Graceland Updates 4am-7am

Dec 21, 2010.

1. The GDX, the index of gold stocks, is down almost 20% from the highs hit at gold $1225. When you get down moves of size that you can see on the chart in neon, you really have to just toss your technical indicators and economics into the temporary trash can and just buy as an investor committed to gold.

2. A number of writers feel the US govt will default on its debt. The damage caused by a default would far exceed any benefit from stiffing the Chinese Gman on the $2 trillion or so that he holds. The US Gman will simply take more of what YOU have rather than default on what he owes. Sorry, that’s reality. If you want to get your handgun and tell him otherwise, go ahead. You will fail. As far as the Chinese Gman goes, we’re talking about an idiot that bought almost zero gold until AFTER it quadrupled. He loaded up on US bucks at the top of the USD bull mkt. What a moron. Now I see he didn’t buy any US govt debt recently and the gold writers are dancing up and down. Real smart. Just in time for a huge rally in the US dollar the Chinese gman buys nothing. What a complete bustout. If he was my trader I’d fire him. He’s sitting there hoping the buck will rally enough to mitigate his losses on his previous price-chased buys on the buck. He should have been POURING IT ON on the USD buy into the usd weakness. Oh well, maybe next century he’ll get it right. Maybe his plan is to sell all his USD holdings to the banksters at USD 40-50 and buy their gold then at gold $5000. Good plan, Mr. Gman. One has to wonder if it’s actually the Chinese Gman’s trading stupidity…Or are the Chinese banksters playing the same game with their Gman as the US banksters play here? Hmmm…that would make the Chinese banksters unethical. No, that’s impossible…

3. Having said the above, the Chinese Gman is a fabulous asset gatherer. I give him full marks there. World-class, and second only to the banksters in that regard… “And the law is, your money is now mine! Gimme it or I throw you in the clink!” I bet a lot of financial advisors would huge asset growth if you had that sales tool for gathering assets…

4. Some of you have sent me things about the “coming food crisis” emergency. I’m in touch with substantial farmers on a daily basis, and have been for years. Believe me, I’m fully aware, and fully prepared. If you live in the city, maintaining adequate water supply is at the top of the list, above owning physical gold. Maintaining bottled water supplies is important. If live near water like a lake, you don’t have that problem. You may need desalination or water purification equipment. It’s not “weirdo” behaviour any more than taking out fire insurance is weirdo behaviour. Look after the highest risks first. See how long you go without water. That is high on the list of risks you want to manage professionally.

5. Welcome to another blast of new subscribers. The “team” is an ad hoc “gang” I’ve put together, each with specific skills that could add to the overall package here at Graceland. I operate like an octopus with no suckers on my tentacles; I put out “feelers of possibility” in waves. I maintain a series of projects in development. Those of you who are business owners (most of my subs) understand the importance of managing risk against reward. Thinking before acting. And when finally acting, doing so in the tiniest of steps.

6. Backing up the truck is a concept that makes me feel physically ill. Fill the truck one mechanized shovel load at a time. It will get filled. I was taught about business by the Chinese. Building something big involves a huge number of exasperatingly small steps and an amount of patience that is limitless and often unpleasant.

7. In old time China, there was no legal recourse to a business dispute. You had to rely on your wit and common sense to structure things so they didn’t blow up. This is how I operate in my business and in the market. In the real world. I structure things so risk and reward are professionally managed. This is why I speak of the failure of the otc derivatives buyers. Not the “evil sellers”.

8. What if there were no courts to handle your supposed “wrongs”? The Japanese and the Chinese operate with a code of honour that is built on that concept. Thousands of years of doing business on a handshake. When you see a Japanese CEO (whose salaries are 1/10^th of a US ceo for the same job) eating lunch in the cafeteria with the workers, that’s not an act. Maybe it was an act thousands of years ago when they first started doing it. It is not an act now.

9. I’m owed millions of dollars from various scumbag fund managers and brokers, money I’ll never collect. I structured the deals incorrectly, it was my fault. Was I robbed and are they robbers? Yes. But that is their issue, not mine. It’s important to learn from failure, whether in business or in the market. I’m far more successful now, because of learning from my past failures, in business, in markets. I firmly believe if the OTC derivatives buyers (what is a CITY govt thinking when they take their taxpayers’ money and bet it on illiquid otcd’s?) set up strategy sessions to discuss fear and greed in investing, you would never again see such stupid behaviour on the buy side by city and state govts.

10. I was talking to one member of my team on the weekend about the comex floor traders. They mentioned that the number of traders making money now on the floor is likely much higher than it was in the past. Probably over 50%. That’s true, but A, this is a bull market, and B, how many of them are keeping it? Tommy Baldwin, the greatest bond market trader in the world, once mentioned he could count on one hand the number of traders in the bond pit that had made a million dollars…and kept it.

11. Where is gold going now? Answer: It’s Christmas time. The trading range for markets is generally very tight during the holiday time. Amateurs who have a passion for gold, but not a brain for it, tend to stare into the quote machines at this time of year, hoping gold moves. It’s actually quite sad for me watching this action. The professionals, the few that exist, will “keep an eye” on the mkt, but they are not expecting nor doing much.

12. All traders and investors need rest. There is a time to trade, a time to rest. Those who are most aggressive in their communications with me now should listen very carefully to my words. All things good take time. And it takes time to gain patience itself. I have always maintained there are only 4-6 truly spectacular trading opportunities in the markets in a year. Patience is the most important asset an investor or business builder brings to the table. At holiday time, the very worst traders are the most active. They are trying, literally, to create something from nothing. That is a definition of: madness and addiction.

13. For those of you with small assets, it’s important to understand that the more successful I am with the largest investors and players around me, the more you benefit from that success. As a business grows, more sub-contractors are required. The bigger the main business is, the more opportunity for the sub-contactors and the better position they will be in to develop a larger business themselves.

14. For the largest investors, it is important for you to understand I have no interest in anything other than a coca cola business model. The greatest stockbroker I ever knew had thousands of clients dealing only with modes[t] amounts of money. It was a stress-free operation and if one client left it was meaningless. That’s how I structure what I do in the market. The Woodruff family built Coca Cola into one of the greatest companies in the world. They have managed risk and reward in their business model at a level that is off the charts. I already made a profit from my 2 trips to New York over the past two weeks. I will make a bigger profit on my next trip. Not a lot bigger, but slightly bigger, and it will be real in dollars. Not every thought or every “tentacle of possibility” I throw out is designed to make a profit. But every business or market action I take…is.

15. As an example, I’m considering the possibility of a gold seminar trip on Rovos Rail, arguably the world’s most luxurious train. It is certainly one of them. The train holds 60 people and would make a spectacular trip. I personally would prefer to have less people, maybe 40, but have a more spacious experience for the travellers. A world class experience.

16. But what about the smaller investor? If you are a smaller investor, and your first thought is, “how can I go, is there some way?”. That thinking is: Not good. It is harmful to you. Think: “how will I benefit from this trip without going, what will come out of it?” When you get highly successful business owners on a week-long trip together with the top gold gurus, a lot is going to come out of that. Video broadcasts, charts, the African gold scene, and a whole lot of trading methodology and some great stock recommendations.

17. I like win-win-win. Win for me, win for the gold market monsters, win for the tiniest players. Win for the train owner. Win for the subcontractors. Win for the stewardess on the plane. Few gold writers think enough about who they are touching when they take an action. I do.

18. Many gold writers love to cheer the Chinese gman as he rips off his people. I keep trying to tell you, “listen to the Chinese people. Are you really listening to what they are telling you about gold? I don’t think so. Do you know the mind of the Chinese? They feel the Gman has betrayed them by abandoning communism in the manner they did. Betrayal is one of the deadliest sins in China and Japan. The gman in China should have stood before his people and wept and apologized and said, “we failed you, can you forgive us? We want to transition to capitalism, but the failure is all our fault, please forgive us” The people would have forgiven the Gman in a microsecond. The Gman didn’t do that. He betrayed his people when he created communism. And betrayed them again when he abandoned it.

19. The smaller investor needs to think with more craft. If the Woodruff family only thought about “big deals” they would have sent Coca Cola’s stakeholders (employees, subcontractors, shareholders) –and themselves- into the poorhouse decades ago.

20. “Now” has got to be a near evil word when used in most applications. Evil actions lead to harm to the doer of those actions.

21. When you are in a situation you perceive as desperate, when you are “under fire” you will panic time and time again. But there will come a time in your life when you are in a desperate situation when you do not panic. When you remain calm. Take the “you” that for the first time remained calm under fire, take that person to the gold market. Now you are ready to build something. A number of you are pilots, retired and current. Some, fighter pilots. I’ve tried to get those of you that are struggling to think about your worst experiences in the sky. That is where your trading, your business, begins. The foundation of excellence is your mind, your soul, your experience under fire. Not your money, not what you know about a technical indicator or economics. Most of you who are struggling are not really struggling, you just think you are. The substantial business owner looks for somebody who is calm under fire, who exhibits patience in action if not in words. You can never have enough patience.

22. My experience with most successful business owners is: You like a good meal, 2 or 3 homes in the US in upper middle class neighbourhoods, drive a relatively new luxury car, or a truck for practical reasons, and you relax from time to time with slightly more than the doctor-recommended 1-2 drinks of alcohol. You may hunt or play golf.

23. I think the smaller investors are over-focused on a fantasy view of what money brings. Just focus on doing a good job, building and networking and rest will start to look after itself. Life is a lot shorter than most people think or admit. Sam Walton used to take his family camping for a month each year. He drove a pick-up truck. Of course he was interested in money, he was the richest man in America.

24. Yes, the rich want to get richer. Does free enterprise work? Yes it does. The banksters want you to go into the Christmas Season, not in holdiday mode, not in rest mode, but in “freaked out” mode. They want you thinking about tungsten bars, failures to deliver, a huge dollar rally, a gold supersurge or supercrash, etc.

25. The bottom line is they want you to think big when you should be: Resting. The markets will still be here in January. And if they aren’t, well, that’s why you went to the bank regularly for the past year and put aside some cash and physical gold.

I’ll post some charts on the site for GDX, NG, Oil, all the major mkts this morning. See you there.

Remember… the theme right now… if you want to make money, is: REST.

Cheers,