Graceland Updates 4am-7am

June 16, 2010

1. June 16 (Bloomberg) – “The euro tumbled the most in more than a week against the dollar after a Spanish newspaper said the nation may get an emergency credit line, renewing concern that the debt crisis in the euro region is spreading.”

2. Maybe at some point, we’ll see ONE article on Bloomberg covering the other side of the trade, which is the horrific financial position of a boatload of US cities and states, which may feature trillions and trillions in OTC derivatives that are hidden from us all.

3. Only the banksters know the real situation. All traders except the banksters love to “talk their book”. Only the banksters do the OPPOSITE. They talk DOWN their own book. That takes a tremendous amount of confidence, and arguably knowledge about the position you are holding. It also helps when you have unlimited amounts of money.

4. The banksters don’t want the other side of most trades covered in the media, which is the side THEY are on. Until it’s time to SELL. Then it’s trumpet time. The horrendous situation of the US cities, states, and federal govt of the US will get coverage, on the banksters’ timetable, not the funds’. The horrendous position of the US cities, states, and federal govt….IS the banksters’ TRADE. Soros talks of a superbubble that has JUST STARTED to implode, while Elmer Fudd and his golf ball advisors talk about “green shoots”. What Elmer Fudd doesn’t understand is that all he has, the whole enchilada, including PAPER MONEY ITSELF, is being BET AGAINST by the banksters. The banksters are betting the world is in a superbubble that has just started to implode.

5. Elmer Fudd is betting QE has just about fixed everything, but he should hold mainly cash “to be on the safe side”.

6. Follow the money, not the show the banksters putting on in the media for the world’s investors. Fundamentals are important. Liquidity flows are more important.

7. Think WAR. The last thing I wanted to do into the current strength in wheat was sell any wheat, so by definition that must be my action: Sell. Profit must be booked into strength on trading positions. That action is equally important to holding core positions. The way I operate is building a core into weakness, and shorting against it into strength.

8. I don’t believe in strategies like “going to hedged” or “stepping aside”, not in a major asset. The shorting component should never exceed 30% of capital allocated to that market, for the amateur investor. In wheat, I’m about 80% long and 20% short. Once you start playing timer, instead of Pgen Gridlines, you are attacking your core position in the ASSET, attacking your own asset like a vampire attacking yourself. The asset is your ally, not the enemy. Vampires tend to make lots of little wins, and then start believing their abilities are more important, and superior to, the NATURE OF THE ASSET.

9. There is no more dangerous market to make that assumption in than GOLD. Gold is the world’s lowest risk market because gold is the world’s most powerful asset.

10. It is no surprise that the world’s worst investors spend their market lives bashing gold, while the banksters, the greatest investors in the world, make it the cornerstone of their very existence. Trying to OUTSMART the gold asset is as close to an act of financial madness as one can get.

11. 99% of the reason that the world’s investors are BURNING is because they BASHED GOLD and tried to outsmart it. I absolutely believe that to be fact.

12. The G20 meeting approaches in about 10 days. The meeting is June 26-27, on a weekend. The banksters and Gmen love week-end meetings, so if there is a dramatic announcement, they can be sure to FRY the maximum number of investors, with a Sunday night gap-up or gap-down start to trading after the dramatic announcement is made. The Gmen like to make dramatic announcements, as it makes them feel important an functional, and the banksters enjoy feeding them that drug.

13. I have no idea if there will be a dramatic G20 announcement, but I will point out that seasonally GOLD tends to bottom in early to mid july, so I’d be very enthusiastic about any real weakness in the gold price, if it did present itself.

14. This is the era of gold because it is the era of asset price destruction. It is the era of asset price destruction because it is end of the era of leverage.

15. The banksters have laid out a multi-point strategy for the Gmen to “end the crisis” and “rebuild growth”. I refer to it as the toolbox, and Ben Bernanke is lead mechanic.

16. Credit cards, mortgages, govt deficits, corporate bonds; the list of strategies to increase reward is virtually endless, with OTC derivatives at the top of the debt ladder. The cost of financing all that leverage has overweighed the benefits, and some of the bets were wrong.

17. As the asset prices started to come down, the banksters cut rates to near-zero, and marked a lot of debt to model, which in plain English was just extending the payment and maturity dates on the debt. That failed to halt the asset price destruction and the purchase of trillions of dollars of assets with printed money also failed to halt the implosion.

18. The few of us that bought the stock market into the meltdown are the only real solution. This is a market, and buyers must outnumber sellers, or price falls. The buyers have no more idea than the sellers as to whether the bottom is in, if it is near, or if there are many more waves down. The public stands watching, and is slowing moving to cash while the banksters promise that each new strategy “should work”.

19. What the public doesn’t understand is that as the banksters move from one tool to the next, the odds of a solution grows, but so does the CONCERN of institutional money managers. Unlike Elmer Fudd Public Investor, the money managers understand that each new tool is more powerful than the previous one, and is being employed because the previous one is deemed to have FAILED.

20. The fact is that lowered rates FAILED to end the crisis. Mark to Model FAILED. Asset purchases as a strategy has not FAILED, but it looks GRIM, because the central banks are already pretty much ALL IN on QE in terms of their balance sheets. There’s a CLEAR LINE between QE and MONEY PRINTING.

21. That line is being tested in Europe right now, and I absolutely believe it will be tested in America, the UK, and Japan as well. The US govt is ADAMANT about raising the Chinese currency pricing, relative to the US dollar, not so much to boost exports as it is to raise asset prices. This all goes back to the banksters’ claims that “high asset prices are good for you!”, something they know is NONSENSE. A rising stock market need not be associated with rising home prices. In a best case situation, it ISN’T.

22. The banksters have told the Gman that if prices stay high, further debt failure will be avoided. The game is to keep everyone in debt, on an extended payment plan, yes, but a payment plan nevertheless.

23. The saying “she who has the gold makes the rules” means she who has the strongest currency, and the most amount of it, makes the rules financially.

24. All market wars are won by those with the most BUYING POWER. The business owners who dropped $1million to $5 million in the stock market in the 1990s had money, yes. Buying power? NO. Their massive of allocation of capital to single areas of price destroyed the VALUE of their money as a TOOL in the war. As price fell, they were helpless, while the banksters operated their pgens on warp drive. Those who committed $1million to the market should have been prepared to commit a further $100 million into massive price weakness, if they understood buying power, which they did not.

25. The debt crisis is a market WAR, but almost nobody besides the banksters understands that key fact. Each “tool” in Ben Bernanke’s toolbox is a stronger than the previous one. Each tool also is greater attack on the BUYER POWER of govt currencies. Institutional money managers are focused on the use of Quantitative Easing, and their liquidity flow reflect that focus. My view is that QE has a greater than 50% chance of failure, because the levels of OTC derivatives debt are vastly larger than the central bank balance sheets.

26. That wasn’t the case in the past. The size of the stock markets, even the govt bond markets, wasn’t much bigger, relatively, than central bank balance sheets. The OTC derivatives markets are “insanely” larger than central bank balance sheets, and insanely larger than the entire money supply of the world.

27. By definition, to halt the levels of asset destruction occurring in the OTC derivatives markets, enormous sums of monies need to be printed.

28. In the 1930s, the level of asset price destruction required the use of gold revaluation, which is the next tool sitting in Ben Bernanke’s toolbox. The United States has never had to go to “Defcon5” in the financial markets, which requires the use of the final tool in his box. MONEY PRINTING.

29. My own view is that the gold revaluation tool will end the crisis, it will be sufficient to do so. I don’t believe QE will succeed, and I believe George Soros tried to tell the money managers that it would fail, without coming right out and doing so. Remember my discussion of liquidity flows. If money managers BELIEVE that QE is failing, they will MAKE IT FAIL by the movement of their money.

30. This is an extremely dangerous situation, and the banksters are, so far, successful at their tactic of keeping the money managers focused on the effects of QE on CORPORATE PROFIT GROWTH, versus the effect on DEBT ASSETS.

31. Lower real estate prices = MORE OTC BOMBS going off. More otc bombs going off mean trillions of dollars in printed money is required. The central banks are already close to ALL IN on QE. Meaning: further QE mauls the currency. The banksters are BETTING that is EXACTLY what is COMING. We’re on the road to gold revaluation, not the road to recovery. The only question in my mind is do we go [on] to the money printing, to Defcon Five, or not. Money Printing as a tool is by definition DESTRUCTION of the currency, not DEVALUATION of the currency. Destruction of the world’s reserve currency via hyperinflation.

32. I say the crisis ends without going to Defcon 5... but I wouldn’t bet money on me being correct.

Thank-you

Stewart Thomson

Graceland Updates