has mitigated a lot of the damage done by the Gman to the purchasing power of paper money, and I believe it will be technology that finishes off the Gman, at least temporarily, at least on planet earth. That’s likely 100 years away, perhaps much more. The Gman adamantly fights technology while pretending to embrace it because he knows he’s like the rotary phone or the wagon wheel. Obsolete. Ten bucks for electric cars, and ten trillion to the banksters with no strings attached other than buying Gman debt. Great plan to restart the economy, Mr. Gman.
13. There is no plan to restart the economy. The plan is to raise prices and burn Elmer Fudd’s paper money in the purchasing power blast furnace. The plan is well underway.
14. Mr. Fudd has been indoctrinated into the view that commodities are “risky”. The reality is that commodity prices are no more volatile than stock prices, and have a near-infinitely smaller risk of going to zero. Even within the gold and fund communities, many if not most investors have a view that commodities are “volatile” compared to other markets. That’s just not true. Food, energy, and gold/silver, versus Fudd’s junk bond “growth with safety” portfolio put on out of terror while liquidating stocks and real estate. You decide which is the more solid move.
15. You could have bought gold currency, instead of t-bills/cash every August, while stepping aside from the stock market and been pretty happy. To Fudd, that’s like telling him to shoot up with heroin. The sad part is, he’s the heroin addict, not gold, and price chasing-- --> is his drug of choice, his drug of addiction, and now, his drug of overdose. Gold Revaluation, ordered by the banksters, and now underway, will put the drug addicts in a financial coma.
16. Here at Graceland the game of Gold Tag continues. This morning we tagged gold 1330 and Silver 22.35, basis Dec futures. Kachingo! Click here now for a look at the GDXJ Chart.
17. I’ve talked about the importance of looking at the larger picture before you place buy & sell orders in the market. The current GDXJ chart is a key example. I highlighted the move out of the large symmetrical triangle as targeting the $37 area.
18. We consolidated in the $33-35 area with a smaller triangle-like move. You can see that highlighted on the chart. Many of those who liquidated into $1200, 1180, and 1156, went back on the buy as gold rose above $1240. They bought gold stock, and many are disappointed that their gold stocks has gone “nowhere” while gold bullion has risen.
19. The reality is that most gold stocks have risen solidly, and now the GDXJ is poised to attack new highs with this morning’s action in bullion. Will it happen? I think so, but the only thing I know for sure is that if it happens, I’ll be ringing my Gold Juniors cash register, and if it fails here, I’m back on the buy, and so are you!
20. By “coincidence”, we could be rising into the GDXJ $37 area just in time for the infamous Jobs Report later this week, a key bankster tool for separating gold community investors from their stocks and bullion.
21. Many of you are just getting -- -->back into the black, after being mauled from 2006 and again in 2008. Be very careful about dumping “non-performers” to chase what appear to be the hotter situations. I’d prefer to see you buy either the GDXJ or the ZJG.tsx than flip one junior's -- --> stock on weakness to chase another on strength. Juniors moves can come out of “nowhere”, and end with an even faster tanking.
22. Team Non-Confirmation is burning like rice paper in the banksters’ gold revaluation blast furnace. Gold was supposed to tank to $600 because Silver hadn’t confirmed gold’s new high. I said the Gold Punisher (of debt and paper money) is the leader, and Silver would confirm gold’s move. It has, and it may confirm gold’s all-time high as well, and move over $50 in time.
23. Gold stocks are micro ticks away on the major indexes from closing at new highs, and a battalion of them have already done it!
24. Here’s a look at the CRB General Commodity Index Chart. Note the massive consolidation in place. It’s a consolidation because price-- --> has risen up into a sideways pattern, for time, from the lows. The Great Gold Revaluation is beginning to spread its wings into the general commodity asset class. Are You Prepared?
Oct 5, 2010
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