Gold Neckline Play. Easy on The Trampoline
1. All hail the regulators. They've done it again. The banksters are masters at directing the public's anger at a red herring, while they operate a vastly larger robbery elsewhere. An example is bank manager salaries. The public is focused on those salaries, not on the trillions of dollars that have simply disappeared after being handed to the banksters, printed money now, to be paid in real money by your great grandchildren over the next 100 years. Should any taxpayer refuse to pay his share to the banksters, it's "hi ho hi ho off to the clink you go."
2. The bankster puppets, the CFTC, decided that ETF funds held "too much power" in the energy markets. So they are imposing "position limits." while the Chinese communist govt buys up every commodity it can touch without limit. US oil and gas funds, and the small investors invested in them, have been stopped from their evil mission to hold substantial amounts of oil and gas. I have to wonder how long it is before GOLD ETFs suffer the same fate. I can picture Ben "Dr. Pinocchio" Bernanke announcing with a straight face, "The greater good is at risk, these evil gold ETFs are a major cause of the lower dollar. This won't be tolerated." The current president of the United States, George Orwell, will chime in, "A change is needed, a new order of doing things." Translation: "Gimme your gold, it's mine!"
3. After the gold ETFs are sent crawling on their knees to the gold OTC derivatives buy counter, the banksters will solemnly promise them that every contract has a full 1% chance of being backed by real gold. Dr. Pinocchio will then likely ask his sidekick Tim "Gold Geyser" Geithner to raise the official price of gold, bigtime. From the current clown act of 40 bucks an ounce, towards two thousand an ounce. But only to help the greater good of America, of course. I'd like everyone in the gold community to now stand and give Dr. Pinocchio and the entire bankster team a standing ovation. For saving you and your families from yourselves. It is you that caused the US dollar to fall down by buying gold, not Dr. Pinocchio and his supersonic printing press and a congress engaged a making a movie titled "how we burned the constitution one amendment at a time." Ben, I apologize for buying gold. I understand it was me that ruined the dollar, not you. I'm truly sorry. I'll work towards passing a constitutional amendment that says, "Gold is evil."
4. Oh, I forgot, you already have that in motion.
5. The beat down on the energy ETFs is likely a test track run for the gold ETFs. As a result of the "position limits," the US natural gas fund has been forced to go into the OTC derivatives market and buy contracts for natural gas there. The banksters must be lying on the floor screeching with laughter as they watch this saga unfold. A saga they deliberately created. And of course only the banksters will be exempt from the energy position limits, big surprise. My suggestion is not to panic if you are a holder of the energy ETFs, but to do further buying via either smaller ETFs on Canadian exchanges, or via oil and gas companies and company ETFs. The banksters want you to go to the futures market, where most of you will be trading too big for your britches with margin, and they can stomp on you like an ant. Out of the ETF fry pan and into the futures margin fire is not a solution.
6. As I phased out my trading of GLD-NYSE, I switched to GTU-NYSE, which is co-chaired by John Embry, a solid member of the gold community, and former head man for Canada's most renowned equity fund at the Royal Bank. While nothing is 100%, the odds are very high that GTU (central gold trust), holds all or close to all the gold they claim to hold. Read their website. You can see the difference in the people you are dealing with. No it doesn't have the liquidity and tight spreads and trading hours of GLD-NYSE. That could change so there is zero liquidity, zero trading hours, and an infinite bid ask spread for GLD-NYSE, if the banksters' latest scheme plays out according to plan. GTU also trades on Toronto, providing an additional level of possible security for those concerned about what Tim "Gold Geyser" Geithner may have planned for your gold ETF trading on a US exchange.
7. While gamblers can continue to use GLD-NYSE for trading purposes, those who are using GLD to buy and hold gold as a replacement for physical gold, in my view, are making a major error and quite possibly a fatal one.
8. There are a number of analysts, within and outside of the gold community, who continue to speak of a gold "bubble" and focus on the Indian jewellery situation and coming mine supply increases.
9. It takes about 3 seconds for JP Morgan to create an OTC derivatives contract equal to an entire year's world jewellery demand. And it's been done already, many times over. Gold is no longer pricing itself as a commodity. The currency factor is fully in play. If OTC derivatives, today were marked to market instead of to model, all paper currencies around the world would fulfill Marc Faber's longerterm prediction for the US dollar: They would trade at zero. Gold would be then priced in the two other main currencies: food and guns.
10. But there won't be any marking to market, marking to zero, the net worth of the world. While the global financial system is totally dead and is being revealed to you as such in a planned multi-year game of stages, devised by the banksters. Bankers understand the big money is in milking cows, not killing them.
11. There are no real estate bargains. There is only a coming decade of real estate pain and agony. The Canadian income trusts are headed towards the scrap heap once the public realizes Dr. Pinocchio's bond buying attempts to reverse deflation have failed. Should his bankster bosses order Ben to abandon his buy the Tbond with printed money game, interest rates will scream higher and he will likely move forwards with the gold ETF scapegoats scheme.
12. I've gotten a number of emails from the gold community (GC) that President Obama is on the verge of handing USA sovereignty to a world government. I think that is coming, but it's far too early to occur now. Many years too early. I think those claiming it's about to occur are "showboating." The banksters understand risk better than the gold community does as a group. For them to move forward on such a plan now would invite total chaos. High ranking members of the US military would not be so keen on any handover and nor would millions of armed US citizens.
13. However, should new OTCDs (OTC derivatives) be revealed as dead, in size, as happened with Lehman, banks and stock markets would close. Many more citizens would be open to a global govt/currency solution if grocery stores and banks were closed and empty of food and money. Another major terror attack could also galvanize a need for a global solution.
14. The banksters love to see the gold community in panic mode. Panic leads to crazed action. Crazed action leads to a transfer of money. From the gold community to the banksters. Period.
15. This is the real deal. This is not 1979, the era of greed. This is the era of fear. Panic and rash action will not help you. It's important to understand that the risk of repeated bank and brokerage closures is high, and means you may not be able to trade stock for intermittent periods of time. For those of you who have ordered safes for your home, keep in mind that the companies you ordered from employ workers who could receive "invitations" from criminal gangs to supply them with lists of the customers. This is common practise in countries where the social order has broken down, even slightly. If I was a thief, I'd certainly want a list of safe buyers. A list that might include combination and key lock details.
16. Bank workers are also gang targets when the social order breaks down. Lists of thousands of depositors from major banks have been found in ravines and fields in countries where gangs have infiltrated the banking system. Kidnapping, extortion, and robbery of depositors is the main purpose of getting the lists, but good old identity fraud is also a popular play.
17. When the system is at risk, bank and insurance company workers may become desperate to assist other family members who are in dire situations. Desperate people do desperate things, and criminal acts are more easily justified when many people are in the same sinking boat.
18. My focus is on seeing the gold community increase reward and cut risk. Keeping 1-10% of your net worth outside of the financial system in multiple locations is your best insurance policy. Gold, cash, and stock certificates are my preferred vehicles to do that. Don't go crazy, just do a bit at a time each week. The percentage of insurance should suit your personality, but zero is a number that isn't very smart. In fact, it borders on insane. I suspect most of those who lost large money in the stock and real estate markets over the last 10 years are laughing as they read this, but it won't end well for them, and you can take that to the bank.
19. Or should I say, "you can take that out of the bank."
20. The US dollar rally. Most in the gold community know I've been a buyer of the US dollar in a pyramid formation over the past month or so. And yes, I've been ringing the cash register as the dollar reversed, blasting my largest buys made at almost the exact bottom in the black, and blasting a chunk of them into the cash register! AKA: Kachingo time! I play the dollar against the resource currencies, but it's in a vastly smaller size than my gold positions.
21. What I want to talk about right now, however, is the attempt to "call a top" on gold. Playing the dollar for a minor or intermediate move is a night and day different act from calling a top on gold. Let's say the dollar bears are correct, and gold falls to say $700.
First, the odds are 99.99% that there will be substantial rallies within such a decline. So if you buy in a pyramid formation into such weakness, many of your positions bought should quickly go into a major profit situation.
Second, let's get a grip on what we're looking at, a grip on what such a fall really is: Gold is heading fast towards a time of mindblowing volatility. $100 daily moves in price will soon become the norm. A $300 downmove, which 90% of the gold community is trying to analyse, is about to become meaningless. It will be 3 days of daily action in the gold market, with most of that $100 a day action on the upside.
22. I personally do not think gold is going to $700. But if it did, I'm a buyer all the way there. Absolutey without question. For that matter, many know that if gold went to one dollar an ounce, I'm a buyer all the way down. The point today is not about who can take how much pain. Those who think they are getting some kind of "superbuy" if gold goes to $700 are Dead Wrong. Things are about to get very very wild on the Gold Ranch. Even if you succeed in riding the $700 horsey, the banksters have 500 more plans to buck you off. If you think a move to $700 is big, you are wrong. This isn't a pep talk to hold you in if gold falls, it's a plain fact. You must widen your view of gold now, if you are a trader or an investor. Think vastly bigger. Think of gold falling to $700 as you would of a $50 move now. Focus on leveraged ETFs with gold stocks if you insist on using leverage, not gold itself. Remember, gold bullion is the primary target of the banksters, not gold stock. It is gold bullion that is used to control paper currencies, not gold stock.
23. I posted a "Gold Neckline" video on my website last night. I believe that because the head and shoulders continuation pattern is so classic, so near-perfect, it logically follows that the pullback to the neckline could also be perfect. When an upside breakout occurs from a head and shoulders pattern, technicians try to analyze where the pullback might end. My suggestion to you is like with the $700 supposed nightmare: Don't be too fussy or you may find yourself standing at Gold $1400 with no gold! There can be no pullback, or it could be all the way down close to the low of the right shoulder, around $850 an ounce. We've already pulled back $30, so you should have bought some yesterday. I did.
24. The gold daily and weekly charts indicators went to overbought in height, but not overbought in time. The last time this happened, gold pulled back slightly, then soared $200 an ounce. The "energy ball" built up over the past 18 months, also termed the "Battle Royale" by Jim Sinclair, is vastly bigger than any previous price congestion pattern that has occurred since this gold bull market began. So the movement from this configuration stands to be vastly bigger, vastly more powerful. I know what thousands of you are thinking, which is: "Stewart, I believe now in this head and shoulders, and if you could tell me where the current decline will end, then I'm ready to back up my truck there, I can see the huge money to be made. Gold will never look back once we blast higher from that bottom, I know it!" I agree, but the markets don't work like that. Buy the amounts you can withstand if gold careens down to 700 or lower, or attack the market with tight stop losses as advocated by my competitors. I would not choose the latter strategy, I think it will fail. Why? Because I believe leverage in most parts of the gold market will be eliminated before the gold bull ends. Any short term success with leverage now, could be turned to longer term horror by the banksters. It is going to get harder and harder to stay in the gold market even without leverage, so don't make the banksters' work easier and buck yourself off the gold bronco by putting her on a trampoline!
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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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