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Gold Santa, What's in His Toybag?

Stewart Thomson
Dec 22, 2009

1. WHY is gold falling? One of you asked this yesterday. Responding to price is important, but why is gold falling? In the end, gold is falling because there are more sellers than buyers. Breaking that down, the US dollar is rising, and gold moves - usually - opposite to the US dollar. Technically, as gold rose to $1200, many of the indicators were at points that would attract more technical sellers than buyers, and as various chart support and trend points failed, more sellers came in.

2. Items rise and fall. Gold rose from $905 with almost no down. All the way to $1225. That's a $300 move, a 30% move, in price. If you are looking for a general explanation of why gold rises or falls, it is usually, but not always, because the US dollar is doing the opposite.

3. I wanted to keep a quotation from Bloomberg yesterday. A heavyweight analyst was talking oil, and he mentioned that price movement in the market is not necessarily related to fundamentals.

4. My own team is quite aware of this, as am I. Markets generally tend to trade AROUND fundamentals. There is a sort of fundamental underpinning or price area band. If you picture something like a 200 day moving average, with price trading way above and then falling way below, that is probably a reasonably accurate approximation of how far away from fundamentals price can move.

5. Speaking of my team, yesterday was like watching Leonardo Da Vinci painting the Mona Lisa in the gold market. I'm getting a number of requests from prospective traders to meet with our team.

6. That will increase. Into a stampede. Unfortunately, the criteria I have, the criteria I must have, for the sake of all in the gold community, is: 5 consecutive years of trading with low drawdowns and zero losing years. 2008 is not an "exception". It is a rule. The prospective trader must have not only survived 2008 but prospered in it with low drawdowns. A corporate trading team must be organized and based on a very strong foundation. That foundation is 5 consecutive winning years with low drawdowns.

7. I brought you the Pgen., my pyramid generator method of buying weakness and selling strength with a focus on compartmentalizing risk and reward systematically. I've turned around huge numbers of investors who had experienced 20, 30, 40 years of consistent losses. The mental changes alone, never mind the performance, is like an epiphany.

8. The banksters operate in the market with a combination of the Pgen and elite-level professional traders that are so phenomenal they make everyone in the gold community look like trading hacks. There are two exceptions. Jim Sinclair is one of them. I have the other. Those of you who think what Jim does in the market is anything like what you read on his site are very very mistaken. Yes he carries core positions. But what he actually does in the gold market himself during the trading day is light years beyond the comprehension of the average gold investor.

9. I won't live forever. It could end in a manner none of us consider now. So building a team of traders and pgen experts simply makes sense. If the head of Coca Cola dies today, the Coke production doesn't miss a beat.

10. The Gold Neckline play continues. We're drastically oversold by some technical indicators. There is support at 1075. A powerful bounce seems at hand. I bought into yesterday's low with my pgens. Is there any difference between buying a fall to 1095 and one to 1075 for us "pgenners?"

11. Not really. If you are a leveraged maniac trying to call the turn I guess those 20 dollars an ounce are critical. Unless you are a trading master, I wouldn't bet money on your success in nailing it. And I would suspect that those who get it have a whole closet of gold market skeletons that are not actually gold, but red.

12. What the gold community writers and investors have that the banksters don't have is Passion. That is a force drastically underestimated by the banksters, especially if it is professionally managed.

13. If you were a buyer into this weakness with your gold pyramids of buys into this weakness, if there is a huge bounce now, guess who is a winner? Correct. You. If there is no bounce, then you will be an even bigger winner later.

14. Bloomberg reports many funds flipping from short USD to long USD. The daily chart of the USD shows it drastically overbought now. Hi ho hi ho, it's off to the incinerator the new USD longs will go.

15. Here's the charts on my website for:

16. Gold Bullion Daily Chart

17. GDX Juniors 60 Minute Chart

18. Oil Daily Chart

19. US Dollar Daily Chart

20. I see gold and gold-related items as fabulous buys here. USD? Not so fabulous to put it mildly. Does that mean this is "the gold bottom?" No. It means that when gold turns and has a huge rally, and it will, YOU start ringing your cash register. We've been thru this many times. "My job is to get you in as close to the exact bottom as possible" ­Army of Gold Analysts. Good luck, with their coin toss. My suspicion is that we'll see huge buying of gold occurred over the past week by the banksters in the next COT report. [321gold Gold COT page is here] And massive liquidation by the fundsters.

21. Australian Dollar One Year Chart

I was a fairly heavy buyer of Australian dollars, a gold relative, this morning via my pgen. The MACD and stochastics on the daily chart are down to the lowest levels in almost a YEAR. And price has landed on support. Remember what I said last week: The USD bulls are dancing a little early. Ego is the death of the market turn-caller.

22. King Gold, I believe, has a near-immediate surprise in store for our opposition, that opposition being of course the world's largest photocopier. I suspect the only thing more shocking than the power of this gold rally will be when it ends. The pgen, as always, will handle whatever happens masterfully. Again, while gold land is now "hedged" or promises you they will call the turn, the reality is I'm on the heavy buy right here, right now. I'm 99% sure the next COT report will reveal the banksters on the massive gold buy. Think carefully about what I am telling you. They were very heavily on the sell into 1225 while goldland talked about a "commercial signal failure". I believe the banksters are buying very heavily right here, right now. Time to go. My short gold and silver range pyramid cash registers are jingling.


Dec 22, 2009
Stewart Thomson
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