1. What a golden day yesterday was. Here's a quick blow of my own horn and then on to the serious analysis:
2. George Soros calls the US banking system, "Basically Bankrupt." He says, "The United States has a long way to go." The good news is the public has built a special George Soros language translation machine. Their machine translates "basically bankrupt" into "Buy anything the insiders liquidate, pay any price, and do it now!"
3. "A long way to go" is translated by the public to: "The recovery will take 2 more weeks, but widows and orphans should wait 3 weeks before investing all their money in stocks. Gold is going to zero, sell it all on the next hundred dollar decline."
4. High oil prices are now deemed great news for the stock market. $70 oil was deemed a disaster for the stock market just 2 years ago. Now we're to believe it is "fantastic news." All that is left for George Orwell Financial Markets now is to mandate mark to model accounting. After your stocks drop 90%, your statement will show a 100% gain. Of course, there will be the minor detail that you can't take out that money, and the banks will use it, for loans to themselves.
5. "And today, marked to model, the Dow soared 50%, and home prices were marked up 40%. Nobody has any food, suicides are pouring in by the hour, but those small problems aside, the recovery continues to beat expectations!" -Bloomberg News, 2012
6. A bull market takes no bear prisoners. The banksters are long gold. Not short. I've been saying this for years and few have listened. They use the COMEX to book profit against their physical gold and to take your gold. It is some of you in the gold community who are naked short gold, not the banksters. This is madness. There's nothing wrong with shorting gold, as long as it is against a much larger long position. I sell 2-5% of my gold into $50 to $100 of gold price strength. Not 5000% of my gold, like many in the gold community have done, hoping to "get in cheaper" later. The gold head and shoulders pattern has already broken out upside on the monthly chart. You've been told.
"As always the Goldmans of the world will end up the biggest winners long gold. You can bet on that." -Jim Sinclair, Oct 5, 2009.
7. Jim Willie has shown "respect" for the massive head and shoulders continuation pattern on gold. So have a few other writers, with the emphasis on "Few." It will be the Few that make large money on this move in gold.
8. Gold stocks have not come back like bullion has. They will. As gold approaches $1200 the urge to buy gold will become nearly irresistible and I'll have booked a boatload of profits all the way there. Gold bullion will have many more multi-hundred dollar corrections. But there is almost a "demand" that gold have such a correction now. I want you all to make money. That means a focus on the basics. The most basic thing you can do in the market is respond to price. Let me repeat that: Respond to price. By responding to price, ironically, you are predicting it most accurately.
9. Don't try to outsmart the banksters. You will fail. There's a reason why they are trillionaires, while most GCMs (gold community members) will barely break even on their gold stock portfolios even if gold hits $1200 on this move! I'm being swamped with two polar opposite types of emails. The first group is saying, "I'm short gold. The stock market should fall soon and gold should fall, right?" The 2nd group says, "I've recovered a lot of what I lost in gold stocks into last fall's crash, I should probably buy more now, right?"
10. Regardless of what the market does, both types of thinking are 100% wrong. The amount of capital you apply to your bets is critically important. You can likely salvage a short side bet on gold, provided you have a plan of action in place to add short positions at least to gold $1200. If you are following some broker or writer who is telling you to short gold with a tight stop, with a bunch of futures contracts in a tiny account, I'm sorry, but you are likely going to lose ALL your money. Picture a football field, with each 10 yard line marking off a $50 or $100 move in the gold price. That is the Gold Market. Think big, not small, or the banksters will make you small. You have to accept smaller wins and place smaller bets if you are going to succeed in the gold market. For those of you playing the long side, you also have to think big but act smaller in your trades.
11. The public wanted out of the stock market. They were terrified in March, and still are nervous, but not afraid. The market memory of the average investor is easily erased by price action. It's simply a matter of degree. Do you seriously believe that if the Dow shot several thousand points higher next week, the public would still want out? No. They would want IN. Most investors are "price slaves." Their so-called plan of action to lighten up on stock market holdings if the Dow rallies higher is currently being replaced with, "well, maybe things are a little better, I'll just hold on a bit longer." Another leg up on the Dow will see ten thousand excuses why they didn't buy at Dow 6500, and twenty thousand more reasons why "it just makes sense to buy now."
12. I want to give you a clear picture as to why the volatility in the gold market is about to grow incredibly. In the late 1990s, the banksters convinced the public that the stock market was "here to stay." Most of you were conned by the banksters. Those of you that weren't conned on the long side, probably lost money trying to short the Dow from 1995 in a series of failed price plops.
13. What is happening now is a similar situation to what the bankers did with the Dow, but with the US dollar, the world's largest market. This is their showcase play. Gold is the world's smallest major market. The bankers, who are massively long gold, are creating a situation where the public is being indoctrinated in the view that the US dollar is finished, a very similar view to the view the banksters created with their "here to stay" stock market of the 1990s. Most importantly, that view is now being pushed on, and accepted by, institutional money. It is being accepted because the banksters are really damaging the dollar fundamentally with their money printing games.
14. The key point is that the US dollar bear market is now entering the stage of a publicly recognized and PROMOTED bear market. As of right NOW, you will start to hear from business owner investor acquaintances about the US dollar bear market. These idiots will parrot the Bloomberg stories, nodding their heads up and down, completely ignoring the fact that the dollar is down about 35% from the highs set about 7 yrs ago. NOW they show up and notice there's a problem with the US dollar? We are in the later, most horrific stage of the US dollar bear market. The stage where the banksters begin buying USD with their infinitely deep pockets, while the institutions and public bail in terror and accelerate their doomed-to-fail leveraged carry trade scheme. Soon the banksters will be selling OTC derivatives on the US buck shorts, collecting, fees and interest before finally burning the thing into the ground via a new gold standard that will end the US dollar short party like a tomato hitting a cement wall.
15. It's very important to stay focused on what the charts are indicating and buying gold weakness and selling gold strength only. This is the largest bankster play ever, as they load up on the US dollars sold by the bustout dollar bag holders worldwide who follow the bankster propaganda that the USD is "finished for the long term."
16. We even have the head of the World Bank calling the USD a sell now, 7 years after the top. Then he says, "by the way, I've bankrupted the entire world bank, but I know the US Dollar is now in a bear market, 7 years after the top." Gee, I wonder why his bank is worthless. He says what he's paid to say to create WORLDWIDE panic and hysteria concerning the USD. The banksters are ready for the next stage of profit booking on their giant gold long positions as part of their plan to take over the major holdings of the US dollar.
17. They are looking to create fear in the US dollar market, and succeeding tremendously in terms of time and in terms of volume of fear. All it takes is for a tiny portion of the US dollars to make their way towards the gold market, a tiny portion of allocation by the institutions, and you have immediate mindblowing volatility in the gold market. There are hundreds of institutional traders handling vastly more money than that held by all the GCMs. If you are shorting gold, you must be prepared to handle price moves of $100, even $200 during a single day's trading.
18. My strongest suggestion if you ARE short gold, is that you move towards trades drastically smaller than you are trading now. Few investors alive today understand what is coming in the gold market. The gold community has called almost every single top and bottom wrong. There's one thing not a single person in the gold community has called wrong: The Big Picture. That makes you smarter in many ways that 99% of the world's largest money managers. Take your credit. It is due.
19. Once the banksters have pointed terrified institutions towards gold, they will then seek to alternate bullish and bearish news to create massive whipsaw action. The banksters' "grand slam" will be announcing that the "recovery" was in fact a warm-up act for their Trillion Dollar OTCD Main Act. "OTCD" being Over-The-Counter Derivatives. Once the economy is announced to be imploding via a truckload of new multi trillion dollar OTCD failures, the US Dollar bear market will not reverse. It will accelerate at hyperspeed. Gold's rise will create terror amongst institutional investors that financial Armageddon is upon them. They understand full well what happens to gold if they all charge in at the same time. Many will turn to gold stocks to appear less panicked than they are.
20. There will be no "gold rush" for the public. They will be too busy screaming for President Obama to print more money to save them from the financial black hole they are in. In the meantime, it is more important that you continue to watch the charts for REAL overbought and oversold conditions. Don't tell yourself excuses to buy or sell gold when the clear picture on the charts is not what you are pretending it is, what you want it to be.
21. I've heard a million reasons from many investors WHY gold will go up or down for the next leg. Who cares. Place your buys and sells in response to whether it IS up or down. All else will fail you.
22. Looking at the seasonal chart for gold courtesy of 321gold via Moore Research at www.mrci.com you can see what has transpired in the past September to October period, on average, over the past 34 years; a huge September rally followed by decline in October that retraces about half that rally. Look closely and you will see the average October decline began around the end of the first week in October. Today is October the 7th.
23. While the money I would personally bet that gold will decline from here is zero, I have been a seller into this strength to book profit, not to call a top. I certainly would not want to bet money that gold will rise in October. Remember 905? Remember when I was alone amongst the gold writers screaming "Buy"? I do. I remember how hard that was. Making Money is hard. Those signing up now for their free October gold market money in a price-chasing frenzy, well, this is like making work strategies on Friday night fuelled by alcohol. Anyone can buy gold now. On Monday morning at 4am when it's tanking, the price chasers are all hungover, too sick to buy. I don't forget what it takes to make money in gold and I hate losing money.
24. Here's a look at the 60 minute chart for the gold stocks ETF, the GDX-n, as of yesterday's 4pm closing. The indicators are all asking you to show some patience, for a few days, before buying gold.
25. I use the 60 minute chart to help technical traders time the entry and exit of positions, not to decide whether to buy or sell. I focus there on RSI, Williams, and shorter time frame Stochastics series. The Williams tends to oscillate between overbought and oversold over an approx 1 week cycle. It is the main tool I use to instruct technical traders to gain PATIENCE. You only need to wait for 1 to 3 days on average, for the indicator to move from overbought to oversold. Are You Prepared?
|Wednesday Nov 25, 2009
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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.
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 invetor 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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