Facing the Music. Buying Gold
In Jobs Report Week
by Stewart Thomson, Graceland Updates | June 28, 2010Print
- “We are scary, scary owners of euros,” – John Taylor, lead manager for world’s largest currency fund, Bloomberg News, June 28. The number one Bloomberg heading this morning says, “…Dollar Rally Buckles..”. I mentioned the bankster game of pumping the news with the other side of their trade. Read that sentence again. Unlike the rest of the world’s investors, the banksters don’t talk up their trading book. They talk up yours!
- Well, hopefully not yours! When you chase price with leverage, and the other side of your trade is held by the unlimited money banksters, it’s only a matter of time before they take what you have.
- I would suggest that Mr. Taylor’s statement should be revised to, “We are scary, scary owners of paper money”. At least he’s on the banksters’ side of the trade. Personally I’m long the euro into the lows, but about 50 times longer GOLD. Inside a blast furnace, would you rather BE paper or metal?
- Here’s the 60 minute euro chart showing the head and shoulders (h&s) bottom that has developed on the chart. Euro to Zero Any Day Now? WRONG ! The next blast of loss-booking by the fundsters takes place around the 124 marker on FXE-nyse (125 on eur/usd forex), which is the red neckline on the price pattern.
- The “teckies” will consider a move over 125 eur/usd a buy signal. I don’t buy h&s breakouts. I ring the cash register as price soars on positions I bought when everyone, including me, felt the euro was really going to zero.
- And of course, that’s WHY I bought. The trick is to buy with persistence in a pyramid formation, but not to call the bottom, when you get into that mental state. Price can steamroll lower, and you need to accept that you are going to feel you bought too little when price turns, as I do now.
- When you buy an item like the Dow at 6500, or the euro into 118, never mind a gold junior, you need to buy discomfort, not pain. Why? Because there is a REAL possibility that the item DOES go off the board, or closes down, or goes out of control on the downside.
- Most investors trade WAY TOO BIG per entry point. Paid subscriber GoldLion, the greatest gold juniors stock trader in the world, believes many in the gold community put their LIFE SAVINGS into juniors in 2006, and their juniors situations are still on FIRE while gold bullion closes in on $1300! I’m sure many investors are in the same sunken gold boat, with no pgen scuba gear.
- The reason most businessmen beat most traders in the market, even though they know almost ZERO about the market, is simply because they lose less, because they understand risk! They come in as streetfighters. In a battle of loser number one versus loser number two, the winner is the person who loses the least. The market is a war. Nobody should be ashamed of losing.
- This is the ERA of gold, and within that superbull, this is the time of gold revaluation. So paper currency positions need to be modest in size, compared to bullion positions, as all govt paper money is being loaded into the blast furnace operated by the gold punisher. Buying the euro at 120 is NOT the same as buying gold if it tanked to 400 or whatever. Nor is buying the Dow at 6500 the same as buying silver at $8. The fears in the media are REAL for paper items as price melts, and the risk of the item realizing those fears is also REAL. That is not the case with GOLD, nor with SILVER.
- Silver is like superman on drugs. He flies all over the place crashing into buildings, but he can’t overdose and die. If you use leverage to carry silver, you are hanging on to superman’s back. When he crashes into the wall the 10,000mph, he’ll be fine. I’m less sure about…you. Horrifically, few silver bugs want to look in the silver mirror and see the reality of silver, and they want to pretend silver is gold. It’s not gold. It’s silver! The risk of silver going to zero is not much different than it is for gold, and it tracks gold, but the silver price is exponentially more volatile than gold, and we’re entering the period of GOLD VOLATILITY, so hello, earth to silver investors on mars, what do you think is coming for silver! So, you need to have capital ready to move at silver prices “insanely” lower than what is rational, below what you “know” is possible. I own silver and I know exactly what I own; superman on drugs.
- Bloomberg News highlighted silver this morning. Here’s the chart: Silver June 28. 50 cents down is a "MANDATORY" buy!
- If you could only make 40 buys in your life on silver, wouldn’t you want them all to be at prices below the current price? Well, it just dropped 50 cents, there’s your first one! Bloomberg mentioned the Hunt brothers being fined for manipulating the silver market. It was the banksters who manipulated the last silver bull market, when they took the other side of the Hunt’s trade, then took the market to LIQUIDATION ONLY, changing the rules. They blew up the silver market, toasted the Hunts (and 95% of the gold community), and then to put the ultimate icing on their bankster cake, they FINED the Hunts $100 million for manipulation after bankrupting them! The banksters have had some big laughs over the years at the expense of most of the world’s investors, and what they have planned this time is the biggest show of all, and the main act is just starting.
- Remember my words: Secular bear markets end with the public OUT of the market, totally. I don’t care if the Dow hyperinflates, or closes down. The show ends with the public OUT. Go knock on the doors of 100 of your neighbours. They are, on average, still IN the stock market. When the crisis ends, they will be OUT. The public exits every major price chase in one of two ways, and there are no exceptions: In a state of PANIC or TOTALLY DEMORALIZED. We’ll have to see this time, if their exit is at a higher hyperinflated dow price than where we are now, or a lower deflationary depressed one. Either way, the probability that they will sell out as LOSERS trying to PAY BILLS is 99.99%.
- What is step number one if you think the Dow is going to break 6500, or even go back down there? Answer: Step one is not to buy put options, not to short the SP500 futures with big leverage or a “portfolio” of leveraged bear ETFs’ “cuz it’s the big one, I know it!”. Step number one is to remove survival cash from the banking system because there’s a high probability the banksters close down all banks and markets (except currency markets, including gold) if that happens. Step number two is to place buy orders for the Dow at much lower prices in a pyramid formation, preferably one that uses 500 or 1000 point Dow gridlines, all the way to zero, with a peak at 20,000. Relax, TAKE CONTROL, and BUILD WEALTH. Start ordering the Dow around, rather than it ordering you into your financial coffin. Finally, step 3 is to place some strictly limited gambling money (not your lifetime savings!) on some tactical bets of the Dow falling, with targets that are reasonable.
- I would say the above pretty much describes the exact opposite of what 99% of the world’s investors have done, and are doing, in the world’s stock markets, and the Chinese are no exception to the price-chasing rule. The Chinese banksters don’t see their population any differently than the US banksters see the US population. Keep that in mind…
- Here’s the Dow Daily Chart What we have going on amongst technicians is the “battle of the head and shoulders”. One group of bulls sees a h&s bottom, and another sees a h&s top. I don’t see either. I see gridlines and Pgen buy/sell points. What happens “if” 9700 breaks? Answer: You BUY. What happens if we “pop” over 10,600? Answer: You ring the cash register and/or enter short positions. The RSI, relative strength, is rising, and that’s a positive sign against the background of a new round of QE (quantitative easing). The Dow Transports Daily chart shows the oscillators like MACD already turning up, and the 60 minute is very very positive. Still, I like to stand aside from the stock markets beginning about Aug 7, thru October. That is HURRICANE season for the market. Other than core positions bought deeply lower, the next 4 weeks, if strength comes, need to be sold. Do I go naked short to anticipate the “big crash”? NO. I buy the crash, IF it happens.
- We’re only weeks away from what is seasonally the “official” start to the strongest time of the year for gold. Here’s the chart, including today’s mauling. Gold. "Mandatory Buy Day" Chart June 28
- The good news for YOU is that I’ve already been buying from 1250 down, so if you start buying now in a pyramid formation, you’re ahead of me! The bad news is that I’m not sure most of you WILL buy here. You might procrastinate. Price weakness must be bought, not analyzed. Most in the gold community seem to be asleep. I’ve given you the joke, “what’s a half of a half of a half?”. Answer: What’s left of you, financially, after your third divorce.
- In the case of the gold community, the financial remains of the 2006 “divorce” and the 2008 “divorce” may be about to meet the 2010 divorce, only this time it could be via UPSIDE movement in the gold price. If YOU are UNDERWATER on any of your gold stock core holdings (I’m not), especially if you were mauled in 2006 AND in 2008, don’t sell now to get in “cheaper” later. You would be selling near the seasonal starting line of the strongest time of the year for gold, and doing so as all paper monies around the world are on the verge of catastrophic crisis.
- Here’s a quick video showing gold’s key HSR points (horizontal supports/resistance). Gold HSR and Fibonacci Lines for June 28
- We have the jobs report and the start of a new month approaching. This could bring another blast of volatility to gold, and as I send this off, it already has. Remember that the bigger volatility FAVOURS the pgen method of buying weakness and selling strength, compartmentalizing risk and reward professionally. The faster the frequency, the faster the PROFIT VELOCITY. Don’t focus on the top callers going into this report. Focus on your personal MILK MACHINE. Don’t bet so large your milk machine flies apart. Just maintain a steady course. Go back and look at the last jobs report and remember how you felt as price gyrated. We’re going into the storm now. Study how you FELT last time, as price gyrated, and use those memories to respond CORRECTLY this time. Those in the top-calling rowboats, well, that’s why we invented coffins…Those on the pgen aircraft carrier will make it thru this next volatility storm ringing the wealth register!
- I don’t believe in the silver non-confirmation against gold bullion, nor the gold stocks non-confirmation against gold bullion. Do I believe silver was wiped out and gold stocks were obliterated in 2008? Yes. The recovery has been spectacular, especially when compared to the Dow. Slowly, we’re starting to see confirmation.
Copyright © 2010 Stewart Thomson
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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