Graceland Updates 4am-7am
Aug 5, 2009
1. Heave Ho, Heave ho! Hard Labour time is here. Get those dumptrucks into position. Time to move another LOAD of money from your brokerage acnts into your bank accounts.
2. I keep a SWEAT RAG beside my chair so I can get the job done without taking a break. It’s a lot of heavy lifting, but somebody has to hand all the price chasers all these items, so they can keep dancing.
3. Oil Kachingos yesterday by the bucketload. Natural gas kachingos. Dow long kachingos. GE and Alcoa both traded over $13. Who says 13 isn’t a lucky number! Silver in supersonic profit booking mode.
4. You run a production line. “Build” your product on price weakness. Then “Advertise” it in the “media”. Set a series of “appointments” for the buyers at higher price points.
5. Then start the music. The price chasers WILL come. They WILL dance. YOU are now a banker. (Ok a mini one). Your friend is your enemy. Your enemy is your friend. It’s true!
6. A couple of you wrote in yesterday, shocked by the reality of how leveraged ETF’s work, after watching the video I posted.
7. With non-leveraged investments, it is very important that your risk capital is allocated so you don’t get into an AIR POCKET situation. Where price falls way below your final buy point. Now you are HELPLESS. The bankers can hold you prisoner there for years. With leveraged ETF’s, air pockets can occur a lot easier, a lot faster. Gold falls 30%, but your leveraged item falls 80%. Your last buy was at 80, and it’s 30 now, for example. You are TOAST. You MUST stay on the buy with leveraged ETFS, and allocate your capital so you can DO SO in the real world, not the pretend world of where your favourite gold writer knows gold is going to next.
8. IF YOU TRADE FUTURES, YOU NEED TO BE ALWAYS AWARE OF THE NOTIONAL VALUE OF THE TOTAL CONTRACTS YOU ARE HOLDING. [the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional.] THAT IS YOUR INVESTMENT. IF YOU DON’T KNOW WHAT THE NOTIONAL VALUE OF YOUR POSITIONS IS, I’VE GOT TO WONDER WHAT IN THE WORLD YOU ARE DOING IN THAT MARKET. THAT’S ALL THAT MATTERS IN THE FUTURES MARKETS. NOTIONAL VALUE. THAT IS YOUR MARKET POSITION. KNOW IT, LIVE IT, BREATHE IT. WE ALL KNOW WHAT CAN’T GO WRONG. FOCUS ON BEING PREPARED FOR WHAT CAN GO WRONG. WHAT WILL GO WRONG.
9. IF YOU DO, THE REWARD WILL LOOK AFTER ITSELF.
10. If you look at how I talk, I try to say things like, “gold could go here, gold should go there”. Look at the rest of the writers. They say: Gold WILL go to price X. That’s a claim of 100% knowledge where there is no knowledge, only supposition. Or worse, you have a LIAR on your hands….
11. THINK ABOUT RISK, NOT REWARD. IF YOUR DEAL IS SO GOOD, YOU DON’T NEED TO REDLINE THE AMOUNT OF RISK MONEY YOU HAVE ON THE LINE. IF IT’S SO FRIGGIN’ GOOD, YOU SHOULD HAVE AN ULTIMATE PARTY WITH LESS RISK MONEY ON THE LINE!!!! When I use the word “will”, it usually refers to your risk, not reward. Like I just did with the futures markets.
12. Greed is a drug sold to you by the Devil himself. Few of you really understand this reality…
13. The bankers designed futures accounts to show “account value”, not notional value. Account value should be there, but your account should show your book notional value, and the current notional value. With the net being your profit/loss. When you realize you are holding, say, THIRTY MILLION DOLLARS worth OF SP500 stock, versus an account “net worth” of $2 million, you’ll start saying, “Hey, am I really capable of handling $30 million dollars of stock put on in a 400 point range on the Dow?” Answer: No you are not ! Don’t walk about in the market on STILTS. You will FAIL.
14. Do NOT buy gold here. [at $970 on Aug 6 2009] I don’t care if it gaps to $1500 tomorrow am, and then leaps to $500,000 an ounce the next day.
15. NEVER CHASE PRICE.
16. No chart pattern overrules price. None. You had 10 billion opportunities to buy gold into 680. You blew it. Don’t compound THAT error, NOW. Buy bigtime gold when you are writing me the email that says, “Joe Bustout Gold Writer says THIS TIME, gold really is finished, and I know he’s correct because of A,B,C, even though PRICE is in freefall!”
17. An INFERNO of volatility is coming. NOW is the time to say good bye to price chasing and price plopping. FOREVER.
18. Yesterday I posted a Uranium video. Those of you burning up hundreds of thousands of dollars in the futures markets should consider getting FOCUSED. You CAN become a money maker like the bankers. I don’t care about deals, or the “next big move”. Anymore than I care about a FLY buzzing around me. What matters is consistency. Booking wins. If you have $250,000 to put in Uranium, buying 10 cents down, selling 30 cents up with a 1/3 trading position, selling $1 up with a 1/3 outer core, and holding 1/3 as inner core, compare that to your actions, your current EMOTIONAL STATE.
19. I’m a non-stop market WINNER. Hundreds of you have become PROFESSIONALS in the market. Others are in transition. Some are still looking for the one-hit wonder. Today’s letter should see more of you take action to stop looking at the MARKET, and start looking at YOUR BUY AND SELL ORDERS. Get ‘em in there! This isn’t about the market. It’s about you!
20. Gold is rising now on new buying by idiots and profit booking by the banks. End of story.
21. Why buy US govt bonds at the end of the gold bull mkt? Because inflation will probably be skyhigh. As the bankers tie gold to the USD, gold likely won’t fall down. But inflation also won’t fall down very quickly. So even if gold is $10,000 an ounce when the gold bull ends, if inflation is say 20%, YOU are losing 20% if price doesn’t rise.
22. If bonds are paying 20%, and a GOLD BACKED USD starts a long term bull mkt, what would you rather own, a bunch of penny gold stocks that just rose 10,000% or 30 year US govt bonds backed by gold, paying 20%. Don’t buy bonds now. Buy them into the end of the gold bull mkt. With the gold price locked, the miners will see their costs inflated very quickly, while gold isn’t “allowed” to rise. It may not be quite the “gold stocks are forever” party that the gold community is planning for….
23. When this gold bull ends, the real reason for the gold certificate ratio is to cook the little guy. The bankers will say, “High gold prices are here to stay!” And all the financial advisors, from their place standing in the BREAD LINE, will say, “Yay, the bankers saved us, buy gold!”
24. “This time, gold won’t go down.” Translation: This time is different. Sure it is. The only thing different this time will be the size of the little guy’s losses, and the bankers’ profits. Both will be bigger than last time.
25. I’m planning another newsletter. If you have 3 hours a week of time, maybe you want to join me as a writer. Maybe I’ll call it the “Sad Sack Report”. I want to poll 100 brokers in USA, 100 in Canada, 100 in UK, 100 in Austria, 100 in Germany, 100 in Hong Kong, etc. About markets. Once a month, or once a week, the brokers would respond to maybe a 10 point multiple choice questionnaire by email. The plan is to do the opposite of the hundreds of “Sad Sacks”. (obviously) I need a way of counting the answers by computer to save time. Worst case, we end up with a very good feel for what is inside the average Joe’s mind at all market price points.
26. Here’s what’s in my mind: Short more Dow into any further strength, book more Alcoa and GE profit, short tiny amounts of gold and silver into price strength against my physical positions, short tiny amts of oil against my long position while booking profit on my longs into strength, and a number of other market actions, ALL of which involve either BOOKING PROFIT or buying weakness/selling strength to put on new positions.
27. I don’t want to hear any more stories of blown up rockets. I don’t mean stop emailing me, I mean end those actions that lead to those emails. Meaning: No more price plopping. End it now. And remember it’s a learning PROCESS. As you cut the size of your buys, you’ll find “rats, I didn’t cut them enough, here I am AGAIN with price moving “impossibly” more against me than I dreamed could happen, and I’m out of bullets!” That’s the nature of the game. It’s a learning process. You don’t transition into Mrs. Banker from Mr. Price Plopper in 24 hours. But the road to profits begins on the road of cutting the amt of red ink. I’m not talking about booking smaller losses. I’m talking about reducing the size of your buy orders at any and all price points, and increasing the number of price points.
28. Once you start the day looking at YOUR buy and sell orders, at your FILLS, rather than at the MARKET, you are moving quickly towards becoming a professional. When you look at the MARKET first, you then act in RESPONSE. Don’t respond to the market.
29. You take charge. Place your orders and demand the market answers to YOU. Make sure you have a enough orders so that regardless of what the market does, you are getting filled as it moves. If you buy gold every $100 down, fine, just make sure you are THERE to act when it happens.
30. I’ll leave you with this: Many of you probably have said, “the market seems to know where my bail point is. I know if I bail now, THIS will be the bottom! Yet if I don’t bail now, I KNOW the market will tank, and then I’ll bail with an even bigger loss. I’m fried either way!!!”
31. That’s exactly right. The bankers know your mind inside out. More than that, the market is really a giant loss booking machine for most participants. Their mindset is what causes price to move. Price is a reflection of their terror and greed.
32. One of you, a new sub yesterday, made the decision to start WINNING in the market. To start winning you must start FIGHTING and totally forget about the market. I could sense from your email that change in you.. to start fighting. Others are still looking at the MARKET. Look at YOUR buy and sell orders and start fighting. The market is a crutch. But rather than carrying you, the bankers use your crutch to bash your financial head in. When you are in a corner and getting beat on, you either die or start fighting. There is only one way to fight:
33. BUY WEAKNESS REPEATEDLY. All price weakness.
34. I told you all into 905 that I would rain on your price chasing parade when the gold price began rising. Well, I suggest you get out your umbrellas, I’m coming with a rainstorm…
35. Gold is a sell here. But do it professionally. Sell very modest bits into strength. This is a big head and shoulders pattern. If successful, you will book obscene amts of profit as price breaks higher. But don’t outsmart yourself, or worse, think you can outsmart the bankers . THEY are booking tiny profits into this strength, right now. YOU…must do the same.
Cheers, st
Thank-you
Stewart Thomson
Graceland Updates
Graceland Updates 4am-7am
Aug 6, 2009
1. Yesterday was scream day. Today is analysis/charts day. When price moves strongly in one direction, the emotions take over. If the direction is up, the “I gotta buy and buy now!” takes over. When the direction is down, the “I gotta sell and sell everything now!” emotion takes over. The stronger the move, the stronger the emotions that envelop the investor in that emotional FOG.
2. Ever hear a foghorn on an aircraft carrier? That is me, screaming at subscribers, with my foghorn against your EAR, as price moves-or feels like it is moving-strongly in one direction. I am the gold foghorn screaming “stop it, stop handing your positions to the bankers at losses!”. Or: “Stop it! Stop the insane price chasing, you don’t need gold here, you simply want it!”. Drive a speedboat around the harbour at 100mph in a dense fog. See how long you survive.
3. Sometimes, a $50 gold price move triggers stronger emotions than a $100 move. In a general sense, a $100 move in one direction in gold is an intermediate move, as it usually takes longer than 3 weeks to occur. Such a move brings a wave of emotion to the trading table.
4. Congrats to one of you who got caught short the Aussie mkt, and wrote in yesterday with a calm rational plan of action to manage your position. One way to manage a losing position is to engage in what I term “hourglassing”. Let’s say you have built a large gold short position into 905 as 90% of the gold writers told you “I’m a gold superbull, but right now I think 880, 800, 700, 600 is where we’re headed in the short term.” Translation: “Sell now, we’re toast!”
5. Unless you used extreme margin, you can probably short into further strength. Picture a bank owner family in your position. They are handed your market positions. They would very quickly look to focus on selling strength and buying weakness to manage that position. Getting OUT of a problem trade is a process. Not an event. Turn the quote machine off and focus on tactics. That’s how to fix the problem.
6. Let’s say you are short 10 big gold contracts. As price rises, you add mini gold short contracts or even small gold ETF positions, while adding long positions in another account on every $10 weakness in the gold price. Focus on the long side. In any major market, never focus on the short side. Even in a nightmare situation like the Japan stock mkt from 1989 to present, the greatest stk mkt disaster in the Industrialized world, using the proper tactics with a focus on the long side would see you in a decent position now. With a 70% long to 30% short risk capital allocation since 1989, you would be in the black now, using proper tactics. Without using a single stoploss. You can lay in your orders in an hourglass formation, layering one hourglass on top of another. Like the tide, your sell orders rise in size as price rises, but then you take a “break” and start a new layering process into the next higher price band. Like a fighter takes a break between rounds. If you take too big a break, you will leave a giant price airpocket between your last market action and the current price. Unless you bought gold at $300-600, that is not a good situation to be in.
7. In the GOLD market, the world’s lowest risk market, an approach of “I’m a superbull longterm, but right now I’m 100% short”… is not very rational. Sorry if I offend anyone. In the first few years of the horrific the bear mkt of 1980, a lot of profits were booked on the long side by the bankers. There isn’t that much to fear in the gold mkt, especially in terms of price movement, which, really, is all that matters.
8. Don’t think too much about where the gold price might go, up or down. Simply focus on buying and selling. At a profit. Open your wallet. Take out some money. Do you think, “Oh, I better get rid of this money, I’m losing on it.” No. Well, look at your gold. Don’t get rid of your gold when it goes down in price, NEVER DO THAT. You are throwing money in the garbage. Gold is money. Don’t throw it in the garbage. It’s an ASSET. You want MORE gold, not less.
9. For those of you who are considering using leveraged bear ETF’s to book profit against your physical gold position during a move towards $1200: be very careful. I’ve mentioned using non-leveraged ETFS at the start of a price move, and leveraged ones later on, for two reasons: A. If gold rises say 20% with a series of zig zag moves, your leveraged bear ETF could fall 70% or more. B. None of us are as smart as we think we are. Assume you are going to get it wrong out of the starting gate. Risk the least capital on your first action in any market move. If you use leveraged ETF’s out of the gate to book profit on your physical, you MUST use a pyramid formation of buy orders on them, or you have a high risk of failure.
10. It’s going to be a tremendous party on the road to $1200, but in the end, it’s a 20% move. A $200 move. The move from $680 to $1000 was a $300 move, and a 40% move. Gold has to rise to $1400 to give you the same party that buyers into gold $700 have already had.
11. The Gravy money is always made in any market…when nobody is paying attention. A few writers said buy the Dow around 6500. I bought the Dow from 8000-6500 with dozens of buys. The difference between what I said and the others is this: I said in about 50 different ways about 50 different times, “separate your MARKET actions from your PRECAUTIONARY actions. The system could blow up, continue to regularly remove insurance money from the bank system on a weekly basis. Make sure you have food supplies. BUT BUY THE DOW INTO THIS WEAKNESS. SEPARATE YOUR MARKET ACTIONS FROM THE ACTIONS OF SAFETY.
12. I didn’t know that 6500 was the bottom. [If he does what he says, he was prepared to buy all the way to zero.] I wondered if my items might go off the board as I bought. Those who claim “there was no risk to the system at Dow 6500” are: IDIOTS. The system is DEAD. If the market price (zero to 10% with most having zero bid) of the otc derivatives was revealed tomorrow morning, JP Morgan would close it’s doors, never mind the rest of the bankrupt banks. They ARE bankrupt. But the fake accounting keeps them alive. They bought themselves TIME. In a crisis, time is a critical ally.
13. The bankers want hyperinflation. Does anyone understand this? The reason they want hyperinflation, or at least a quasi-hyperinflation, is to boost the price of the now-worthless otc derivatives. The big win is if they can re-inflate the housing mkt. I think they will, but it may be years away. Then the Fed can claim they really did make a profit on the stacks of the OTC Trash they hold in their locked garbage cans, and the banks can say, “See, our capital ratios are fine!”, and mkt value accounting will return.
14. I had no idea whether the fraud would work, or whether the Dow itself would blow up. The fraud worked. Again, you have to separate your actions in the market, your tactical actions, from your fundamental THOUGHTS. Picture a fighter in the ring. Somebody could shoot him while the fight is going on. But he fights anyway, accepting the risk. It is the same in the market. Every DAY there is a reason why the mkt could blow up. New York is the prime terrorist target in the world. But millions of people live in the city, accepting the risk. They aren’t ignoring it, they accept it. Insure yourself against risk, possibility, but don’t INVEST based on 100% odds of Armageddon. You won’t make any money, not consistently. Consistent winning tactics is the only way to make consistent money from the mkt.
15. The few online traders who yelled “buy now, there’s nothing wrong!” at Dow 6500, were IGNORING the broken system. Or didn’t understand it. That’s not smart either. When the Dow turned, they were lucky, not smart. On every price move, there are “lotto winners” [lucky call] and professionals. Strive to be a professional in the market, not the winner of the Russian Roulette market lotto. Unlike the Lotto winners, the bankers and insiders who bought the Dow into 6500, with monster money, did understand that the system was completely broken, but they accepted the risks.
16. Of course they understood it was broken. They broke it deliberately so a new and bigger system could be created. With them in control.
17. Picture yourself looking at your brokerage account statements. It shows you holding a leveraged OTC derivative contract with another party. It involves a bond on a company in bad trouble. You get out your calculator. The market price of the OTC derivative is $20,000, but you put in $200,000.
18. Many of you have bought penny stocks and experienced at 70-90% meltdown last year. That shows in your account. If you had 200k in penny mining stocks in Feb 2008, by October your brokerage account showed an account value of around $20-60k.
19. Now imagine you write a letter to your broker. You say, “listen, I want to buy $200,000 of gold. I want you to show my account statement at my projected model price for those stocks in Dec 2011.”
20. Your broker says, “Sure, we’ll have it ready tomorrow”. The next day you check your statement and sure enough, it now shows the account value at $200,000, under the “current model value” summary, which is now the bottom line on the statement. You place an order to buy $200,000 in gold right away and you are filled.
21. THAT is the picture of what the banks have done with OTC derivatives. Legally. If you tried your plan with the brokerage, they would just laugh. They might not laugh so hard if you had a margin account and you went $100 billion underwater on a trade before they could liquidate it.
22. Then they might be VERY open to your “suggestion” of: “Doctor the books or I take your whole show down. And throw in a couple of billion into my Swiss bank account while you’re at it. Thanks. I like the service here.”
23. The bankers said to the govt, “Doctor the books, hand us trillions, or we shut it ALL down. You decide. We own a monster pile of gold, so if the show shuts down, we couldn’t care less, how about you Mr. Gman, I wonder what the general population will say when ALL the banks are closed tomorrow morning and ALL the money in them is GONE when we announce hundreds of trillions in losses. YOU will be target number one. Not us.”
24. The Gman knew the bankers weren’t bluffing. So he handed over the first of many blackmail payments. These payments will go on for many years. The bankers then told the Gman to get ready to start printing money so the market price of the otc derivatives starts to rise.
25. The idea that the Chinese Govt dictates anything to the bankers, including their own bankers, is: Nonsense. The bankers couldn’t care less about the $800 billion t-bond peanut held by the Chinese Govt. Nor does the US Govt, and nor does the Chinese Communist govt. Ben Bernanke could buy the entire Chinese t-bond holdings tomorrow morning and announce he’s increasing the T-Bond buy program to $5 trillion. Bonds would end the day limit UP. The US dollar would tank, gold would likely skyrocket. And the gold community would scratch their heads.
26. The bankers have a real “problem” and that is one thousand times bigger than the Chinese T-bond smokescreen/clownshow.
27. A quadrillion dollars of worthless OTC derivatives.
28. I don’t know whether President Obama is on the inside, or the outside, as far as what the bankers have planned. If he’s on the outside, then he’s really going to go after the bankers. If so, the OTC derivatives skeletons will start cascading out of the closet. Stock and commodity prices will have a nasty setback, and more money will be printed to keep the system alive. I do find it very strange that the man who is arguably the most socialist congressman in America just “happened” to get elected as President, just in time for the greatest money printing show in America’s history.
29. There is no solution to the Quadrillion dollar problem except quasi-hyperinflation. The bankers have everyone in a trap. Quasi-hyperinflation will allow the derivatives to be raised in price, so the margin calls end. But inflation causes a lower standard of living for the general population. Much lower.
30. The solution to high inflation is: Gold. Gold is the tool the bankers will use to end the inflation they create. A quasi-gold standard, which is the Gold Certificate Ratio that Jim Sinclair has detailed, is the only solution. High interest rates would likely cause a massive depression. Market valuation of OTC derivatives would cause a complete wipeout. Neither are planned by the bankers. The[y] plan to revalue gold upwards against the US dollar, print massive amounts of dollars, and then lock the dollar in price against gold.
31. Focus on the fact that gold had a 30% move from 700 to 1000. This is only a 20% move, if it happens. Not a 2 billion percent move. I made 20% on Alcoa in one day. The oil market jumped 10% in one DAY as it came out of the hole at $30 while most just stood and stared waiting for some wet noodle “setup” to buy. For many of you who bought between 900-1000 a year ago, a move towards 1200 represents your first “in the black” experience in the gold market. Whether that move happens or not is totally unknown. The otc derivatives superskeleton could crush the gold head and shoulders pattern like a popsicle stick.
32. The mental FEELING you get on the road towards 1200, IF it happens, is something you want to KEEP. The bankers are fully aware of how you will be feeling as price moves towards 1200, and how those short are going to feel as it goes there too.
33. To keep that POSITIVE and WINNING mental state is going to require a lot more than, “I’m in the money now, all is fine”. Stay focused on booking profit into strength, holding your core, and being prepared for both MUCH higher and lower prices than you can logically understand. Do NOT repeat with gold what many of you have done with the Dow.
34. My guess is we have 1 more minor reaction (1 to 3 week decline in price) before we attack the 1030 neckline. Whether that reaction starts today or at gold 990 or gold 1010, or wherever, I don’t know. Bob Hoye thot it would start at 960. Wrong. Bob Hoye is sharp, but nobody is sharper than price. Not even remotely close. Which is why if King Price rises, I say, “Yes Sir, I’ll sell some, and I’ll do it right away Sir”. Price falls, I buy. King Price’s wish is my command. I suggest you address King Price as “Sir” or “Your Highness”. I wouldn’t suggest you chase him. He doesn’t like that and tends to severely punish those who engage in such behaviour. Sometimes, he hands out the financial DEATH PENALTY. Those of you who naked shorted gold around 960 with a “price plop” based on “maybe this is the last reaction from 960, so I’ll short it now with a bunch of futures trades, then I’ll go long big in week or so”, well, I don’t think that was a tactic using the sharpest tool in the shed, if you know what I’m saying.
35. This is a time for VERY LIGHT profit booking. Gold has rallied $65. Not $650! No buying because you “know” the h&s pattern will blast gold to 1200. And no bailing because you “know” the head and shoulders will fail. We don’t know anything…except that price WILL move! When it DOES, then ACT, but only with your pre-set buy and sell points. Those should be set NOW.
36. There’s a reason why Houston calls it Mission Control, and not Mission out of control…
37. I’ll be posting a lot of charts on the site in a few minutes.
Cheers,
Thank-you
Stewart Thomson
Graceland Updates