Graceland Updates 4am-7am

Dec 31, 2009

1. Happy New Year!! But you say, “Stu, it’s only 4am on New Year’s Eve, you’re way too early.”

2. Wrong. It’s Kachingo city here. Oil, blasting to new highs at $80 for the rally, gold up $12, silver up, Australian dollar up to new highs for the rally…and the day has barely started!

3. It’s easy to FORGET what gold IS when the gold Worms, Bullies and Bears keep pointing at price and telling you what a lousy world this is. Once you melt away into their failed mindset, you are DOOMED in the MARKET.

4. The BRAIN last night noted a rare technical pattern for gold that has not occurred since about 1900 on one set of charts they follow.

5. Goldblood in England already reported in this morning that his HANDS FREE pgen gold robot bought into yesterday’s lows and has already cashed out a chunk, while he’s playing tiddly winks with the kids. Are those Golden tiddly winks, Sir? Happy New Year to you!

6. Meantime another of you reports that your stats yesterday showed gold’s SENTIMENT at the same levels it was… at 905! AND, only a few points above where it was on the tankshow into 680! Remember my words at 1075: “This FEELS like 905.” I read the gold writers and get into the MINDS. That’s how I do this. I read “thru” their writings and try to think, “what is this guy REALLY thinking, what is he FEELING.” I don’t believe their stories about being “hedged” or “temporarily short gold but long term bullish”. I saw them as: BUSTED OUT.

7. The lemmings are marching to the garbage can and dumping their gold as fast as they can to bring in the New Year with none. They know the crisis is over and junk bonds and OTC derivatives are a low risk investment. Price chasing them in a frenzy is the royal road to free money. Because Marty Feldstein the Bankster puppet says so. 5000 years of history be darned, all we need to do to make free money is sell all our gold to the banksters at the market and invest in toilet paper following the Gman’s specific instructions. Then borrow money from the banksters and leverage it to make even more free money.

8. Remember what I said as gold started down from 1225: Gold could fall hard to bring down the technical overbot condition, but it could also go sideways into a range. Anything was possible, and anything remains possible.

9. You got your first taste of life as part of Team Gold in the fight ring yesterday. On the OFFENSIVE. No more defence for gold. We don’t “answer” to the bears anymore. We DICTATE to them. That’s not my idea. That’s what gold itself is DOING. All I’m doing is pointing out that reality. I suggest you get into that VIBE too, or you will be DESTROYED by it. I’m serious. Taking on the Central Bank Of China with some cycle chart or a dentist isn’t going to cut it. Get Real. No chartists can beat THE VIEW. You survived yesterday. And prospered. Gold will be here LONG after Marty Feldstein and his cardboard otc derivatives party boat are dead and gone.

10. Focus on surviving days like yesterday and Tuesday with a MODEST amount of REAL GOLD. Don’t play King Kong if you can’t survive days like yesterday. Build with patience. Increase your market action slowly, with care. Make each move forwards PERMANENT.

11. I spent a LOT of time bashing the Chinese Gman in full view of the gold community. I did that to make you focus on yourself. Not some crutch. Once I saw you had made that transition, I was able to then re-visit the Central Bank Theme. Which is: Buying gold for the next DECADE. Nothing else matters. Not plastic fillings or slumping jewel sales. Once you accepted that what the Central Banksters are doing is not in their taxpayers interest, but in the banksters’ interest, I could then revisit the theme.

12. No chartist, no cycleman, no nothing can stop what is coming. I posted the whole story on my website a couple of months ago, courtesy of Paul Tudor. Tudor’s original flagship fund has been closed to new investors since it formed in the late 1980s. He uses leverage, yet his largest drawdown (peak to trough movement) has never exceeded 13%. He had his first losing year last year but he only lost 1% or so. That’s a superhuman performance by Tudor. He’s a gold superbull, largely because he understands the GLOBAL central bank theme which is:

13. Buy gold and buy it CONSISTENTLY for the next ten years!

14. The bears are MORONS. They were morons at 250, 520, 680, 905, and 1075. They will be morons all the way to the gold stratosphere. Do you know how pathetic it is to be standing in a hotel room dumping the gold you bought in 1980 at the peak to some loanshark at a 40% markdown? While the shark tells you it’s a bubble? You say “how low?” when some bear bustout says jump? The central bank gold steamroller, operated by the banksters, is going to pulverize the bears over and over again for YEARS TO COME until there are NONE LEFT.

15. Everyone in the world will be a gold bull when this bull market ends. There will be ZERO bears. The difference this time, is that the general public will NOT own ANY gold, despite being bulls. The idiots will accept that gold “must” be part of the financial system and nod their heads up and down at how smart the central banksters are to help everyone by buying gold non-stop. It’s all a BANKSTER GAME.

16. As INSITUTIONS (who are sitting on 8 TRILLION in CASH) realize what Tudor knows, what WE know, they will begin piling into gold STOCKS. The institutions won’t move until they see the central banks buying more and more. Then they will move like there is no tomorrow. You’ll likely see juniors go to $100 a share by the BUCKETLOAD. If you aren’t in NOW, you’ll NEVER get in once the institutions hit the buy button. If you can’t get in now on weakness, if you can’t survive THIS price action like we had into 1075, how will you ever survive the action as the central banks become players in the open market?

17. The banksters have thought and planned this whole thing out very, very meticulously. Keep in mind that the Rothschild family has several hundreds years history working closely with the Chinese banksters and gold dealers. Keep that in mind before thinking the Chinese banksters are any different from the Western banksters. This is all one big bankster game, and I want in on it.

18. I don’t buy or sell the Dow or Wheat or Corn based on what the US dollar might do. I buy them based on PRICE. THEIR price. I’m long the US dollar on weakness into ITS lows. Not into gold’s highs. I’m long much more gold than I’m long USD. If you blow out your gold into weakness because the US dollar MIGHT rally, you are making a HUGE tactical error. At some point the US dollar bear mkt will end. And the dollar may rise TOGETHER with gold.

19. I mentioned shorting the metals into gold 1225. I didn’t pick the top. I sold INTO it. I didn’t call the bottom at 1075 although it felt like one. I simply covered into weakness. The same with the US dollar. While the dollar bulls blabbered on about “the big rally that could be coming” I was buying the dollar in a range pyramid.

20. The daily charts for the US dollar show this ASSET to be overbought. Not the weekly charts. So a fall on the dollar here could still be followed by a bigger rally, or extension of the current rally. But that has ZERO effect on my GOLD market ACTIONS. If you think the dollar will rally, BUY IT in a pyramid formation based on its price.

21. Let’s see how the paperbugs actually PERFORM in the rally they are almost CRYING to get. Why the OBSESSION with a dollar rally? Let me throw down the gauntlet to the paperbugs: Your market LIFE seems to depend on getting a rally. While you go to battle against the world’s central banks all lined up in unison against you, you are obsessed with trying to get an intermediate term rally WIN. I’m IN the same trade you are, and likely at FAR BETTER prices. My largest long USD positions are bought into the EXACT LOW. Are yours? I don’t go on and on and on about how the USD might “rally big!”. I just buy the stupid thing into weakness and be done with it.

22. This is the ERA of gold. Only a market IDIOT sells their PRIMARY POSITION to take part in an intermediate counter trend move against an ERA. And of course, that’s what the paperbugs really are: Market IDIOTS engaging in a crazed attempt to beat the central banksters of the world in a death fight in the gold market. Trying to scalp some primary trend counter move to make peanuts. If the public investor who priced chased the stock market in the late 1990s (then real estate and now bonds)thinks he’s had a bad experience to date, if he thinks he’s tasted market PAIN so far, I would suggest he enrol in a course to manage pain and do it ASAP. He’s going to need at lot more SOUL than he’s shown so far. Because the banksters are going to taken him WAY DEEPER into the pain zone.

23. This US dollar rally will end with the carry trade firmly in the hands of the banksters. Some of you think ALL the comex gold trades by the banksters are actually hedging they do against their gold dealing. Earth to Mars: They often come in the middle of the NIGHT, while you are ASLEEP. Why would they short 8 gold contracts at 2am? Is that part of their dealing hedging? Then at 2:14am they short 24 contracts. And on and on it goes. Suddenly THOUSANDS of contracts are changing hands and it is the banksters on the BUY IN SIZE and the funds on the sell in size as price tanks. The banksters BROKE the mkt with small positions and BOOKED PROFIT in SIZE with big ones. While the funds book LOSSES. Also in SIZE. That’s reality. Gold Reality. Those who believe the banksters are not involved in gold market games are so far removed from trading reality we need to call in Captain Kirk again. To bring you home in his starship.

24. When you have never handled money for people professionally (I have), you can cause TREMENDOUS HARM to investors with your MARKET THOUGHTS. Because just as there is vastly more to running a business than knowing the numbers, there is much more to investing in gold than where the next possible move might be. Gold land makes their living writing about the next price direction point.

25. In golf ball advisor land, it is the opposite problem: Ironically, Morgan Stanley’s own advisors and clients, most of them, failed to listen to their TRIPLE SELL SIGNAL given in spring 2007 for the Dow. And they are FAILING AGAIN TO LISTEN with BONDS. Everything built in the 1990s by the investors in stocks was destroyed by failing to LISTEN. Or should I say, everything was handed to the banksters at 10 cents on the buck. They gave similar signals in Dec 1999. I told my people to get out and prepare to buy gold. Few listened. Those that did sold out in Dec 1999. We sold everything over a one week period. Waves of stock blown out. One guy’s wife refused to sell anything. He made a fortune and she blew up completely. She thought the high tech bubble was a “new era”. It was. A new era of bankster games and she was their MARK. We took a few months off. I began putting people into gold in the spring of 2000. Some oils, but mostly gold, silver, and gold stocks. I wasn’t involved with the general gold community then, I didn’t know there was one.

26. A lot has happened since then. Right now, the gold bears have laid out the possibility of a dollar rally. I make money if that happens. I make a lot MORE money if gold rallies. And I make the most money of all if they BOTH rally. Frankly, the way the gold bears have handled a possible counter-trend rally in the USdollar (which could turn into a new bull mkt, although I put the odds of that at about 10%), is: totally irresponsible. They know the gold community is fickle and quick to act in size. Their statements were not done professionally. Not at all. The golf ball advisors would not be comfortable with such aggressive moves and they are correct. “Sell it all, buy it all, do anything, just move it all!” There’s a way to handle things. The bears like to play hardball. Well, I like softball. But if somebody plays hardball with me, I have my own little game: Rockball. The central banks are the rockball that will put most of the world’s investors into their financial graveyards.

27. The Pgen makes it basically IMPOSSIBLE for you to act rashly in the mkt. In terms of mkt action, the golf ball advisors act far more rashly than most writers in the gold community, because they are moving assets in size at single price points. The banksters SEEM to be “action-oriented” leaping around in the gold futures mkt. The reality is their actions are the most stable of all, buying weakness and selling strength consistently for hundreds of years with GOLD as the foundation of all their actions. Their drawdowns over the past 100 years probably make Paul Tudor look like a WILDMAN. The pgen is like a factory machine based on their exact actions in the market. It IS a factory machine. Buying and selling constantly while keeping a percentage for the “home run”. The trading portion is like the “singles” in a baseball game, the bread and butter. The outer core is the doubles and triples. The inner core is the home run play.

28. I believe the brain has figured out what gold’s likely next moves are and they are prepared in size to profit from them. They maintain a monster battalion of statistics and have waves of buy and sell orders around all kinds of market numbers in the market, in there NOW. This is way above me, way above the clowns in gold land who pretend they are professional traders. Trading an Edwards and Magee price pattern requires a lot more skill than most chartists bring to the table. I’ve seen very good chartists place the same amt of money on a spectacular trading opportunity as they do on a mediocre one. Big mistake. For the rest of us, as we are just 24 hours away from 2010, do you really want to face this year with some GUESS about where the major markets are going? Just respond to the price. Try lining up some major asset hourglasses on your desk. Mark one “Dow”. Another “Bonds”. Another “Gold”. Turn the hourglass over. That’s price declining and you on the buy. Now BEFORE all the sand goes down, turn it back over. That’s you on the SELL. Booking profit. Feeding stock into the mkt into strength, booking profit on it. If all the sand drains out, you sold too much. Is that the end of your world? No. Price WILL decline again. And, slowly, you go back on the buy, refilling. In 2010, it’s going to be more important than ever that you just compartmentalize each market like that. Stay very calm and just respond to price and you’ll walk into 2011 in the black, with low drawdowns, and feeling good.

29. Lastly, how many people do you see in the gold community shorting bonds now? Almost none. For the past few years, it has been non-stop. I would say the attempt to call the bond mkt top was MANIACAL. And a total failure. Now Morgan Stanley steps forward and puts cobra venom in the bond mkt, and everyone says, “maybe it will be ok, maybe all is fine, turn the party music back on, let’s dance.” Sure, dance of the zombies.…. I’ll leave you with Morgan Stanley’s summary of 2010. I agree with their analysis. It is outstanding. Highlighting and underlining is mine.

30. “...we think that sovereign risk and inflation risk will be a major theme for markets in 2010. The current issues surrounding Greece's fiscal problems are only a taste of things to come in many other advanced (note: not emerging) economies, in our view. We note that fiscal policy looks set to remain expansionary in all major economies next year, as it arguably should be, given the ‘triple B' recovery which still requires support. However, markets are likely to increasingly worry about longer-term fiscal sustainability, and rightly so. Importantly, the issue is not really about potential sovereign defaults in advanced economies. These are extremely unlikely, for a simple reason: most of the government debt outstanding in advanced economies is in domestic currency, and in the (unlikely) case that governments cannot fund debt service payments through new debt issuance, tax increases or asset sales, they can instruct their central bank to print whatever is needed (call it quantitative easing). Thus, in the last analysis, sovereign risk translates into inflation risk rather than outright default risk. We expect markets to increasingly focus on these risks in the year ahead, pushing inflation premia and thus bond yields significantly higher. Put differently, the next crisis is likely to be a crisis of confidence in governments' and central banks' ability to shoulder the rising public sector debt burden without creating inflation…the rising rate scenario may unfold sooner rather than later...” - Morgan Stanley. Dec 2009… Richard Berner is a Managing Director, Co-Head of Global Economics and Chief U.S. Economist at Morgan Stanley. He co-directs the Firm's forecasting and analysis of the global economy and financial markets and co-heads the Firm's Strategy Forum. Before joining Morgan Stanley in 1999, Dick was Executive Vice President and Chief Economist at Mellon Bank, and a member of Mellon's Senior Management Committee. He also served for seven years on the research staff of the Federal Reserve in Washington. Dick is a member of the Economic Advisory Panel of the Federal Reserve Bank of New York, a member of the Panel of Economic Advisers of the Congressional Budget Office, and a member of the Executive Committee and a Director at large of the National Bureau of Economic Research. He is the 2007 winner of the William F. Butler Award for excellence in business economics. Dick received his bachelor's degree from Harvard College, and his Ph.D. from the University of Pennsylvania. He researched his dissertation under SSRC-Ford Foundation grants at both the University of Louvain, Belgium, and at the University of Bologna, Italy. He speaks French and a little Italian.

31. You get the idea:

The bond mkt is toast. Morgan is the toaster. GOLD remains the investment of choice for 2010.

Cheers,