On The Gold Field
Stay With The Ball!
by Stewart Thomson, Graceland Updates | April 30, 2010
Print- Nouriel Roubini is back! So are a boatload of other top economists, all horrified as they watch what they term “the tip of the iceberg”. The Euro crisis has deepened into a catastrophic mess, one that has just started. While it all looks hopeless, I want to remind you that the “banksters” continue to accumulate the euro, holding the other side of the funds’ “all in” euro to zero megatrade.
- I also want you to picture how gold’s price could respond, upside, if the euro were to “impossibly” start rising. Remember your negativity on the Dow into the Oct 2008 and March 2009 lows. Many shorted it at those lows and were mauled. The Euro looks finished now, as the dow did then. Is it finished? If so, why are the banksters on the euro buy, in size, like there were on the stock market buy at Dow 8000-6500? I’m not saying the Euro has bottomed. I’m simply pointing out that every trade has two sides, and the banksters have the deeper pockets and real inside information.
- Maybe they know something that none of us do; it wouldn’t be the first time. I’m saying be careful of assuming you know something that could be nothing more than an idea. Most of all, I’m saying: focus on GOLD. Here’s a look at the Euro Liquidity Flows report and the US dollar liquidity flows report. Think about how much FEAR the thot of buying the euro generates within. Facing that fear is what it takes to make BIG MONEY as a speculator. Not chasing breakouts. My richest subscribers who have made hundreds of millions, and billions, all say the same thing: “Most of the largest fortunes are made by buying when you least want to do it, when everyone else says it’s a sell and going nowhere”.
- Euro Liquidity Flows Battle Royale Chart! I want you to notice two things about that table. First, the commercial banksters are twice as long as they are short. Second, they are not running a one-way bet. They do have 60,000 shorts on the table, balanced against 130,000 longs. Think about your own actions in the market in that regard, very very carefully.
- Here’s a look at the US Dollar Liquidity Flows Report
- The funds are vastly net long while the banks are net short, each with about a 5 to 1 ratio. Things have a nasty habit of going the way the banks are positioned, but after what seems an eternity of time. I would be leery of betting against them, regardless of what you see on Bloomberg, which is highly euro-negative and dollar positive.
- Jim “mighty man” Rogers noted that if the 2nd and much larger Volcano erupts on Iceland (which it has a record of doing measured over its multi-thousand year cycle), it could be a GAME CHANGER for the global food supplies. Jim recommends personally buying farmland, while Elmer Fudd Public investor recommends “buying the residential home bargains, housing is back!” Housing is back, but perhaps only to take more of Elmer’s money and transfer it to the banksters.
- I see nothing in the world that is fundamentally negative for gold in the bigger picture. Nothing.
- You are aware of my campaign to accumulate natural gas as an asset and my view that the supply glut will turn into a shortage, stunning the shorts. You are also aware that I urged great caution as the gold community initially got VERY interested in gas at EXCELLENT prices last fall, but prices that were in no way a guaranteed BOTTOM. Buy VALUE, not perceived bottoms. Or you’ll find you bought a trap door. The same advice I gave you then, I just handed out again, in SUGAR, as it fell from 30 cents to 17.
- Great gold community interest in sugar appeared in the 17 area. Now we are in the 14-15 range. Those who used MARGIN in the futures mkts to call a bottom rather than buying value, are already feeling the heat. You should be increasing your buying of sugar now in a pyramid formation of buy points that extends to ZERO, not bailing in despair, mumbling “why is it still going down, this is impossible, I’m burning!”
- One approach is to use my 30% short and 70% long approach to major markets. In natural gas, that has been highly beneficial. Do NOT let your short position approach the size of your long position, regardless of those percentages. There is a financial and emotional gain to be had, booking wins on the short side while accumulating a bigger long position, in a rock solid asset like sugar.
- Subscriber Babe Ruth notes a plethora of cup and handle bull patterns on the major gold stock charts. I’ll add that the end of the Barrick’s hedging program means earnings are going ballistic. It’s not a surprise, although it’s about time. We just had to wait for the Rothschild and pals gang to book their $5 billion profit holding the other side of the trade of the Barrick OTC gold hedges, a profit paid by new Barrick shareholders and diluted old ones. That’s done now, mission accomplished, so we’re good to go on the earnings front and therefore on the stock price upside parabola front.
- The upside breakout from the weekly gold chart head and shoulders pattern signalled the beginning of the 3rd leg of the gold market and ushered in my “Gimme the Juniors!” call, while most of gold land said, “too many people know about the head and shoulders, maybe it isn’t real”. They blew it. If somebody chopped you in the head with an axe while thousands watched, would you say, “too many people are watching, so I never got hit” ?
- Gold stocks perform best during the first and third legs of a bullion bull market. The two lead juniors ETFs are the Canadian Bank of Montreal’s ZJG.to and the GDXJ-nyse. (yes, some 4 letter tickers trade nyse).
- I would NOT try to compare the two. I see them as two weapons you want in your gold army arsenal. Buy both, and ideally you do so in separate accounts, one (zjg) denominated in Canadian dollars, one (gdxj) in US dollars. Here’s a look at GDXJ’s 60 minute chart, sporting a head and shoulders bull consolidation pattern that could be the fuel that blasts it to a new high, something ZJG has already accomplished.
- GDXJ head and shoulders bull continuation pattern
- There has been a mighty, but failed, attempt in the gold community to call a wedge pattern in the Dow. I drew lines showing that showed what was more likely there was a larger parallelogram with some wedging action within it. On the daily GDJX chart, however, there is a real upwedge. The question, here and now, is whether the bull h&s pattern on the 60 minute chart can power price up above the supply line to the 30 area and destroy the wedge. Here’s a look at the wedge. As a professional, you are a seller of all strength, so the wedge is not a “bail signal”, simply a sign you are doing the right thing booking MODEST profit into strength. This isn’t the end for GDXJ, it is the beginning, and the real message of that wedge is that IF price declines, you are prepared now with buy orders to respond to price.
- GDXJ Daily Chart Rising Wedge Chart Pattern
- Here’s a report I did this morning on the ZJG, highlighting the current HSR (horizontal support and resistance) levels. It is no accident that the top technical professionals in the trading game focus most of their energies on HSR levels. My pyramid generator lets investors respond to price levels, and the HSR levels are based on a similar principle, but less detailed. You are responding to HSR levels with consistent and clear pre-set action, not making calls and predictions.
- ZJG Daily Chart Cash Register in Action
- One positive development coming out of the battles in natural gas, and now the food markets, is an emerging “warrior mentality” in the gold community. The banksters have endured as long as they have partly thru shenanigans, partly thru their ability to print money from air, but also thru their ability to commit to a buy program all the way to zero in price, and to infinity in time.
- On the MARKET field, the professional athletes are the BANKSTERS, buying weakness all the way to zero in price and in time. The game never ends for them,T never.
- Draw out a football field in front of you on a rectangular sheet of paper and draw in the gridlines, starting at zero and extending well beyond the current price. That’s all the horizontal support and resistance levels are, gridlines on the playing field.
- Make the transformation from analyst to player. There is only one question as price ball moves up or down to a gridline; are you on the ball, or standing there staring at it? I know I’ll see you out there on the field. The question is…
- Are You On The Gold Ball?
Copyright © 2010 Stewart Thomson
Editorial Archive
Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.
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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 investor 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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