Graceland Updates 4am-7am
Email: s2p3t4@sympatico.ca
Nov 7, 2009
1. Dinner Time. As the day wound down yesterday, I had to think about dinner. My mother told me she once ate 12 cobs of fresh corn on the cob for dinner. I looked at the price of March corn, which was near 3.80 a bushel, down from buy #1 at the $4 major gridline. Bang. Just notched 3.80 in my corn gun.
2. I’ll never be able to beat my mother’s family record for corn consumption, I accept that fact. Let’s so how I do with corn ACCUMULATION. As I reflect on that buy into weakness while nobody even mentions the word corn in the financial media, I can’t help but think of the MAJORITY of Canadian investors at the PIG TROUGH as Nortel traded at $100 a share. ALL their money is GONE. NEVER to return. I bought Nortel too. Beginning in the $2 area. From THEM. I sold it between $3 and $8, while the rest of the public went to seminars on how to change their diapers more frequently. I made 300%. Nortel is bankrupt now. Ericsson is likely taking or has taken the remaining micro assets carcass. The public kept telling themselves they are in for the long term, all the way down. They are in for the long term, yes. An INFINITELY long time. “Oh, well, let’s not spend 10 seconds of time thinking about our TACTICS, let’s find a NEW DEAL and use the same TACTICS we used for Nortel. This time will be different!” Yes it will, the losses will be logarithmically bigger.
3. This time, their flaunting of the gold punisher is going to cost them their job, their business, and their family, reducing them to a pathetic baby crying in the bread line.
4. America had Enron. Canada had Nortel. Neither general population LEARNED anything from their ORDEAL. I seriously believe that. They learned NOTHING. That is a horrifying indictment of their mindset.
5. 35% of the Rogers commodity index is not Nortel toilet paper. It is:
6. OIL.
7. WHEAT is the number 2 holding. CORN is number 3.
8. If I bought a stock in a company at $3.80 a share, I would be VERY nervous about it going off the board or being horribly diluted by management. With corn, while it’s possible, I’m not even sure that nuclear Armageddon would totally finish corn off.
9. Some of you have what I term: ThunderCash. Yet, you are “caught in a trap”, as Elvis would say. Various advisors, gurus, analysts, etc are feeding you fantasies about the next hot swing trade. Jim Rogers is the greatest agricultural investor in the world. Question: Do you see HIM flipping CORN like it’s Enron on the day it went under? No. Many of you, despite watching gold soar $200, are STILL caught up in calling a top. Gold is going to THOUSANDS of dollars an ounce and you will make ZERO by the end of this bull mkt if you keep up those ACTIONS. You could actually arrive at gold $2000 a gold LOSER. CHANGE YOUR WAYS NOW. IT’S NOT TOO LATE, NOT AT ALL. You have lost MILLLIONS of dollars in the market with various schemes. Picture a CORN PYRAMID. There are smaller investors here that will PASS YOU in terms of wealth because they understand what food and gold is and they have absorbed the winning market actions of the BANKSTERS, and are executing those actions themselves in the mkts, and doing it CONSISTENTLY. With the lowest risk investments in the world, and corn is one of the few, the closer these items are to a price of zero, the more important it is to buy them in larger and larger SIZE.
10. The time is NOW to step up to the corn plate. Are you prepared?
11. I would bet money that most of you have near ZERO IDEA what is coming in the food markets. Every cent that corn and wheat decline in price makes these investments logarithmically more SPECTACULAR while CHOPPING RISK. If there were no OTC derivatives, and there was a coming real recovery, not coming mass bread lines, the price would soar based on demand. Over the past 5000 years, the same amount of gold has bought the same amount of food. There is NO INFLATION of either when considered alone. If gold goes to $5000 on OTCD rocket fuel, do you think corn will be $4 a bushel? Try 20. Or 40. Maybe 100.
12. My friends over at www.cropletter.com , lead by “The Brain”, who has linked up with Mr. Ground and Pound, a multi-generation massive landowner grains farmer…they are putting together a free report (to coincide with the planned Jan 2st launch of their newsletter/website) on the BUSINESS of farming, aimed at grains INVESTORS. When you have a DOCTORATE DEGREE in BRAIN ANATOMY you get to be called: The Brain.
13. The focus of this report will be: WHEAT. I don’t think the commodity futures FLIPPERS (picture a fish on the kitchen floor flipping around while the banksters’s kids watch. For awhile. Then they fry it.) understand there is a FLOOR on corn and wheat price that is related to the BUSINESS of farming.
14. No farmer is going to plant a crop that GUARANTEES they lose money. When you trade wheat futures without understanding the farming BUSINESS, meaning the basic costs and risks, you have no VIEW, no FOUNDATION. You become like the pathetic gold timers who NAKED SHORTED GOLD out of the head and shoulders breakout.
15. You become: VAPORIZED.
16. You don’t want to get too fancy about the basics of farming, nor any market. When you build a foundational pyramid on an item, you want a mental and logical foundational view to keep your brain from frying as price moves “impossibly” lower. When you get into a billion tiny details, that can also destroy you mentally, just as having ZERO understanding of the business can. A worse scenario is where you IMAGINE you understand the crop markets fully, and begin taking action believing you cannot fail on your flip trade.
17. I told you to picture a huge metal vice grips (me) operating on a field of corn with price gridlines. When I buy, I’m not letting go. I’m not just buying, I’m GRIPPING onto the corn, holding it like a POSSESSED DEMON. Picture a ravenous tiger on a baby deer. That’s the picture of reality, of me GRIPPING corn at $3.80.
18. At $3.60, picture more tigers that are even hungrier, on another deer. There can be thoughts of failure, yes, but no market ACTIONS of weakness. NONE.
19. I don’t see corn at 3.80 out my eyes when I buy.
20. I see gold $380.
21. “It will be the farmers driving the maseratis…” – Jim Rogers.
22. There’s a HUGE difference between sitting in an armchair reading about some corn price pop, or ethanol, or a storm…and viewing wheat and corn as legitimately vying for gold’s title as the world’s lowest risk investment.
23. Think back to gold at $380. Some of you were there. Some of you watched it there. Think back to the long hard road to gold $1100. The epic battle royale at $1000-700. The carnage you lived thru. Let me say that again. The LONG road from 380 to 1100. Even today, there exists a pinhead patrol that claims gold is NOT in a bull market and corn and wheat are BUBBLES. Some agricultural commodities are trading below levels they were at in 1975!!!!
24. Now, here’s the key point: I’d like you to put 380 gold aside for a second. Picture gold at $250!!! That’s how I SEE corn $2.50. Corn $2.50 “is” Gold $250. What, really, is the difference between corn 2.50 and gold 250, in terms of RISK? Answer: For practical purposes, the answer is: nothing. Will we go there? I don’t know. Don’t play Food Flipper. Throw your food flipper timers in the GARBAGE. Do I HOPE we go to corn 2.50? The answer is: YES.
25. The corn and wheat “price floors” caused by the farming cost break-even point are obviously not the granite floor that a price point of ZERO is, but they do exist, and the odds of price falling far below the cost of production and STAYING well below there are very low odds indeed.
26. If a leveraged ETF falls from $6 to $4 as you buy, if it is reverse split to $40, your account value doesn’t change. From a mental and emotional perspective, however, it’s very difficult to buy from $40 to zero.
27. Corn and wheat are not stocks, anymore than gold is. No scumbag is going to dilute corn while issuing himself a billion corn options the day before he resigns from the company. He can’t. There is no corn company. Corn is a thing, a commodity. Not a corporation.
28. You ALL have come to grips with buying weakness and have made MASSIVE progress. It’s easy to forget how far you have come in such a short period of time. There are very few “regular Joes” in the world who can consistently buy weakness in the markets, let alone do it using the tactics of the bankers by allocating your capital to pre-set lower buy points. But you also KNOW by now, that those who can REALLY buy to ZERO are in a VASTLY stronger position than those who just play the range pyramids. That is one reason I brought up the Juniors. It’s simply a lower distance to zero from a lower number, and mentally, it’s easier actually execute a foundational pyramid. But it terms of RISK, junior stocks are ULTRA RISKY, and bullion is ultra LOW RISK. Corn and wheat are LEGITIMATE challengers to gold for the title of world’s lowest risk investment, whereas ALL corporate entities, on their BEST DAY, are a BILLION TIMES riskier than CORN is, in terms of the odds of it going to ZERO.
29. $3.80 Corn TODAY “is” gold $380. How many of you new to the foundational pyramid game can REALLY look me in the eye and say, “Yes, I have a foundational pyramid on gold ALL THE WAY TO ZERO. If gold falls to $400, I’ll be right beside the banksters on the buy!” Maybe. I doubt it. It’s just too far down. I think many HAVE a plan. But IF gold melted $700 from here, I think you’d collapse mentally. I talked about this at gold $800. I said, “as gold goes higher, YOUR RISK goes HIGHER, you’ll find yourself looking down from a 15 storey building. It’s only 8 now. The higher the market price building, the scarier it is.”
30. I don’t believe corn is a “better” investment than gold. I don’t believe it’s better than wheat either. Wheat has cracked the $5 a bushel marker on the nearby contract, so it “is” gold 497. I believe that if we were all magically transported to $500 gold, 500 is the number that all of you would be comfortable laying in at least modest gold foundational pyramids to ZERO. AND ACTUALLY EXECUTING ON THEM IF IT HAPPENED. The Dow, at around 10,000? VERY FEW of you can handle that picture, mentally, of buying down for TEN THOUSAND POINTS!
31. Corn “is” $380 gold. I think some of you would be like a PACK of HYENAS on gold, on the buy side, if it was magically $380 today. You don’t just agree with the pyramid thing now, you BREATHE it. It’s in your BLOOD. It wouldn’t be about getting gold “cheap” at 380, it would be about getting it closer to zero so you build a FOUNDATION OF WEALTH THAT CAN’T BE BROKEN. Not by the Gman, not by the banksters, and not by your emotions. We can’t destroy fear and greed, and buying gold from $1100 gold to zero requires a gargantuan effort, one that I believe is simply too much for a large number of you (but not all).
32. Don’t be the Golden Bonehead showing up to buy gold at $1500 just in time to watch it reamed back to $1000 on a final bankster hit before it screams to $3000 as fund managers begin to fear REAL hyperinflation. Likewise, don’t be the idiot buying corn at 30 dollars a bushel while staring 30 storeys down to zero mumbling, “why didn’t I just buy at 4 bucks,it’s not the missed profits, it’s that I wouldn’t be so darned AFRAID when I bought!
33. Gold 380 to zero would see you surge on it with foundational pyramids like a TIDAL WAVE. Standing on a 4 storey building versus standing on a 30 storey building. You decide which view to the ground YOU want to see when AFTER you buy….
34. The banksters grab ahold of you and start pushing you over.
35. There is no gold 380. There IS corn 380. I’ll take it. And you?
36. I absolutely believe in my HEART that if the banksters grab ahold of you at gold 1100, and show you the pavement at zero, if gold were to start tanking, most of you wouldn’t make it. There’s a number between 1100 and zero where they would GET YOU. OBLITERATE YOU. TAKE YOU OUT.
37. I don’t believe they could do that to you in corn. I’m showing you the difference between money and POWER. You have built some power in the gold market, some ability to buy weakness. Apply that to the corn market and a huge wave of you will have TOTAL POWER in that market. Some of your gold power is an illusion. Because if gold went south, your plans would begin to smoke, and then light on fire, at SOME lower price point. Applying your pyramids to junior situations is a fantastic strategy to make huge profits, but it is not real POWER. Jim Rogers understands POWER. POWER is about the REAL ABILITY to buy price ALL THE WAY TO ZERO in a market that has MICROSCOPIC odds of really going to zero. Food grains and GOLD are two markets of POWER. Take a JACK BOOT and stomp on the next PEABRAIN who tells you his STUPID analysis of where some stock is going over the next year or 2 or 10 or who cares. Corn has FIVE THOUSAND YEARS of market ACTION. To repeat, I think if you apply what you’ve learned in the gold market to CORN and WHEAT, you will actually have attained what can only be termed: Market Perfection.
38. Upside targets? Don’t think about upside corn and wheat upside targets in terms of dollars.
39. I suggest you think like Jim “Mighty Man” Rogers does.
40. Think in his currency: Maseratis.
Have a good week-end,
Cheers,
St
Stewart Thomson
Graceland Updates
Graceland Updates 4am-7am
Email: s2p3t4@sympatico.ca
Nov 8, 2009
1. Corn futures alternatives. As a mini follow-up to yesterday’s CORN mkt update, I want to bring up the following that will have different levels of importance for different investors:
2. The futures markets are the most direct way of accessing the corn markets, besides buying actual farmland.
3. If you are looking at buying real estate, maybe farmland is the better choice than Detroit rental properties. More Detroits are coming, many more…
4. Regardless, with the MARKETS, I want to draw your attention to the difference between ETN’s and ETF’s. Both may invest in corn futures, but an ETN tends to have more credit risk while the ETF has more corn price tracking risk.
5. ETF securities (the people that run SGOL, the physical gold fund, with gold stored in Switzerland on an allocated basis) has come up with ETC’s, which are an effort to reduce the credit risk associated with ETNs, and the tracking risk associated with ETFs.
6. Their products are “ETCs”. Exchange traded commodities.
7. ETFS has corn, wheat, soybean, coffee, and cotton ETCs.
8. Those of you that like JUNIOR STOCKS may like these ETCS, since a number of them are trading in the $2 range.
9. They trade on the London Stock Exchange, but in US dollars. For gamblers, short versions are also available.
10. If you have a brokerage account with a company like Interactive Brokers, you CAN buy stocks on London, with your US dollar trading acnt. Since these ETCs trade in USD, there should be no conversion rate.
11. Futures contracts are not covered by the same securities account insurance that covers etfs and stocks. Having said that, the futures markets themselves are operated with a tighter system. There is no “3 day settlement”, as exists with stocks. If corn goes up on the day, the money you made that days is transferred into your acnt. Some brokers will hold most of the cash use to buy the futures contract in your securities acnt, so the bulk of your investment is insured against problems. Of course, if everything were to blow up anyways, that insurance is totally useless.
12. For those of you who are uncomfortable about futures contracts, the ETC’s on the London mkt are probably the way to go to play the corn market. A mini corn contract is worth about $4000, whereas, the corn ETC trades at about $2. So you can have 200 corn “bullets” versus 1 in the futures mkt.
13. While the banking system “appears” to be A-OK now, keep in mind that the gold price is rising, and gold is a thermometer.
14. You may recall my gradual step by step phase out of GLD-nyse and into GTU-nyse and GTU/un.to for those holding paper gold as a semi or full gold core position.
15. I would suggest its getting near time to do an evaluation of the ETN’s in the same way. Better to do it NOW, while times are good, than after 100,000 people rush thru an exit door designed for 10 with the building on fire. This isn’t a “sell” call. It’s a “start looking at what you are holding”, and look at some possible alternatives call. If you believe gold is going to 10 bucks, then don’t worry about it. If you believe gold is going higher, well, it won’t be going higher on great news for the financial system.
16. Items like coffee and sugar offer more UPSIDE action, potentially, than corn and wheat, while still offering massively low odds of ever going to zero. The ETC for sugar is around $18, so that’s a ways down to “zero”, whereas coffee is $2.80.
17. Mentally, most of you could handle laying in 5 or 10 buys from $2.80 to zero and deal with such a real event a lot better than dealing with a real meltdown from $18.
18. When you can grab corn, or coffee, or any of gold’s other blood relatives at the same price per share as a penny stock, it’s going to be even easier to stay on the buy into any possible weakness.
19. Tomorrow I’ll post some charts for the various food items on the website.
Cheers,
st