Graceland Updates 4am-7am

Dec 28, 2009

1. In regards to GUSI, you won’t find that on any chart service. It doesn’t exist. It is: Graceland Subscribers’ Choice Index, and is probably better named: GJSCI. Graceland Juniors Subscribers’ Choice Index. Likewise, Mcewan Capital’s index doesn’t exist on any chart service, at least none I know of.

2. One key part of GracelandJuniors.com is going to be “Interviews with the Boss”. For each of the componenet stocks. I’m mailing one of you some telephone recording software I have today, that lets phone conversations be recorded put on a computer file. We want to interview the Chairmen, CEOs, Presidents (and other key persons later) for EACH of the component stocks of GDXJ, Mcewan, and GJSCI, on a regular basis. It will be titled “the boss talks” for each company.

3. There will also be a category for monthly charts, weekly charts, daily charts, and 60min charts for each stock. Plus a general overview of the stock. And a “relevant new information” category.

4. I see John Embry, who has been called the top gold man in Canada by Jim Sinclair in the past, has stated that only a deflationary disaster event would push gold below $1000, and then only briefly. Following that money would surge IN to gold as it would be then understood en masse that gold is the ONLY true safe haven. I have detailed a similar view here repeatedly. My only dissension is that I don’t like to bet large money on single events being a sure thing. I wouldn’t get obsessed with whether gold could or could not go back below $1000. It depends how BIG such a deflationary disaster event would be. If it was the failure of a major bank, who knows what could happen; gold could fall to 700 and reverse to 1400 in the SAME DAY if the event was big enough.

5. Get obsessed with what action YOU will take IF it did break $1000, not obsessed with why that can’t happen. My action in such an “impossible” scenario is: BUY.

6. John Williams does a lot of great work with Shadow Stats. He is probably the top statistics man in America. He thought hyperinflation could begin about now. It didn’t happen. The difference between the two leading TRADERS in the gold community (Jim Sinclair and The Brain) and the economists is the traders go into the MARKET with a BATTLE PLAN OF ACTION, whereas the others go into action with a MODEL of PREDICTION. That is the classic amateur versus professional fighter thing. The amateur gets obliterated in the ring against the professional.

7. The pgen gives you, the regular investor, a REAL BATTLE PLAN. Not a model of where gold SHOULD go, MIGHT go, but then, impossibly, “didn’t”, so you lost all your money while clinging to your model of fantasy. Attack the DOW the same way. Not with a model of what should occur, but with a battle plan of what you will do in any and all price point situations.

8. The January indicator works. Because it is based on institutional money placement action. Institutions often make their money placement decisions in January for the year. The Dow often either accelerates the current trend or reverses, based on what happens in the first few days of January. I sat in a libraray 25 years ago and studied the Wall Street Journal every day for the month of January for every year since the WSJ covered it. The January indicator is aprox 80% accurate.

9. Many gold writers, including some of the best, unfortunately, believe the Dow is a “rigged index”. They state that bad companies are taken out and good ones put in, and that hides the reality. That’s like the too big to fail philosophy. The POINT of the Dow is to reflect the largest, most dominant and successful industrial companies in America. Not the has-beens.

10. Further, it isn’t easy to create an index that PERFORMS. IF what the gold writers say is true, then what they are really saying is that the stock pickers at Dow Jones and Company are the best in the world. I do not see the Dow as a “loaded deck”, a “fixed deck”, etc.

11. The Dow was not designed as an “ETF”. It is not a fixed basked of industrial stocks that is unchanged in all market conditions. It is a MANAGED index. Not actively managed, but occasionally managed.

12. Most traders follow the SP500. It is more liquid, more exciting. I like “old world” wealth. It’s not exciting to follow utilities or the Dow Transports. I find making money is exciting. Pretending to understand 500 companies is not the kind of excitement I like. 30 is a manageable number. The Xinhua25 is an even more manageable number. It’s a number the small or large amateur investor can get a handle on. Granted that all the Xinhua 25 are not readily accessible to Western investors, but it’s probably a good idea to start getting acquainted with them now. BEFORE taking buy/sell ACTION.

13. Again, who is really pro-China? Goldland is pro-Chinese Gman. I’m pro-Chinese FREE MARKETS, pro Chinese BUSINESS.

14. As we go into 2010 both the Xinhua (via FXI-nyse for now) and the Dow basically DON’T EXIST in the eyes of most in the gold community. Let the move from 6500 to current levels be a lesson that ANYTHING can happen in the market. You want to look at the Dow 30 and the Xinhua 25 as 55 ASSETS that you want to own in a pyramid formation. Not 55 rolls of toilet paper you attempt to short into nothing. Focus on attacking the WEAK. Not the MIGHTIEST COMPANIES IN THE WORLD. What happens is that you end up GIVING BACK all you make in your attacks on these giants. The giants have an ability to get financing and attract capital, and SURVIVE, that the smaller companies don’t have. The number of good shorting opportunities in the stock market (like 1999 and 2007 which Morgan Stanley called a rare “triple sell signal”) are very infrequent. Patience…

15. Gold is surging this morning (now up almost $40 from the 1075 lows), oil is surging, corn/wheat are surging, silver is up $1 from the recent lows. Natgas is on the move higher this morning. Kaching, Kaching, Kaching…The fundsters, who just finished burning up on their USD carry trade, are now finding their “stop and reverse” long USD play is already on fire too! One particularly pathetic journalist, David Olive, just wrote a rack of insults in the local Toronto Star aimed at the gold community. (YOU). And, really, at GOLD ITSELF. Of course he didn’t mention Paul Tudor nor John Paulson. He mentioned a few gold bubble callers as his heros, gold market losers who I think the Brain could out-trade on his worst day of trading, with his eyes closed and his computer turned off. I personally would simply like to meet this dollarbug Mr. Olive in a boxing ring and bash his face in legally. Why waste time arguing with such a moron, just beat him up legally and be done with it. It’s more time-efficient. He’s a disgrace to his own dollarbug team. All he deserves is a toy photocopier to play with, not even a real one. “Look mommy, I’m a money creator. Free money for all my pals!”

16. Today is REALITY day, if I have my calendar set properly. The gold COT report should be out late this aftertoon. (how generous of the banksters to let us see what they did 10 days after they did it, while they look at us acting in the mkt by the microsecond)We get to see the banksters ACTED in the gold market over the past week thru Tuesday’s trading. That’s a very important time period, because it includes the drive into the lows at 1075. While Mr. Olive operated his useless blabbermouth, the banksters, and our pgens, were in gold market ACTION. My suspicion remains we’ll see they bought heavily into 1075.

17. Dec. 28 (Bloomberg) -- If Morgan Stanley is correct, the best sale of U.S. Treasuries for 2010 may be the short sale. Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.

18. Gold bears and dollar bulls will see the rise in rates as dollar bullish. We’ll see how bullish it is after higher rates send the fake real estate recovery into the ashcan. And tax revenues, already in disaster mode, become a crisis. When the coming wave of mortgage resets occur, it could be at vastly higher rate levels than was previously considered possible.

19. Rising rates and plunging tax revenues are a NIGHTMARE scenario for the US Treasury. The response will be a VICIOUS attack on the US dollar. It is unknown how bad the US bond market is going to be hurt as rates begin to rise at the worst possible moment.

20. My own view is that the banksters are using the possibility of 8% mortgage rates to take the carry trade from the last fundster holdouts. Only it really isn’t a “carry trade” in the eyes of the banksters. It is a SHORT USD trade. Look out YOU market window this morning. Does the thought of VASTLY higher rates make you feel afraid that a HUGE USD rally could be coming? USD Monthly Chart

21. Notice the TRIX indicator on the USD monthly chart. It is on a huge BUY signal. I wouldn’t laugh at that. A major USD rally would destroy the fundsters’ carry trade completely. The USD daily chart is overbot. So the USD long newbies (most of whom are leveraged) will be fried on only a small fall in USD and rally in gold.

22. The key situation comes AFTER such an event. Is a coming USD selloff and gold rally marking THE bottom for gold at 1075? I wouldn’t bet money on that.

23. I see some gold writers discussing year-end as portfolio re-allocation time. Translation: Loss-booking time. One well-meaning fellow wrote that if you have 100k, you should spread that out over 20 stocks and over different sectors.

24. I see that as an exercise in MADNESS. Diversify FIRST over PRICE, not sectors. Think of the guys that bought a package of “quality golds” in 1980 at $800 an ounce. If they bought bullion in a pyramid from the day of the top, they would have been fine. Instead, they are DESTROYED. The writer meant well, and in his world $100k is what he terms “significant assets”. In the world of many of you, that’s a couple of day’s pay. But even if you only have $100 to invest, you should still diversify over price, not build a junk box of 10 zillion stocks.

25. So as we start this fine Monday morning, we’re looking good, ringing the gold and gold-related item cash registers. But let’s not get too cocky. Remember that the game of the banksters is to take what the fundsters have. They gave the USD carry trade big publicity, then slammed it. Can you seriously imagine being a leveraged fundster short the USD and getting your newsflash early this morning that Morgan Stanley is talking rates at 8%? You feel like DEATH.

26. Likewise, with Natural Gas, the daily chart IS overbot somewhat. Price is UP. So you have been ringing your CASH REGISTER via your PGEN with your TRADING positions. But don’t outsmart yourself and blow out your NG core positions. Guys like Babe Ruth that bought into the pain zone didn’t buy to flip out NG on the day winter starts for a micro profit. Reward must correlate to the risk you take.

27. MANAGING items like corn/wheat and natgas now, are like managing gold at $400-300. You need to reach down inside and into YOUR character core, your SOUL, and LOCK onto that. View those who want you to sell your core positions as your PERSONAL ENEMY. Make it personal. Why? Because you aren’t the Brain. You can’t “sculpt” profits. You are not a market ARTIST with that skill level. You have to FIGHT for profit. All YOU have is: Price and your Character. Think of the worst periods in your life that you survived and use those to hold on to your core positions. Do NOT let go. You need to be very strong on the inside to keep your focus on PRICE and away from all the noise around price. Noise that is DESIGNED by the banksters to keep you acting as they like. I am VERY content with both the ringing of my trading cash register for NG AND with my NG core positions. THINK Dow 6500. Do EVERYTHING you know you should have done THERE with corn/wheat and NatGas now. Be Strong. Very strong…

See you out there….

Cheers

Dec 29, 2009

1. “Gold is a high risk investment”. Dec 27, 2009 – Martin Feldstein, former Chairman of Ronald Reagan’s council of economic advisors and professor at Harvard.

2. Gold is not a high risk investment. Martin is dead wrong. Gold is the lowest risk investment in the world. He is correct that the gold price is volatile, although it can be argued that the price volatility is because of the successful efforts of most world governments and the banksters to convince everyone that gold IS a high risk investment and an irrelevant asset.

3. Gold’s price volatility, I argue, is a direct result of is drastic undervalue. Not just underpricing, but actual undervaluing. Joe Blow investor and Joe fund manager thinks gold is an irrelevant asset, when it actually remains the cornerstone of the global financial system. That fact is the actual underlying cause of gold price volatility.

4. The banksters don’t think gold is high risk or irrelevant, but they want academic types like Martin Feldstein to make everyone else think so. In a major crisis, when everyone already owns some gold, the gold price would not gyrate wildly. That’s not the case in today’s world. In a crisis, a storm into and out of gold creates huge price volatility.

5. The gold bears like to trumpet Marty Feldstein’s resume. He’s recognized as one of the 10 most influential economists in the world. I say: Marty has been to Oxford, has an IQ in the stratosphere, is a big gun at Harvard, has been close to the President of the United States, and yet still this man does not have a proper understanding of what gold IS? That’s unfortunate. For him.

6. I bought a bunch of gold data and emailed to my resident systems engineer “Goldflower” (that’s a real profession, systems engineering. The average student has 98% in grades to get in there). I mentioned the ATR, the average true range indicator.

7. While Marty Feldstein cries his eyes out that gold is “volatile” I celebrate that volatility, as do the banksters. By understanding gold’s volatility, money can be made (a lot of it) by buying and selling gold in a way that sees that volatility as your friend.

8. What the gold bears don’t want to understand is that during a selloff there are rallies. The more volatility there is, the more volatility there is, and the bigger the price swings. I don’t guess at all those swings, I respond to them. Buying weakness, selling strength. As do the banksters. They do it with complicated algorithm trading software. The problem with an algo trade is you need to basically put $100 million on the line to make a hundred bucks. Yes, you then make that $100 bucks repeatedly thru the trading day, but: What if the “impossible” happens? What if gold gaps?

9. The price gap is the death bell for the day trader, the day flipper. When price gaps there is no trading. A price gap could occur at the opening bell, or it could occur during the day. Gold is a 24 mkt, but gaps are still possible. I have no interest in betting monster money to make micro money.

10. But the very volatility that Marty Feldstein talks about is my friend. Goldflower is working to structure my pgen to take advantage of various market conditions, various changes in mkt volatility. Those of you who have enquired about managed money probably have an idea of where I’m going with this. Since we only buy gold on weakness, changes in volatility can be managed, but even when we get it “wrong”, is it really “wrong” if we are buying gold say, every $8 down, when we “should” be buying it every 7.94 down? We still make money! I doubt the business owner is looking for perfection. You are looking for profit maximization in something solid.

11. What goldflower is doing is simply adding another pgen machine to the Graceland factory floor. He’s honing the machinery. Since he’s designed highly complicated engineered systems in the past, let’s assume this isn’t exactly putting his brain in a goldknot (like Marty Feldstein’s is..). The difference between Goldflower (and most of your reading this) and Marty is that Goldflower understands that because the odds of gold going to zero are so tiny, the price volatility is a blessing…if you are prepared to buy any and all weakness, which we are.

12. Goldflower is onto something very very big with his research into gold price volatility. His own trading account has surged forwards with low drawdowns since he adopted the pgen. It’s too bad Marty Feldstein is wasting his great brain on gold bashing instead of making money out of it. Too bad for him. Guys like Marty actually help me make more money by boosting gold’s volatility rates. Maybe I’ll send him a thank-you note with a picture of a monkey holding a gold bar. I’m the monkey. It might be more than one bar I’m holding…

13. Remember, if gold trades ten times between $200 average true range over a year, that is potentially a lot more profit than if it trades just once between those prices. This refers to velocity, not just volatility. The frequency of volatility is as important as the volatility itself. The bear market of 1980 featured some spectacular opportunities to buy and sell gold. It wasn’t just a straight down affair. If you threw in carrying a 30% short position traded in my pgen, you could have bought on the day of the 1980 gold top with the pgen and ended at the low at $250 with a net profit.

14. “Ask not what gold can do for you, but what you can do for gold”. If you can think this way, vast riches (or at least the ability to sleep at night with your current gold positions) are near at hand.

15. I posted the latest cot report on my website last night. Once again we see that as price fell into 1075 it was the banksters on the buy, booking profit on about 13,000 short positions and adding about 3000 longs. The fundsters and much of the gold community, sadly, took the other side of the trade, throwing about 15,000 longs into the gold garbage into 1075 in failure, while adding 3000 thousand gold shorts right into the lows. Nice move, fundsters. For the smaller gold investors, it is demoralizing watching the larger investors throw their gold into the garbage. It seems impossible that they are that stupid.

16. It’s more greed than stupidity. Long term capital’s managers had leveraged the fund about 500 to 1. Nobody knows the real numbers. It seems they had a few billion in real capital carrying “around” a trillion dollars in notional positions. Top economists with doctorate degrees were on board that good ship, the Leveraged LoliPop.” So smart, yet, so dumb.

17. Volatility is your friend. Leverage is not your friend until you have used up all your volatility friends. I don’t believe anyone reading this has used up your volatility tools, so your use of leverage could be: A tactical error. Seek volatility that exists. Don’t create it with leverage. Like good cholesterol and bad cholesterol, that is the story of volatility versus leverage. The banksters seek while the fundsters try to create from thin air. Think about that. Seeking versus creating. Discovering versus reinventing the wheel. If you can achieve reward X with zero leverage, why try to create that same reward with huge leveraged risk?

18. The banksters love selling the fundsters leveraged algo trading systems, while they take the other side of the trade with no leverage. (partly because they have the ability to print unlimited monies to handle any margin call for themselves)

19. What is the real value of gold? [Arguably, there is no real value. More so than for most commodities because of the extremely high stocks-to-flows ratio. -FNC] Likely vastly higher than where it is priced now. The dollar that has lost almost all its value while gold has lost: None. That is the scorecard, that is the fact. Gold wins, the dollar loses. And yet each year a new crew of paper money pundits step forward, claiming they alone have re-invented reality, that they alone are smarter than five thousand years of history, just as the long term capital managers believed they could outsmart risk, rather than manage it with properly by reducing leverage. A leveraged world drowning in debt now exists. “Champagne taste and a beer bottle pocketbook”, as my mother drilled into me.

20. Paper money and gold can work together as a team. Gold keeps that door open 365 days a year, and has for 5000 years. When the dollarbugs decide, however, they want a fight? That is an exercise in madness. There will be no victory for the dollar in a fight to the death against gold. Just as there has been no victory for all the other paper currencies that tried it. All were killed. Not knocked out. Killed and exterminated. Fighting gold is the ultimate market madness. It is complete and total insanity. Leveraging that fight against gold defies all spoken words.

21. Do not join in any fight against gold. You will be financially killed and exterminated by Queen gold. Trade it, yes, but don’t fight gold. Gold will be here long after the continuous feed of gold bears fail in their fight, just as every single gold bear has failed for 5000 years.

22. Sadly, most of the world’s investors are actually engaged in that very fight. I mentioned Mr. Olive, a local journalist who threw down the gauntlet in the Toronto Star as one such pathetic example. That is the calibre of gold’s opponents. Clowns that can’t trade. My subs as a group, via my pgen, have probably booked well over10,000 wins in gold in the past few months alone. Closed winning trades. Not day flips. Position wins. How many have Mr. Olive’s flock booked? What a clown. If you want to listen a clown tell you how gold is a bubble, go ahead. His brain is the only gold bubble I see, a gold spray painted bubble. And one that is definitely popped.

23. By failing to team up with gold in a friendly way at low gold prices, the paper currencies have made it a done deal that they will find themselves blubbering on the floor at thousands of dollars an ounce, crying “please help us, we’ll pay anything, just help us please!” The price for that help is going to very costly. I feel sorry for the paper currency bulls, clinging to their electronic photocopier heros. “Let’s see, the Gman steals 50% of my income, he can’t balance his books despite having the power of taxation, he still can’t solve a problem without a war despite trying for 5000 years, he has 10 billion laws to enforce 10 common sense ones and still can’t do that, and yet his photocopied playmoney, not gold, is my financial hero”. What’s wrong with that picture? Everything is wrong, everything.

24. It’s not about economic gain. It’s about freedom. Gold is about freedom and responsibility. The papercurrency bugs will never understand that, and since they’ve decided to take the gold community on in a financial deathfight, that’s fine with me. I love fighting. Let’s see how willing these worms are to buy their photocopied trash all the way to zero while I do the same with gold bullion. The paper currency bugs are going out in financial bodybags, just as they have every other time for 5000 years without a single defeat for gold. Do not fight gold. You won’t just lose. You will be obliterated. Although I don’t think it will happen, I would love to see the banksters really stick it to the paper currency bugs. Instead of ending the US dollar bear at 40-50 on the index, they instead wipe it out and replace it with a global currency. Like the management of a company delists its common stock and rolls the business into a new company, wiping out the common shareholders of the original business. The paper currency bugs think they are really smart betting on the exception. The rule is: All paper goes to: Zero. I think the banksters will lock the dollar to gold before the dollar goes off the board. Would I bet money on that? No. The bond market is on fire and Morgan Stanley is pouring tanker trucks of gas on it. Morgan Stanley’s record of calling major moves is unparalleled. Not a lot of people know they are in fact the spun off brokerage arm from JP Morgan. They were spun off from JPM as Exxon was from Standard Oil. For gamblers (and those seeking retribution) only: I have advised patience on shorting the US bond mkt. The gloves are off now, it’s time to attack. I believe the junk bond market is the prime target, but that may involve shorting that market, rather than buying a bear etf. A bear etf has limited risk. You can’t lose more than you bet. Shorting has unlimited risk. I don’t know of any junk bond mkt bear etfs….Let me know if YOU do. Thanks.

25. The bond market is very oversold by some technical measurements now. It’s fallen from 142 to 114. That’s a huge fall. Above all, always trade smaller than seems rational. Some of you cooked yourselves shorting the Dow at 6500 in size, buying too much natgas sure you had the bottom, etc…The bond mkt looks bad, but it could have a massive rally from here. Sell strength, not hopes. The biggest money is in buying the bond later. Not shorting it now. I wouldn’t put anything more than wild gambling money into the shorting the bond. It should be money you are comfortable throwing into the fireplace. Here’s the junk bond etf: Weekly Junk Bond Chart

Price is rising, rising, rising. I wonder what Morgan Stanley’s huge rates rise prediction, if it “happened” to come true, would do to the JUNK bond market…..Looking at the chart, it seems that MS clients, and most of the world’s investors, WHO JUST FINISHED LOADING UP ON THIS GARBAGE are ignoring the Morgan sell signals. Just as they ignored Morgan’s sell signals in 1987 for the stock mkt and in 2007, also for the stk mkt. My view: JP Morgan is about to hand Joe Public bond investor what could be the whipping of a lifetime.

See you out there…

Cheers