Graceland Updates 4am-7am

Feb 3 2010

1. Smile. You’re on Candid Camera.

2. Smile Mr. Dollar Bug, You’re on Fire.

3. Does a New York cash register ringing sound any different from a Toronto one? Since I’m ringing mine right now at 430am in New York, I can testify that the answer is: NO. Gold: 1125. Up “only” $45 from the “what if gold goes to zero now, I’m dead, sell me out now!” symphony that the gold community sung in unison last week at 1075.

4. The smirk is being wiped off the dollar bugs faces, here and now, the same way it was wiped off the gold bugs’ faces last week into 1075. Never smirk about a paper profit. Smirk about ringing the cash register after you’ve rung it, never before. This is the real world and those who count chickens before they hatch, those who pretend their cash registers will ring after some pretend long term pipedream, well, the banksters have other plans for them. Their smirks will turn into adrenaline-pumping terror before this is all over, like a heroin addict with no drugs. Here’s why:

5. One of the big theories of the dollarbugs is that because gold stocks failed to make a new high along with bullion, that means gold bullion will crash. Here’s a reality check: The Dow has not made a new high, bonds have not made a new high, in fact other than sugar, almost NOTHING has made a new high.

6. Gold is leading everything else and it fell less than everything else in 2008. There is no gold to gold stocks “non-confirmation”. It takes TIME to recover from an event like Lehman.

7. My message to the dollar bugs is: keep betting against the banksters, keep doing that, keep telling yourself how smart you are betting on the exception against the rule. The other side of the dollarbug position, the usd long position currently held by the gilligan’s island team of lifetime market bustouts and losers, the other side of that trade is held by: The BANKSTERS. If YOU are net long dollars and short gold, you risk being blown out of the water. Permanently. The odds of the banksters closing out a major position like the short USD one they are holding now, at a LOSS, while joe public and joe fund manager book profits, is MICROSCOPIC.

8. WHO are the public and fund managers going to SELL their usd long position to? It must be the man on the moon, because there is no way in a billion years that the banksters are going to buy it from them if the usd does rally. Not in a BILLION YEARS.

9. My suggestion to the dollarbugs and gold bears is to get out now. Take a small loss now and admit your idiocy in taking on the banksters. Just be a man about it. You lived your fantasy. You failed.

10. The OIL market looks PHENOMENAL. From a technical perspective. After sending team “short term pop” to their stoploss grave, up went oil’s PRICE. Oil is now up FIVE DOLLARS from last week’s lows in the 72 area. Obviously it’s cash register time for those of us that bought into the weakness, the few of us who view oil as an asset –not a bet- and a currency, one that must be bought all the way to zero. The MACD is touching on a buy. All price-chasers on deck, please, time to buy as we shave off a little oil.

11. I warned you all against picking the top in the Dow, against calling the turn, against shorting it after 700 points of Dow weakness. I mentioned buying the Chinese market after a nearly 20% fall. I was pushed aside by the turn callers. As I sat in the Deli here in New York for 3 hours last nite with King Kong and Mr. Macro talking gold and the major markets, I mentioned my great concern with the gold community’s obsession with shorting the Dow.

12. The idea that the Dow has topped at 10,700 is almost UNIVERSAL in the gold community already, after just a 700 point fall, a fall I BOUGHT into. Sell into strength if you want to build wealth. Turn calling doesn’t make you money.

13. Mr. Macro and I both are of the opinion that the bond market looks very toppy. Toppy in terms of a long term bull market coming to an end. I think it’s already over. The potential scenario is this one: The economy is improving in certain ways even if the longterm picture is getting worse. The bond market is likely to decline on an intermediate basis, as major institutions sell because of their view that inflation, and the stock mkt, would pick up as the economy improves. That would fuel the initial breakdown in the bond.

14. That selling of bonds on the “good economy news”, to take on more risk could turn into a nightmare as a sovereign currency crisis erupts, most likely in Japan, but with the UK and even the US as possible candidates. Japan is a major holder of US bonds. So the bond bear could start out as greed-based, with bond sellers seeking risk, but then accelerate into a panic as a world-wide paper currency crisis erupts.

15. Global governments are spending far more than their revenues. A global bond bear market would make that situation far, far worse. The response by governments is going to be to ask the central banks to print money. A first step could be an acceleration of the gold buying programs now underway at a lot of central banks.

16. The GDXJ bumped into and halted at the 24.50 area horizontal resistance line I spoke of yesterday. Now it is “job” time. We must work thru that resistance, and you should not assume that the lows at 22 were the bottom. All we know is that 22 was A bottom.

17. This bring us back to the issue of: making money. Don’t be like the gold bears, or the public. And just sit there like a log. The simple fact is that GDXJ is at 24 now, and it could go higher or lower. If it goes lower, we have to be buyers. If it bursts thru 24.50, while that might be great news for our core positions, we have to take a file to our metals positions into that strength.

18. As I get ready to send this off, you should know I’m a little tired this morning from some action at US customs yesterday. They didn’t believe me when I said I’m coming here to discuss forming a fund, follow up discussions. They wanted a written itinerary. I missed my flight and had to get another one after spending several hours at customs proving I wasn’t actually bin laden. Not all business dealings have “itineries”, but I will give the Gman his playdough itinerary to play with next time, if that’s what makes him happy.

19. Gold has now turned back down, and is down about $14 from this morning’s highs, highs I sold into. Maybe we go higher, maybe we go back to the buy. But nobody can take away the rings on the cash register that occurred into this $45 of gold strength.

20. I had hoped to get even more strength before any sell-off, and that may still happen. My big concern is that some of you got weakened mentally to the point you acted in the market on that weakness.

21. Unfortunately the market doesn’t give us what we want. Sell-offs are rarely comfortable, because they are accompanied by the media pushing very solid, but very gold-negative views.

22. If you feel extra weak, turn off the news, and just leave your buy and sell orders in the market. Forget about tweaking, thinking, forget it all. Just respond to price, and odds are very very high you’ll come out of that sensation of weakness or confusion in a very good financial position.

Onto the site, and whole pile of admin,

Thanks

stewart