Graceland Updates 4am-7am

Oct 14, 2009

1. The Chairman and CEO of CIT group announced his resignation effective Dec 31, 2009. 60% of the clothing business of America gets its financing from CIT. Two thousand vendors supply 300,000 retailers with product financed by CIT.

2. Meantime China just announced the fantastic news that exports only fell “only” 15% in September. Exxon’s total revenues exceed all of China’s exports to America. Hello? Anyone listening? Funny, now that the US dollar is really tanking, I don’t hear a peep of complaint from the “mighty” Chinese communist Gman. His 100 year plan of securing commodity supplies is a last minute act of desperation, not a masterplan. His last couple of 100 year plans worked well. You know, like the one where he forced his citizens to ride bikes. Well, that only worked for 50 years. How about the one where he gave those with university degrees a choice: Heads you work for 10 cents an hour. Tails we kill you. That also worked well. Now we have his masterplan to burn coal in a zillion plants to generate electricity. Didn’t England learn from burning coal 300 years ago? Oh well, what’s a little 500,000% increase in cancer rates in a population of a billion people, who cares. Burning fossil fuels is about heath, not melted icebergs. China is on the verge of a massive health cost epidemic, fuelled by pollution and McDonalds-style food. However, not to worry, the G20 will soon allocate a full 50 bucks to developing an electric car for delivery in the year 2080 (after handing the banksters another 20 trillion). We’re saved!

3. If you think President Obama’s health care program is expensive, supersize those problems and you have a view at the costs coming to China’s Gman who is the world’s largest polluter, with 4 times the But the good news is they just signed a deal with an African dictator to rip off his people’s mineral wealth while he murders them by the bucketload. The media applauds how smart they are not to let little details like starvation and murder get in the way of the ripoff.

4. The Chinese population should get a standing ovation for enduring their tyrannical Gman and building the greatest industrial revolution in world history, in spite of their Gman slave masters. I’m personally a buyer of the Chinese “Dow”, the Xinhua, all the way to zero. It trades as FXI-nyse. Support the Xinhua, not the Gman. The Chinese people are working tirelessly to reduce the power and corruption of their Gmen, who make America’s Gmen look like Mother Teresa.

5. I consider Richard Russell to be the greatest living expert on the Dow in the world. Here’s his view of the Dow: “…From a valuation standpoint, the March low appeared more like a bull market top!”

6. If the man considered the Dow at the March low to be wildly overvalued, I wonder what he thinks of the valuation now, after a 3500 point upside blast, while unemployment has rocketed to “somewhere” between 10 and 20 percent.

7. What the gold community is witnessing is a bankster-engineered panic out of the US dollar. All it takes is for a small portion of the world’s largest market to make its way into gold and you have the potential for an upside blast like has never been experienced in history.

8. The biggest money is normally made “out of the hole”, at the beginning of a bull market or rally. When the Dow hit 6500, bearish sentiment hit 98%. Many stocks have soared hundreds of percent since then. Once a bull market is underway it takes a lot more money to move an item higher on a percentage basis.

9. In the case of gold, some in the gold community have noted that gold stocks had a huge percentage rise in the 1999-2001 period, the beginning of the gold bull market. The difference between that period and now is night and day. In 1999, it took only a tiny amount of money to move gold and stock stocks higher on a percentage basis. From $1000 an ounce, the money required is vastly bigger.

10. We’re in a situation now where major institutional players, who control trillions of dollars, are actually placing some of the US dollars sold, into gold. In 1999 the movement into gold meant your electronically traded gold stocks staged a massive rise in percentage terms, hundreds and even thousands of percent in a short period of time.

11. A similar rise now means bank closures, brokerage closures, and armed gangs standing in front of grocery stores. You won’t be buying any food with your gold because there won’t be any food to buy. Buy foods like rice now and forget the wet noodle fantasy of walking into the corner store with a bunch of gold to do business. And pray for the following, like it or not:

12. There’s only one way to end the US dollar bear market. With a gold standard. The debt can never be replaid. The baby boomers just went into retirement mode. The “play today pay tomorrow” jig is up. Just as JP Morgan “saved” the Dow investors by buying the Dow for himself at a 90% discount after the 1929 wipeout, today’s banksters have a similar plan to beat down the value of the US dollar and buy it in size after major weakness, just as they sold it in size at the top of the market. That’s what a top is; one group of market players selling to another group. The Chinese Gman was one of those on the buy at the 2002 top. He’ll bail at the bottom along with the rest of the dollar bag holders. After buying the dollars, the banksters will unveil a new gold standard. A panic IN to the dollar will occur, unleashing a massive bull market. At that point, US tbonds will have collapsed and rates soared. The banksters will have dumped their gold on the public via central bank buying into the peak of the gold bull market. The bankers will buy US T-bonds featuring a gold-backed US dollar in a brand new bull market, while getting huge rates of real return, paid to them by the taxpayers of the world. Only gold, the US dollar, and bonds would rise as the new gold standard is put in place. All else could collapse as the United States’ mini experiment with hyperinflation is ended with a new gold standard. Stock and commodity markets would crash to peanuts as the gold standard is, by definition, the ultimate “the buck stops here” statement of action, not talk. All commodities would disintegrate in price. All except GOLD.

13. I’m not a junior gold stock person, meaning I’m not interested in this deal or that one. But perhaps that’s part of the total package needed to make large money in the juniors. I don’t really care about what one company is doing or where. Don’t take that the wrong way. I play sectors. Major market moves. There are many in the gold community who follow the action at individual companies, like my friend “The Golden Surveyor”. But I want to take you back a bit in time. To the hi-tech bubble. Remember how the golf ball advisors had their alphabet soup of tech stocks? You had to cover the micro-sectors to really make big money, right? Question: Did all that micro-selection make you a lot of money?

14. I believe we are on the doorstep of a major surge of institutional dollars into gold. Some are already entering the gold room now. I believe the Dow is rising on a combination of failed short covering, modest institutional buying, and smart money placing tiny insurance bets that a mini-hyperinflation is possible. A failure of CIT group could send the Dow to new lows and possibly even wreck the massive head and shoulders continuation pattern. So there is real risk, but there always is real risk of massive price decline in all mkts, at all times. Gold would have to penetrate the right shoulder around 850 to ruin the technical pattern. That’s over $200 down from here. Possible, yes. Likely, no.

15. I’ve long stated that the gold juniors would shine only when the US dollar institutional lake began moving into gold, not just into foreign currencies. I gave $1000 as the rough launchpad where I expected to see the lake start the gold geyser erruption. Assuming there are no new massive otcd (otc derivatives) surprises, I think we’re at that point right now. I seriously believe there is more leverage in junior gold stocks to gold bullion, right now, than there is with futures contracts. That’s the power, that’s the tool that is sitting right in front of you in your gold toolbox. Jim Sinclair, the only real bank family member of the gold community, has predicted (knows?) that gold futures mkts (the comex) will be turned into cash-only markets with no leverage. I’ll add that if YOU are long gold futures on the day that is announced by surprise, you’ll have the mother of all margin calls.

16. Let me me repeat what I said yesterday: Junior gold stocks are offering you leverage with no margin calls. Now, what happens if there is a CIT group failure, or some other catastrophic event the banksters may have planned for the stock market, and your juniors all melt away again? You buy them to zero. [in small increments.] Period.

[From this point onward, the 321gold version of Stewart's update differs from the below.]

17. I posted a sort of “beginners now” gold video on the site last nite. Covering the question from one of you about buying GLD-n between 102 and 90. Where I think the market might go, and what I think your actions might be as it does that, are two different realities.

18. The reality is right now GREED is the emotion tugging at you, at me, in gold. Not fear. In declines, tweaking is done on the downside. Buying a bit less, to manage the discomfort from becoming fear. Errors in the discomfort zone, the price decline zone, are on the “I bot too much, I’m going to be finished!” side.

19. In the greed zone, tweaking has to be on the “ok, buy a little more than you planned” side. Errors are on the “I didn’t buy enough before, I sold too fast!” side.

20. If you have trouble with pyramids, you have to “get in there and fight”. Go into the pgen, save SOMETHING and click “email to stewart”. Each person is different, and one size definitely does not fit all. This is where the gold writers get into trouble. They just draw buy and sell points and percentage portfolio allocations. Then when the markets move, they find a simple $200 move in gold plays havoc with their pre-set plans. Plans need to be set around emotions MORE than around logic.

21. The US dollar is in a major bear market. If you are buying USD and have crossed the threshold of discomfort into pain, if you “never thot it could fall this much against the aussie or cbone”, don’t just keep buying expecting the market knows or cares about your positions. It doesn’t. A range pyramid is a range pyramid. The fact is the US dollar has broken massive support at 80 on the index AS gold has blasted thru $1000 via a massive head and shoulders continuation pattern. Those betting LARGE money against the major trend could get fried. If you are buying US dollars as an asset to hold, that’s fine. If you think the dollar must rally here, this reminds me of the oil bulls at 110. It “had” to rally. At 90 It was “ridiculously” oversold.

22. At $30, I mentioned oil and people said, “What’s oil, does that exist?” I’m a buyer of the US dollar at these levels, yes. Only in a tiny fraction of my gold. If we get a rally, I sell some USD and buy more gold. If not fine. If gold goes ballistic and the system implodes, what’s the RISK for those holding dollars?

23. And they don’t even have the friggin US dollars in their HAND!!! It’s in the MARKET! Most of those playing the USD rally, which so far has been ZERO, have NO gold AND no dollars in their hand! During what is arguably the greatest financial crisis of all time!

24. I put the odds of bank closures and bread lines at 90%. The US dollar bulls have their chips with the Gman. I’m prepared for a USD rally OR a USD meltdown and grocery CLOSURES.

25. I didn’t get that “Dow To Crash?” posting done yesterday. I’ll get on it now. I posted that Van Eck PROPOSED ETF fund portfolio. [??Market Vectors Junior Gold Miners ETF ? http://finance.yahoo.com/news/Van-Eck-Amends-Filing-For-indexuniverse-913030917.html?x=0&.v=1 ] Nothing is in stone, but it looks VERY positive. I’m on the move…

Cheers,

Stewart Thomson

Graceland Updates