Pgen https://www.gracelandupdates.com/index.php?option=com_wrapper&view=wrapper&Itemid=74
Those of you who are buying silver in a pyramid formation will be getting filled today with your largest buys so far in the decline.
I have zero concerns for you if your buys extend to zero. If they stop at $13, you are playing with fire.
The secret to handling the “I’m missing out” mental weakness is to RAISE the peak of your pyramid.
The smallest buys in a pyramid occur at the highest price.
If you set a range pyramid, that allows you to place larger buys at the current price, but so does raising the peak of the pyramid.
The difference with a foundational pyramid, which extends to zero, is you stay IN the game, regardless of how low price goes.
I’ve seen very good investors get WAYLAID when price goes far below what they believe is possible.
Again, we don’t BUY bullish action. We buy bearish action.
Anyone who chases price is very smart. So says Joe Public Investor.
Trading positions must be sold at a minimum of 3 times the buy increment. You don’t buy gold every $10 down and sell it every $5 up.
Outer core positions are sold around 10 times the buy increment.
You shouldn’t feel outright fear when you are buying weakness. There should be a feeling of DISCOMFORT. Not TERROR.
Don’t fall into the trap of buying gold on weakness, and then booking a micro profit, because you “know” it will go lower.
Gold either goes UP from here, or it goes DOWN.
If it goes down, you buy more. If it goes up, you sell some at your pre-set sell points.
You don’t care where gold rallies FROM. As long as it is from YOUR largest buy point.
There’s only one way to GUARANTEE you are a buyer at that low point: Place your orders down in price. In advance of all price predictions.
All I can say to all those who know where the bottom is, is this: Wherever that bottom is, my largest buy will be there, or very close to it.
My suggestion is that when you BEGIN a pyramid, you do NOT use leveraged vehicles. Use boring cash only vehicles. The odds of you picking the exact bottom are small.
There are other general commodity ETF’s besides GSG if you can’t stomach holding something with the Goldman Sachs name on it. RJI-n is one such index. With Jim Rogers involved. RJI is trading around $6.50. It’s often mentally easier to look down from a 6 dollar cliff, than from a 27 dollar cliff. This is why I often speak of gold being broken down into "only 9 buys", every $100 down.
A fairly large contingent of you sent me emails into gold 990 that your gold stock positions were getting “too small” as you booked a BOATLOAD of profits into that strength. Some of you rebought in a panic as gold sold off to 880. That’s not buying weakness. As you now obviously realize here at 905. Others bought core positions in lumps, convincing yourselves that core positions have an “exemption” from the pyramid mindset.
If you have zero Dow on the long side, you are now starting your buy programs. Maybe you buy every 100 Dow points down. Maybe every 1000. If you buy every 100 points down, that’s a MAX of about 80 buys, if the Dow went to near-zero. At 1000 points down, it’s only 8 or 9 buys. Simple.
Use the moving averages like price buy points. It adds a little “spice” to things. You can have, say, 15 moving averages. And allocate your capital in a pyramid formation over those moving averages. To use the Pgen to do that, simply make your pyramid between 15 and 1. The capital allocated to “15” will be the smallest, and will correspond with the shortest time frame moving average. On the sell side, you may have to start a sell pyramid that corresponds to price. You can use PERCENTAGES and sell and certain percentage moves about each moving average.
Professionals buy weakness. Amateurs buy perceived bottoms.
... every Friday is report card day. You MUST end the week in VICTORY. Following the pre-set buys and sells with the Pgen. If price of your item is up, you are a seller. If price is down, you are a buyer. Victory is measured in ounces or shares bought into weakness, and/or profits booked into strength. Some weeks are more about ounces and shares booked, some are ALL about ounces and shares booked. Some weeks are about PROFITS booked.
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1. The gold COT report is out. The bankers shorted 25,000 contacts of gold into this rally over the past week. A good week for them. A good week for us.
2. There is a severe misunderstanding in the gold community of how the bankers operate in the gold market. They are SOAKED in physical gold themselves. Not paper gold. Physical gold. Some of you may be asking “what does this new 25,000 shorts position by the bankers mean, is gold going down?” Answer: The bankers could carry MILLIONS of gold short contracts, if need be. Price rose, so of course they sold. So did I. So did you. A huge crowd of you sold at a profit some of what you bought into 905. Systematically following your Pgen sell points.
3. The misunderstanding of the banker tactics relates to WHY the bankers short gold. Yes, it is to smack down on the funds and speculators. And to accomplish various scumbag “I’m the king of the world” goals. But in the end, for our purposes, they take action in the gold mkt... to book profit or loss. Mostly, they book PROFIT.
4. As a holder of physical gold, the ultimate game is to short paper gold against a portion of your physical position. Thereby booking profit on your physical, without having to move your physical. If price goes higher, and this is KEY, you LEAVE the short alone. It was executed to book profit on your physical, so unless you are ready to liquidate your physical CORE, you leave the short alone. You cover the short when you sell your CORE.
5. But in the MEANTIME, if price FALLS, now you have: FREE MONEY. You cover the short, which is the equivalent to buying back your physical that you sold earlier when initiating the short, if you follow. Then you use the profits to buy more physical! It’s basically FREE GOLD! “I just added to my physical gold position” –Graceland Sub. “Oh, what price did you pay?” – Joe Investor. “The price I paid was…Zero!” –GU sub.
6. If you own as little as 10 ounces of physical gold, or even less, you can do the same. By buying a bear gold etf into gold price strength. If you are a bigger player, you use the futures mkts to book profit in BITS and PORTIONS.
if you were buying in a skyscraper (buys all the same size) you may find making the transition to buying in a pyramid formation is too hard. Ease into it. You can manually change the skyscraper so a few buys are bigger. Maybe every 5th buy or so. As you progress thru some buy/sell cycles, you can then do a “1,2,3”. Where you buy, say, 100 shares at $10, 150 shares at $9.90, 200 at 9.80. Then at 9.70 you go back to 100. 9.60 is 150. 9.50 is 200. Then for 9.40 you are back to 100. This MENTALLY takes off some pressure. While that takes extra work, don’t just lay out $100,000 in buys for the first time into extreme weakness and assume you can handle them all without trouble. Maybe you can, maybe you can’t. You WILL find out. Know what YOU can handle, and adjust as needed when you realize you were WRONG about your discomfort to pain crossover POINT. Remember, most of you have not ran a pyramid thru a full bear mkt. You don’t really KNOW how you’ll handle it.
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5 . ......... If gold is around 940, you can begin a buy and short program, both at 940, but the dollar value of the long positions must be greater than the short dollar value of the corresponding positions. I go into more detail on the ratios below.
6. Technical indicators can be of great assistance to you in setting up your buy/sell programs. All you care about are general indications. Since you are focused on a general 70% long exposure to any major mkt you target, your buys will be bigger than your sells.
7. I want to look at a couple of scenarios to build your positions. But rather than focusing on the euro, I want to focus on gold and the US dollar. With an eye to building a 70% long gold and 30% long US dollar.
8. You could go for 70% long gold and 30% short gold, but that is far riskier. Remember, the 70% refers to a 70% maximum risk capital allocation to long gold positions, of a 100% “risk pot”.
9. I use an inner core position of 1/3, which is 33%. So my gold short positions can never put me net short gold in a bull mkt, or at least in my interpretation of gold being in a bull mkt.
10. In practice, I rarely exceed 1/3 of my actual metals positions with shorts, and if I do, it’s maybe by a couple of percentage points. I’m interested in making a profit from the rises and falls in gold, but I’m not interested in attempting to make all the THEORETICAL money that can be made from a mkt swing.
11. Here’s the gold daily chart, via IAU-n, the comex gold bullion ETF:
12. Most of the technical indicators are what I term “midships”. Price is around the centre of the green keltner lines. RSI is around 50. MACD and TRIX series are around the “O” line. Stochastics are around the 50 level.
13. Price itself is in the centre of a symmetrical triangle, and near the point of either breakout or failure from a head and shoulders consolidation pattern.
14. All of the above says: It’s 50-50 as to whether the next intermediate move is up or down. My vote remains: 51% for the upside. Notice I said 51%, not 99.99%.
15. When the indicators are midships, it’s often a good time to begin both long and short pyramid accumulation programs at the same time. For myself, I don’t want to be adding ANY short positions unless the entire buy program, if completed, sees me holding no more than 30% short, 70% long, for every dollar of gold market capital I have deployed, and that must remain true for every dollar that IS deployed… from dollar one.
16. You may have to read point 15 above a few times. What I’m saying, in simple terms, is that you should not short one dollar of gold unless you already own 3 dollars of gold. If you plan to short 2 dollars of gold, you better own 6 already. Those who violate my rule may get to wear a Smarty Pants Crown for awhile. But, again, picture Sherlock Holmes on the beach. That’s you. Wearing your gold smarty pants hat, while a nuclear armed aircraft carrier steams towards the beach, with you as the primary target. Live by the exception, die by the rule.
17. This is gold bullion. The world’s lowest risk investment. It’s not a one-shot deal penny stock, with 95% odds of being delisted. Spend your time shorting gold naked, and you will be one left naked. Financially naked.
18. While they shorted gold into the top of 1980, the bankers still carried gold longs all thru the 1980-2000 bear mkt. If THEY did THAT, why would YOU be naked short NOW, in what is likely the greatest bull mkt of all time… Hello?
19. I want to come full circle to my story of being long and short at the same time. The difference between winning and losing in the market is largely about handling emotions. When you go for long periods of time with your positions deeply underwater, without a single win, you start to creak like a floor. Over time, you can “break”. Imagine a basketball team that fails to score a single basket, game after game. Never mind win a game, they can’t even score a basket.
20. This is why I talk of seeking weekly and daily victories. I’m 100% sure that many gold investors who liquidated into the 2008 gold stocks meltdown would have held their ground, had their positions been balanced with even a modest percentage of gold short positions, put on into the strength into 1030, and on the huge rallies that occurred on the way down from 1030 to 680.
21. Do what it takes so you aren’t mentally broken. You want what you see in your account action on a daily basis, to be something that makes you feel positive. You shouldn’t have to create that positive outlook; the actions you are taking should provide that to you.
22. You may need to give yourself more reward (take more risk). Most need to take LESS risk. If gold falls $35 (it just did over the past couple of days), and you are booking profit on short positions while adding to longs, the positive energy you get from booking profit will make the buys easier, and make it easier to stick with your pre-set sell orders.
23. Price has a 99.99999% chance of hitting ONE of the your profit booking points. So there’s no need to jump any gun.
24. Rather than shorting gold, my suggestion is you operate US dollar buy programs, but using no more than 1/3 of the money you have allocated to gold. The benefits are:
25. A: You are not directly betting against gold, the world’s smallest market.
26. B: As gold moves up and down, you are booking profits on USD while buying gold.
27. C: Gold is the world’s smallest financial market, and the USD is the world’s largest financial market. The USD has melted against the paper currency index by about 50% since the gold bull mkt started. Gold has quadrupled against the US dollar. Gold could go up in value many times in value while the US dollar cannot fall below zero.
28. Long USD. Long Gold. Gold is the King. Shorting the USD in a gold bull mkt is a waste of time. Gold is leveraged to the USD. And you can’t get a margin call! I bet you make more money being long both USD and gold. AS the gold bull matures, the 70-30 ratio still applies. But the USD is the one wearing your 70% hat at the end of the gold bull mkt. It’s a slow transition, not an event. Today is NOT the day to go hog wild on USD. But if you own zero USD, consider adding a USD currency buy pyramid program.
29. I’ve dismantled a lot of myths in the gold community, and outright crazed thought. Such as the bizarre and near unanimous vote in the gold community to replace FREEDOM with: “On our knees in front of the communist Gman like 16 years olds in front of a rock star”. Later you will learn the rock star is a heroin addict. And: the idea that if you can physically enter a stoploss in your account… that automatically makes you a professional investor. WRONG.
30. Now, I want you to consider the concept that managing a small gold short position or (USD long position, preferably)…. can actually help you make more money in gold over the course of the bull mkt. Some of you don’t need this. For your personal answer, you need to look in the mirror at how you mentally handle $100 declines in gold….
31. I’ll post my view of the gold COT report later this afternoon. I’m meeting my billion dollar bond trader friend this afternoon. I’ll let you know about that tomorrow AM.
Cheers,
st
Buy weakness. Sell strength. And don’t blow out your core.