Gold Battlefield: Think Less. Buy More
1. I've seen many business owners embrace what the banksters do in the market, the buying weakness and selling strength in a pyramid formation, and no gold writer can compete with that when they begin to execute on the strategy repeatedly. The substantial business owner brings too much to the table. It's an overwhelming force, a force that goes way beyond simple dollars, and is understood by very few outside of the bankster community. The volume of understanding of risk and reward that the business owner has, is something incomprehensible to most writers and analysts. It is a force of tremendous power.
2. Beyond that is the highest level of trading, and the trader becomes more artist than fighter. Jim Sinclair speaks of his father in this regard and he himself is a trader-artist. My head trader the Brain trades as an artist. It's like moving beyond the fight ring and into a ballet stage. But all market winners focus first on "what is my risk on this deal, what, really, do I have on the line here, how much can I lose?"
3. Bloomberg reports that Mary Ann Bartels of BankAmerica is the number 2 ranked technical analyst at institutions. Mary sees a possible dollar rally tanking the SP500 to 1000.
4. This plays in with what the Brain sees. There is an orthodox broadening top formation on the stock market. But major price patterns in the stock market have a notorious habit of being false, or price halts long before the ultimate target of the pattern is reached.
5. The orthodox broadening top is the death pattern for a major market. 1929 began with the decline from a broadening top. There is no question that relative strength continues to fade as price has risen to one high after another. The Dow Transports show the same kind of action despite just making another new high.
6. A drop to 1000 on the S&P500 (S&Pooh500?) could bring my "Gold Neckline Play" to perfection. Meaning the head and shoulders pattern on both the weekly charts and the KingDaddy 20 year monthly chart pattern highlighted by Trader Dan Norcini. I term it the Golden Goldzilla. Dan's highlighted pattern is certainly one of the largest and most powerful legitimate chart patterns to appear on a major market in 100 years. And it is ultra bullish for gold.
7. Keep that in mind before opening up the gold garbage dumpster and tossing your gold in there. If you look in the gold dumpster, you'll see the biggest banksters standing there with open arms.
8. My trader, the Brain, notes that we may not necessarily have seen the high yet, however, for the SP500. Perhaps yes, perhaps no. There are a tremendous amt of "if this if that" possibilities in the market right now.
9. Your only proven-over-time market weapon, is to buy weakness and sell strength. If you are a gold player, well, as the Brain said to me yesterday, "gold price weakness here is a gift to you from the gold gods." Take it.
10. The problem with the idea of trying to pick the bottom of the gold correction is that the gold-negative news accelerates in volume along with price.
11. Therefore, if price did fall down to your targeted buy point, you may or may not be emotionally capable of executing your buy orders. Worse, what if gold fails to fall to your buy point and then turns up and goes to 1400 or higher, how will you feel?
12. If you can't buy any gold now, but you felt you were missing out at gold 1225 and silver 19.50, my suggestion is to take immediate action on the buy side. Not a price plop, but you have to step up to the buy plate here with something.
13. The bottom line is that the price of silver is 19 dollars an ounce. Silver is not likely to go to zero. What happens if you put on a pair of skates and jump into the Stanley Cup Hockey Finals? Answer: You may die and you will certainly face major injury. You are in the pro's way and they will harm you.
14. Your biggest friend in the silver market is the 19 dollars of price levels between you and zero. Your biggest enemy is trying to guess which one of those levels is not your friend today.
15. With gold it is the same. I don't believe most in the gold community have done any serious preparation for what is playing out as a picture perfect head and shoulders neckline play.
16. When you go to battle, various weaponry is moved to strategic points on the battlefield. The gold winner is he or she who is able to increase the number of ounces they own with no leverage. Price has moved down. This is an advantage for the gold community. It's a battle field win. Not an account win. The account wins come on the sell side, the profit booking side.
17. The oil market is in a similar situation. Price has fallen from 82 to 72. That means you have 72 soldiers beneath you, working for you in battle. Betting on how many of your own soldiers will die is stupid. Bet real dollars on every single one of those soldiers, all the way to zero. But be smart about it. Bet the most amount of dollars on oil soldier $1 a barrel. Not oil soldier $72 a barrel. But bet something on Mr. 72. I am.
18. Gold is a billion times less risky than oil. You have 1146 gold soldiers working for you. You are the General leading them. Don't bet money on which of your own soldiers will die. That's plain dumb. Bet incrementally larger amounts that the enemy-the dollar-will fail against gold in a pyramid formation of buy orders that extends lower. I am.
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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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