Graceland Updates 4am-7am
Email: s2p3t4@sympatico.ca
Oct 23, 2009
1. The bond market. I have been mentioning over the past week or so that I feel it is time to keep an eye on the bond market. Or should I say, keeping on eye on its transition from a safe haven..
2. To a bonfire of US dollar toilet paper soaked in gasoline.
3. The gold community tried for 9 years to call the top. And for 9 years the bond has steamrolled the bears.
4. I felt sort of a capitulation occurring on the most recent attempts to call the top. A loss of interest in even bothering with the bond mkt. Now I see Ambrose Pritchard reporting that Morgan Stanley is warning that a number of major central banks may ALL be readying to monetize the govt bond markets, and raise the inflation ceiling (“temporarily” of course) to 6%. MS/Pritchard says This would be a deliberate transfer of wealth from lenders to debtors, a political minefield. It could cause huge losses for bond holders…
5. I see Mr. Greenspan has come out and said more regulation is needed to prevent the crisis from occurring again. MORE regulation is a failed policy. Common sense is needed. You GET common sense when you EXIT the MENTALITY that the Gman is some kind of MOMMY and start THINKING about handling yourself with responsibility. The Gman’s house is so out of order it’s insane, and now he’s going to dilute his bondholders. THAT is his SOLUTION to the crisis? To wreck the bond market? There are large numbers of Americans that are nearing the breaking point with the complete and total disregard for the constitution that is the STATED POLICY of 90% of congress. Where this is going is not to a good place. Substantial chunks of the population are becoming very angry. Most of the population are idiots that continue to believe the Gman is bigger than markets. Soon they will learn the problem ALL markets have for which there is NO SOLUTION, and the punishment that Queen Gold has in store for most of the world.
6. Meantime, we’re told that lowering currencies will boost exports. I’m so sick of that broken record of lies that I could vomit. The US dollar has lost 98% of its value. Exports have not been boosted by wrecking the dollar except for a bunch of short term pops so the public can cheer while the banksters rob them. It’s like clapping for the robbers of your house after a home invasion. Or a CEO telling shareholders they are doing well after their stock lost 98% of its value. After a 98% disintegration in purchasing power, combined with an out of control power mad govt, one would think the Gman might admit that his policy is NOT working. But no, 98% isn’t enough. It’s “one last smash for the gipper”. Bust up the dollar some more, and when the bondholders are DEAD, and interest rates SKYHIGH, AND the dollar is LOWER then than it is NOW, what will the Gman’s summary of the situation be then? Will he finally look in the mirror and say, “Maybe I should focus on doing less, I’m a bustout, I admit it.”
7. No, that won’t be his answer. His answer will be: “I’ve got the solution. I’m a genius! Turn the printing press to HYPERDRIVE!”.
8. It’s too late to audit the fed. Ron Paul is wasting his time. The Fed should be closed down, not audited. Ron wants to shut it down, but after an audit “proves” that it should be closed. It’s time for a bulldozer, not negotiation. We’re LIGHT YEARS beyond the point where auditing would do ANYTHING. The printing of money should be returned to the US Treasury TODAY. Period. Think about that institution, the Fed: They are a private institution that control the American PEOPLE’s money supply. THEY decide how much to print, NOT the US Treasury. They have never allowed an audit, not even in good times. The fed shareholders get an 8% fixed dividend. Hello? In WRITING, they have gold bullion on their books at 40 dollars an ounce. Anyone with ANY common sense can see this is nothing but a RIP OFF MACHINE. And it’s doing ALL it was designed to do. It’s PERFECT. Yet the American public is demanding MORE regulations and BIGGER institutions, thinking that is a solution. MORE govt power is the SOLE CAUSE of the end of the American Empire. NOT capitalism. SOCIALISM is the cause. Mike “two year old” Moore should stop looking at the Gman as his Mommy and start practising to spell the word: FREEDOM. Which he CAN’T. I still get emails from people saying, “Stewart, show me evidence that the banksters are all-powerful”. A thousand trillion dollars in otc derivatives with JP Morgan backstopping the bulk of it, in a combo with the burning of the constitution of the United States via a ZILLION “AMENDMENTS”, THAT isn’t all-powerful? What is then? How much more of a RAZING of America’s constitution is needed to open Joe Blow’s eyes? What kind of human being legally values the nation’s gold at $40 in the year 2009 and refuses to let a big 5 accounting firm look at it?
9. Answer: A MAGGOT.
10. Let me repeat: Govt is NOT bigger than markets. Govt can’t fix the crisis. There is a thousand trillion dollars to fix. There is NO SOLUTION. There is only DECADES OF PAIN coming as the debt losses are BOOKED thru both the destruction of the debt itself and thru the destruction of the paper currencies the debt is denominated in. Currencies held by the winning and losing side of the trade.
11. Those who have bought TOKEN amounts of physical gold are FOOLS. They continue to laugh in the face of the world’s lowest risk investment while they stand in the eye of a force 5 economic hurricane that is far beyond their worst nightmare. They are vastly bigger fools than they were when they price chased the stock and real estate markets in years passed. And the price they pay will this time will be logarithmically larger. This is the RAPTURE.
12. The real estate bear market is not over. It’s JUST STARTING. In terms of valuing it against gold, real estate is going into the GARBAGE CAN.
13. Don’t waste your time shorting the bond with anything but wild gambling money. That’s chump change even if you nail it perfectly. I WILL be laying it out technically for those who want to play the gamble. The time is near, but it’s not here yet. The big money made on the destruction of the world’s govt bond holders comes from focusing on gold and gold stock.
14. Many analysts are talking about the “speculative phase” of the gold bull market. One analyst thinks the juniors will be “hotter than the dot coms”. I agree with all he wrote about the golds. EXCEPT THAT. I don’t subscribe to that thinking, not at all. I say: The rocket move UP in PRICE will indeed be bigger than the dot coms, but it won’t involve ANY greed. It will involve TERROR. I don’t believe any speculative phase is coming. A DEATH phase is coming. The financial DEATH of those who hold only TOKEN PHYSICAL GOLD. The public will be engaged in breaking into each other’s homes to get food when gold is $3000 an ounce, not calling their golf ball advisor about the hottest gold junior stock. Their golf ball advisor will be in the bathroom with his wrists slit. DEAD. I am 100% serious.
15. If you want to make money in gold, really make money in it, you need to understand that you will be TAKING your PROFIT from the REST OF THE WORLD’s LOSS. An ocean is trying to squeeze itself into a water gun. [Exter's inverse pyramid 1, 2] That’s the picture you should have of gold. Why do you think not even the president of a major mining company knows where the GLD-nyse gold is stored? We’re entering the stage of GOLD REVALUATION, the 2nd to last tool in Dr. Pinocchio’s tool box. For those who need a translation, Dr. Pinocchio also goes by the name of Dr. Ben Bernanke. He WILL use revaluation tool. Unlike in the 1930s, this time the only “confiscation” will be the surprise discovery that a lot of paper gold is not backed with enough real gold. The banksters may enact some kind of “cover ratio” for the paper gold assets that is essentially saying “sorry, but your GLD-nyse stk is actually trading at a huge premium to bullion, sorry about that, but tough luck for you. To make sure this doesn’t happen at the comex, effective 10 seconds from now- to give you a heads up- there will be no more margin allowed, it’s a cash market now. Have a nice day.” Investors will likely panic and charge from paperland to physical gold. THAT will most likely BE the revaluation.
16. Those trying to value gold in different currencies and decide whether it is “really” rising have “lost it” in my opinion. Gold is not rising against paper assets. There is no “non-confirmation” because gold hasn’t gone to a new high against certain currencies. Gold is PUNISHING and DESTROYING ALL paper currencies. You can ride in the driver’s seat of the gold steamroller. Or get flattened by it. The choice is all yours. I’ve made my decision.
17. Are You Prepared?
18. Tactics. I’ve mentioned shorting an item with no more than 30% of your total risk capital allocated for that item. I’ve also stated that I personally don’t like to exceed 30% of my existing long positions with any shorting program. Why? Because price can keep going higher, and because we’re living on the knife’s edge of hyperinflation. If you are net long, you can’t be hurt if price skyrockets; you make a net profit. If price tanks, and you are dealing with a major asset, not some idiot golf ball advisor’s latest “here to stay” garbage fund, you can be confident when you buy into that weakness with additional risk capital on the long side that you are accumulating wealth with LIMITED RISK.
19. The communist govt of China has made SOME fantastic moves. No capital gains tax is one of them. But it’s not all roses, as you may have surmised when dealing with a COMMUNIST, who by DEFINITION is a THIEF. His sole existence is defined by TAKING what is YOURS and renaming it HIS, again, by definition. The Chinese Gman values GDP numbers based on units of production, not units of sale.
20. So if a factory builds 10,000 units of widget X, but sells none, that 10,000 units built goes into the GDP number. This is the communist GDP version of the US mark to model derivatives accounting, but on a smaller scale. It can be argued that China is actually showing NEGATIVE gdp growth right [now] and is in RECESSION, but accounting numbers show 8% growth. If you live in China and you see thousands of people leaving the factories and heading back to the farms, you have to wonder what the real number is. We’re on a swing back towards real sales and growth now. But for how long?
21. I spoke yesterday of the “ease” you should be able to buy or sell items against gold in the intermediate term while keeping an eye on the fundamental long term view, which is all about the implosion of OTCD and govt greed.
22. Looking at the weekly chart of the Australian dollar, for example, we’ve gone to MAJOR OVERBOUGHT on the weekly chart against the USD. On the very long term charts, the AUD looks like it could go to 1.50 against USD, based on a potential gargantuan head and shoulders that is FIFTEEN YEARS in size. But shorter term it is getting MASSIVELY overbought. It is showing little H&S top on the 60 minute chart, and is much more overbot than the Dow, which had one that quickly failed as price rose above the right shoulder high.
23. This early morning email from my bank trader friend (who manages $1.5 billion in bonds working part time), his very serious analysis: “All around the money bush, the bankster chased the fundster, the bankster cheats while the fundster bleats, pop goes the fundster!”
24. On the weekly chart, the Relative Strength (RSI) on the Australian is at the 3rd most overbot point in NINETEEN YEARS. When technical indicators go to extreme levels like this, the situation could still resolve itself with sideways type action, but odds favour at least some kind of price retracement.
25. But the MONTHLY chart is NOT overbought. I would put the odds at 50-50 where [we] are at the point of a serious sell off in gold OR a US dollar CRISIS that blasts gold higher and DESTROYS those shorting the foreign currencies betting on a USD rally.
26. The ACTION to focus on continues to be: Use any price weakness WHEN it happens to BUY GOLD. Do NOT engage in top calling gold or foreign currencies and commodities. We’re into the DANGER stage where massive price volatility in the gold and currency markets is probably only weeks away, and maybe days away.
27. If you want to bet on a TOP in gold and foreign currencies and commodities, then BUY the US dollar but NOT with leverage and if it fell to ZERO you should ideally not be holding any more than 30% of your gold position.
28. I’ll be posting charts for the currencies and gold on the site today. By the way, I’m maxed out. There’s more areas I want to cover in Graceland Updates and I need WRITERS to do it. I’m working from 4am to 8-9pm. I want to do more, but it’s physically impossible. I will not delegate what I do in the daily letter to anyone, because there’s a HUGE difference between calling where mkts might go and actually engaging in real world market action, but If YOU can write in an output of even 1/5th of what I do in the daily updates, I could use your assistance, or if you [know] anyone who can write, please let me know. It would probably require 1-2 hours per day of work. Thank-you.
Does the aussie go “down under” or to outer space? The bigger question is: Are You Prepared?
See you “out there”
Cheers
st
Stewart Thomson
Graceland Updates
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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.
