Graceland Updates 4am-7am

Feb 1 2010

1. I fly to New York tomorrow morning until Sat. To meet with King Kong and his contacts. As the gold correction accelerates, most writers, and gold community investors, dig deeper into their charts for answers. I dig deeper into people’s minds and threshold levels. And deeper into my layers of buy orders.

2. The theme right now, as a lot of major events are moving towards centre stage, the theme is: “What is going on?” My suggestion is that the more you try to figure that out, the higher the odds are that you will get yourself into trouble in terms of your market actions.

3. Reuters carried statements by Swiss officials that UBS bank could fail if negotiations to rat out US clients of the bank fall through. Neither the US dollar nor gold’s price responded to those statements. IF the bank were to fail, it’s quite possible that both the dollar and gold get bought.

4. You know I don’t like Noriel Noubini playing market timer. He made one call, and that came after 98% of the gold community’s writers already made that call, the destruction of the US real estate bull mkt. I don’t even call it a call. If he DIDN’T see US real estate as ready to tank when it did, I’d call him an IDIOT. What he is GOOD at, is economics. His statement that the 5.7% GDP number headline is actually a report that the US economy is “dismal and poor”, is not a statement to be taken lightly, but it will be. By the dollar bugs. He says US unemployment will CONTINUE to rise BEYOND the 10% number.

5. The fact that 19 out of 20 working age men were employed during the American heydays, but now only 16 are working, has profound longer term ramifications.

6. Men like Roubini and John Williams do great work, phenomenal work, in economics. But I can tell you MANY stories of elite economists who took their economics knowledge and tried to play market timer and money manager. The two are related fields, but not the same. Being good at one does not make you automatically good at the other. The stories end in horror. Use the phenomenal work of Roubini and the even more phenomenal work of John Williams to build and maintain your big picture view.

7. Not to enter market trades.

8. On the other end of the scale, the chartists are killing themselves trying to figure out where gold might go next. All the signs are in the air for some sort of announcement that is going to catch the day traders by surprise. Day traders can make money for years. Then one day, a monster announcement sends their leveraged bets, and them, into the garbage can, permanently.

9. Now is the time to act more slowly, more rationally, with smaller buy and sell orders. Not the time to guess that the market’s next direction will be magically revealed to you. To do that, there is only one course of action. FOLLOW THE MONEY. Now is the time to seek a state of calm, and do what it takes to maintain that state. If you are buying an item every dollar down and you are starting to feel HEAT, switch to buying every 3 dollars down, or every 5 down, or whatever the number is that is required to turn down YOUR thermostat. Your emotional thermostat.

10. For myself, for the Brain, for King Kong, for Babe Ruth, and for most of you, we have control of our personal emotional thermostats. The idea that gold could pull back after rising $540 from the 680 lows is not a “surprise”. The idea that gold could pull back to the neckline area or lower is not a surprise.

11. Most of all, the idea that the banksters would do their best to terrify us while any price weakness occurred, is not a surprise at all.

12. Every new price rise and fall is slightly different. As the stock market crashed in 1907 there were a million reasons to stay out. Those who bought the weakness in the stock market consistently and sold strength consistently have been rewarded with vast wealth. Those who bought nothing but their fantasy turns were left in the dust.

13. It will be the same in China, and more so in gold. Maybe this is like 1907 in China and we’re due for “the big crash”. All I know is the market is down 17% from the highs basis the FXI-nyse etf. Six more “shots” of that and we’re at zero. Are we going to zero? Maybe. All I know is the banksters have made BILLIONS trading the Japan market in a pyramid formation while everyone else has tried to expertly call either the turn on the non-turn.

14. Write “master top and bottom caller, turn identification expert” on a piece of paper. Hold that in one hand. Read that out loud. Then get another piece of paper. Write “BILLIONS and TRILLIONS” on that one, and read that out loud.

15. Then decide which you want. I’ve made my decision, and the route there is following the liquidity flows of the banksters.

16. On that note: The commercial short position in gold has come down in size, but is still large. Obviously if price falls more, the banksters will be on the buy as it occurs. So will I. In the late 1970s, there were the same ideas there are now: The short position means we have to buy dollars, the IMF might sell gold, and interest rates might rise so we have to buy the dollar.

17. The dollar did rise in the 1970s. And the dollarbugs made about 10%. Let’s give them a standing ovation for that action.

18. While gold soared 100% on bullion and 1000% on junior golds. You can choose the 10% toilet paper bird in the bush if you want, if you find that exciting. Not me. I like 100% to 1000%. Is the dollar going to rise 1000%? Maybe it is. I say: NO.

19. If you can’t handle the heat, and if you didn’t buy any dollar positions in a pyramid formation that you are now booking profit on while the loser trader dollar bugs count all their birds in the bush, my suggestion is to consider buying put options on gold, IF you can’t handle the heat. Sin a little to manage that heat. Do what it takes to stay in the gold kitchen, take the practical action to manage your personal stress levels. But remember, that heat is YOURS. Not MINE. I don’t have any heat because I didn’t play timer or price plopper and I DID buy the dollar, and I’ll make MORE of my dollar positions that the dollar bugs will on theirs. I don’t even believe they will make ANYTHING. I think their toilet paper fantasy bull market will be flushed by the banksters and they’ll liquidate at huge losses, that’s my personal opinion on how it will end for them, regardless of any short term price rise.

20. I added to my Australian dollar position this morning. It looks like it has a top on it, and a “breakdown” below 8750 would send it “plunging”. Oh no, I’m terrified, somebody get my mommy on the phone, it might go lower than my latest buy point…

21. The head of the IMF stated over the week-end that most of the “tools in the toolbox”, meaning the central bank toolbox, have been used.

22. Yes, now we “only” have gold revaluation and money printing left in Benny’s toolbox. President “SpendORama” Obama announced he projects a 2011 budget spending almost FOUR TRILLION dollars of YOUR MONEY (with a loan from your unborn grandchildren to cover a minor shortfall) and projects a 1.6 trillion dollar deficit. In the real world, that means over 2 trillion. What happens when the mortgage resets hit? 3 trillion isn’t impossible. If they blow up OTCD-soaked UBS, think 4 trillion or 5 trillion. Think about that before tossing your gold in the trashcan on weakness because it violated some daytrader’s line in the banksters’ sandbox. Once again, we’re told that “the recovery” is more important than the Gman fixing his own house. He’s going to save us all instead of fixing his own sinking ship.

23. JP Morgan has joined Morgan Stanley and Citigroup’s top analysts in calling for a bond bear, using the term that they are “tactically bearish” on the US bond market. Institutions are starting to get nervous as they watch one bond market sell signal after another being generated by the major banks. The public still doesn’t know what is going on and won’t for a long time. When the banksters finally do a major housing repo, do you think they would want to do it at higher or lower house prices? The dollarbugs are being herded into the slaughterhouse by the banksters but sadly, they don’t need herding, they are slobbering to get in, they are LINING UP to enter the gas chamber. When the bond market goes into free-fall mode, and it is on the VERGE of doing just that, I think President Spend O Rama is going to order Mr. Geithner to turn on the dollar, like a pitbull on a poodle.

24. The question you need to ask yourself, is this: WHY are the banksters shorting the US dollar here and now into this strength? What do they know? The answer is:

25. Something you don’t know, something I don’t know, something we can’t know, something we will never know, which is why you employ charts, newsletter writers, newspaper reports, and various other schemes and dreams to figure out that which is…. unknowable. The brain bases their trading on FOLLOWING THE LIQUIDITY FLOW IN THE GOLD MARKET. Not predicting it. They want to know what IS happening, not what WILL happen and RESPOND to it.

26. The reality is that nobody in the gold community knew that the banksters would tank Bear and Lehman. And nobody knows why the banksters are shorting the US dollar here and now, nobody knows what it is that the banksters have planned, and nobody knows whether they plan to keep shorting it for months, or this is the top of the dollar right here.

27. You have to make a decision. Lay out your various market guru letter subscriptions in front of you. Look at what they are predicting. Then stare into the COT reports I posted on the site, stare into the US dollar video report and the Gold cot chart. The reality is that there has never been an instance in the history of the US dollar cot reports where the fundsters have beat the banksters. Maybe today is win the lotto day for the fundsters. But I’m not betting money on such an event. I’m not changing strategy because some writer is telling you (and himself) that he’s smarter than a trillionaire.. The trillionaires are laying in USD shorts-DAILY- into THIS strength. Here and Now. I live in today’s world, not tomorrow’s fantasies. The cracker jack box team has sold all their gold and is now short gold, while telling you they are “strategically hedged” and playing “short term opportunities”. MANY of you now realize that to be true and have communicated your understanding to me.

28. Here’s a statement from the land of the bizarre and surreal: The World Gold Council claims India needs to take steps so their people view gold as an INVESTMENT, not a commodity, like it is now. Hello? Indians are the world’s largest owners of gold BULLION, bud. They got the message 5000 years ago. The banksters want Indians to sell their bullion (to them of course) and buy fee-loaded paper instead. Then comes the leverage and the price tanking, then the talk that “maybe gold is a relic of the past, do the right thing and hand it over to us on price weakness”. While India’s gold markets could/should expand greatly, and that could help the gold price but add to volatility, that’s a separate issue from their UNDERSTANDING of what gold IS. The average 5 year old in India understands what gold IS better than the head of the world gold council. That’s a FACT.

Check out the FXI-nyse I’m posting on today’s site. The top 25 companies in China. 17% on sale. Buy none? I’m not sure that’s the smartest plan…. In fact, I’d say that is a thought, not a plan.

Cheers