Graceland Updates 4am-7am

Oct 28, 2009

1. I want to talk about what I term the “bear line in the 60 minute chart sand” today, that crosses all major markets,

but first let me take care of something important. Tell a Jew the holocaust is a joke. See if he or she laughs. The holocaust took place some time ago. Even leaving aside what he did to millions of Jews, Hitler was STILL one of the worst Gman to ever walk the planet. He was a killer, plain and simple. There have been many Gman dictators over thousands of years. Twisted serial killers that make Ted Bundy look like a nice guy. That’s all they are really, smarter and meaner versions of Ted. There will be many more proposing horrific murderous “solutions” for perceived problems. Hopefully never again in a major nation, but future history is infinite in time. Time heals pain, and more time heals more pain. Chairman Mao and the communist machine he led, was a more recent killing machine than Hitler. So memories are fresher. 100 million Chinese communist party members have received one type of treatment in life, and 1.3 billion non-members have received another far different one. The Chinese holocaust under Chairman Mao never received the global coverage of the German holocaust. Understanding what kind of suffering the Chinese nation endured under communism is key to understanding the “leave us alone” mentality that exists today, as China marches forward away from communism. There will be no more national Chinese empire ever again. The age of national empires is over. America is the last one. The Chinese nation, over the next 100 years, will become a major power again, as will India, but the world is entering an era where too many parts of the world are all on the same technological and standard of living level, as is the case when comparing the standard of living in the G7 nations. You can’t have an Empire when everyone else is a near-equal. What is coming is a China that will be a powerful member of a world community where most in the world operate from a more unified standard of living. The current standard of living for the average person in China is a small fraction of what it is in America. The gold community has engaged in a maniacal “I love China” LOVE AFFAIR. It’s a one way love affair. China loves gold. Not you. They love gold because they have LIVED thru REAL hyperinflation courtesy of THEIR GMan. They hold gold NOW because they don’t trust THEIR Gman nor THEIR banksters NOW. In time, the current maniacal distrust of the outside of China world, created by decades of enslavement, poverty, and a general beat down at the hands of Chairman Bonehead (Mao)…will END. Just as the pain of the new generations of holocaust survivors is a fraction of the pain felt by those who lived it physically. Just as the sons and daughters of those who experienced any horrific injustice, physically, at the hands of any Gman, have less pain than their parents who lived it. The coming generations in China will embrace their place as strong and contributing members of the world community. But the gold community is living a fantasy that the year 2050 is….TODAY. Wrong. I’ve tried, and failed, to get across to the gold community the reality of China. But the obsession with “I gotta have higher commodity prices now!” that exists as a CULT has produced an absolute head in the sand approach to understanding the real China. One of you sent me an hour long interview with the 86 year old former head of Singapore, the man who arguably masterminded the creation of the modern state into what it is today (and no, not without faults) with his focus on raising the standard of living. Which is focus on the Chinese govt NOW. I worked, as the only white guy, for 5 years with only Chinese and my best friend was Chinese from the time I was 8 years old. I taught him English at a time when schools didn’t care. Nobody can tell me I don’t understand the Chinese mentality. Tell me I don’t know how to communicate it, but don’t tell me I don’t understand the character. I urge you to sit thru the video and UNDERSTAND the real China from a macro perspective, a financial and geo-political perspective. As opposed to the “The Chinese Gman is buying commodities, therefore he’s my hero!” cult mentality in the gold community. I would argue that the average Chinese person is looking those behaving like that like a spectacled old man at his desk watches a child on a sugar rush outside his window. That mentality is superceded only by the “The US dollar is falling so therefore China’s economy and standard of living is already at a point now, where the Chinese govt itself says it won’t be until 2050. I hate what’s happening in America so therefore everything the Chinese communist govt does is without fault!” This is a dangerous and false view of China that will lead to: MARKET LOSSES FOR THOSE WHO HOLD THAT VIEW. Probably lifetime losses. Markets don’t operate on what commodity investors want china to do for their overleveraged commodity positions, they operate on reality. I’ll post the video on the site this afternoon. Which comes from one of you whom I refer to as: Mr. Wisdom. Thank you. SIR. The average Chinese person is not in party mode. They are not in “short the US dollar it’s finished!” mode. They are in HEALING MODE. Healing from decades of life under people that make Giethner, Bernanke, and all the banksters on their WORST day look like Mother Teresa on her best day. THAT is a FACT. You don’t emerge from that GUTTING OF YOUR SOUL without a lot of: TIME. Sending a girlie cheerleading team to the survivors fresh out of the Nazi death camps might work. For 1 out of 100 survivors. The rest just want TIME. TIME TO HEAL. Decades, not minutes of time. Pretending that the survivors fresh out of the Chinese communist nightmare are ready and planning to “take down America” is absolutely RETARDED. America is holding a PARTY for the mangled communist survivors and can’t figure out why nobody is on the dance floor. Leave China alone. It’s the WRONG TIME for dance music. Tell your 6yr old children and grandchildren to hold the party when they grow up. The next GENERATION of China will come to THAT dance floor. Then they will dance and smile. Not now. China is healing their broken standard of living, healing their broken souls, and healing the memories of the millions of direct relatives murdered by their Gman version of Hitler. The Chinese CAN forgive their govt for past actions. They CANNOT forget. Russia chose alcohol to forget their Gman monster past. China chose time. Give it to them.

2. Victory. The time is now to decide if that’s what you’re here for. My suggestion is you walk to the fireplace with any and all bearish gold analysis and burn it. You can’t afford to have any negative thoughts in your head. Think like a soldier. This isn’t a boxing match. It’s a real war and your life is on the line. You’re fighting for yourself and your family.

3. The bears have the ball in the short term. Accept it as fact. Sometimes we have the ball, sometimes they do. Some days are for offence, some for defence. Many of you have committed to buying gold as a “player” in this general price area and time frame for a possible upblast. I’m going to help you do that. The first step is to prepare yourself mentally. The funds are not prepared. They are already in trouble. The COT report, coming this Friday, which reveals the banksters in action, not in name, will likely bear out my view of the fragile position the fundsters have put themselves in with leverage.

4. Failure to book profit after a $165 upblast in the gold price, accompanied by a supersurge in silver from the $13 area to $18, while their account values are higher, ironically that has actually greatly weakened the fundsters, both financially and mentally. They see themselves as in a stronger position, because they are holding more gold and their accounts say they are worth more than they were a couple of months ago. Their investors are happy, even ecstatic. Taken individually, all the component arguments of the funds and their investors are true, but it is leveraged gold, and more leverage will prove itself to be nothing but more of a ball and chain. The reality is that if the gold price surges, the banksters make out large on their physical, and if price melts, they book profit on their shorts.

5. In contrast, the funds are massacred if price falls, and if price rises they will borrow even more money to buy even more giving themselves a paper gain. A few funds have bought physical gold, but it is still mostly with leverage provided by the banksters. If you have 200,000 horsepower car on the Indy track, you ARE the fastest car.

6. But if you put the accelerator to the floor, you will not win the race. You will crash and die. This is the picture of the funds you should have. That accelerator has been pushed hard, and on any price movement above 1080, it will be pushed harder. I’ll explain why now.

7. Even if the comex allows the speculators to use all the leverage they are using now, this situation cannot end well because of this one minor detail that almost nobody in the gold community is focused on besides myself: WHO will the funds sell to IF price rises higher? YOU? Maybe to some loser on the street that thought the stock market was an ATM machine in 1999? He’s terrified of losing his job. The last thought in his peabrain is: buying gold. What the gold community doesn’t understand is that if gold rises hundreds of dollars higher, the public will be vastly WORSE OFF than they are now. The LAST THING on their minds will be: buying gold. There is no “party phase” coming. The fantasy picture that writers and investors have of people meeting about the hottest dot.gold stock to buy is all wrong. This is not a speculative bubble. There will be no public participation other than to try and get their hands on physical gold, maybe yours by force, when they realize the govt has turned their bank and brokerage accounts into locked boxes with limited withdrawals. Why would they even think about some junior gold stock in such a situation?

8. The junior golds ARE set for a mindblowing upside price explosion, but it will be fuelled by institutional allocation, not by the public standing in the bread line clutching their Enron and Nortel certs while babbling incoherently to their golf ball advisor standing there with his soup bowl beside them. “Sorry, people, those certs can’t buy you an extra bowl of soup. Nice try. Save them for next week, when the ultility turns your heat off for non-payment. Burn them to stay warm. We still take US dollars, but they are starting to be used as fire starters as well” –bread line volunteer. Winter 2011-2012.

9. The funds have been boxed into a horrifying situation by the banksters. They are loaded up on gold which should be great news for them. It isn’t. They are showing a paper profit. But they can’t sell in size because the banksters are the only other entity of size that will touch the ask price, and they aren’t doing it at 1070 or higher. They are hitting the ask now, because price is down $35. So the funds have no choice but to sit and hope that if price rises more, more funds will come in and they can unload on them, or so most of the gold community thinks.

10. WRONG. The fund managers’ greed makes the banksters’ greed look small. A price chaser by definition is GREEDY. How will a fund manager answer to his underlying investors if he dumps gold now and then it leaps $300 higher? Answer: He’ll be fired.

11. The investors will say, “listen, I pay you to invest in gold with leverage. Instead, you sold it. I understand if it goes down you have to take a loss. I can live with that. THIS, I can’t live with. Now all the other funds are making a pile of money and I’ve made nothing. You blew it! I want out and I’m putting my money with somebody who is committed. You’re fired!”

12. So the funds that CAN sell, won’t. As a group, the funds cannot sell. The buyers simply don’t exist. The banksters have ZERO interest in buying gold after $165 of gold price strength, as you can see from the recent COT reports.

13. Let’s now picture gold at $1400 or $1500 an ounce. It will trade there because the global financial patient just got sicker than he was at gold $1000, a lot sicker. I believe it is somewhere in that price area that the banksters will act to increase margin requirements for futures contracts. We know they took the market to liquidation-only during the silver bull market of 1980 and killed it. I don’t believe their plan is to kill the bull mkt as $1400, because the level of failed but hidden otc dervivatives debt is far too high to be paid off with a US dollar that corresponds to only gold $1400.

14. The funds have no choice but to keep buying. The managers don’t care what happens in the long run, any more than the golf ball advisors really cared about any long run, when the took the life savings from working families, including their own, and dumped it in the market in the 1990s. If they really cared, they wouldn’t have dumped it ALL in. It would have been small. The fund managers care even less. They stand to make billions, and maybe even hundreds of billions for a few of them, should gold carry the general commodity markets vastly higher, marked to gold $2000 or more.

15. If it ends in a fireball, but YOU just put $30 billion in your pocket as your cut of the action, $30 billion that STAYS yours…well, would YOU really care if it all ends in a fireball?

16. As evidence, note how MANY managers start new MULTI BILLION dollar funds after losing ALL the investors’ money in their previous fund! The list is HUGE! Do they bring along the old investors and say, “look I’ve learned some things, I’ll give you some extra stock in the new fund”? No. They say, “who cares if I lost all your money last time. All I know I got my performance fee, legally, while the fund was in operation. I simply lost. The market went down and nobody forced you to invest. There was no fraud. If you want in my new fund, no there’s no discounts or favours, now scram.” And the fund manager is legally correct in his statement.

17. I don’t think gold itself will end in any fireball, but a move of hundreds of dollars an ounce, down, from much higher price levels, via fund bailing over margin issues, would mean many FUNDS will end in a fireball. Not Gold.

18. The key lines in the bull sand on the 60 minute charts that have failed (and keep in mind these are “key” only in the sense of the 60 minute chart) are:

19. The Australian Dollar/USD. The 9125 line has failed. With currencies, horizontal resistance tends to be followed by huge numbers of fund and bank traders. The bears have taken some ground here. I’ll post the chart on the site this morning as soon as I send this off. A bigger line in the sand sits at around 89. That’s not a 60 minute chart line. That’s a substantial uptrend line over the past year, and it has been touched many times, so it is very key. I personally will be a BUYER of AUD/USD if that line breaks. Those of you in Australia who are short aud/cad should be taking some profit on positions you bought at higher levels today, and if that line breaks, your cash register should be ringing, bigtime.

20. The GOLD line in the 60 minute sand sits around 1045. That has failed, with a corresponding line on silver at about 17.25 You should be a buyer into all these failures. I am. The bulls will be looking to recapture 1045 and 17.25 respectively.

21. Many in the gold community are now hoping for a bigger correction, having been convinced this head and shoulders is real. I’m sensing a different kind of strength in many of you, while the public continues in “I wonder” mode. The strength I’m seeing, or believe I’m seeing, is much stronger than on previous sell-offs. I seriously believe that IF gold did fall badly to say, $500 an ounce, I believe many of you, after getting over the initial shock and pain, would become active buyers and run even more powerful pyramids. I’m sensing a whole new level of commitment, almost a “Eureka!” type moment.

22. I suggest you apply that Eureka moment, in a SMALLER way, to oil and gas. We may be looking at the last of low commodity prices for a long time. The oil line in the sand sits at just under 78 on the dec contract.

23. I’ve spoken before about building a bullion bank to compete with the banksters, a process that will take a long long time. The first step is to build a real mindset of strength in the gold market. I’m seeing a lot of “Eureka!” moments and just a real application of the stronger parts of your personality to “attacking” gold on weakness. This is the killer instinct I want you to bring to the table, which is almost a “snarl”. You read Mr. Bear who says gold is going to $500 and the Dow to 2000 and you say, “Gimme it, bring it one, I wish it was here now because if it is I’m taking. Gimme that Dow, Gimme that Gold. Make your move Mr. Price, because if you do I’ll putting a bullet in you and I won’t miss”.

24. My own view remains that we won’t see the kind of prices many of you are now REALLY prepared for, really HUNGRY for. Don’t overlook the food markets. Some of what you await in gold is HERE in food. And for those interested in making 10 zillion percent: my buddy “Mr. Rare Earth” is working on his newsletter. He was introduced to Rare Earths by a pilot flying REE cargo trips. He’s launching his rare metals letter on Jan 1^st. He’s a lawyer. I asked him if he could sue people if they don’t sign up. He didn’t find it that funny.

25. I’ll keep you posted. Posted on the party…

See you on the site,

Cheers,

Stewart Thomson

Graceland Updates