Items 13-21 are on BONDS.

-Fred

Graceland Updates 4am-7am

July 3, 2010

1. There’s a reason my trading accounts went to a new high on Thursday July 1, and another one on Friday July 2, while the rest of the gold community was flame broiled, roasted, toasted, fried, baked, burnt, boiled…have I missed any terms? If so, I apologize. A new high… marked to market.

2. First, let me discuss my physical gold inner core, and then we’ll talk trading. I mark my inner core to model. In dollars, I mark my physical gold lower, not higher, than the market price. A LOT lower. The opposite of how the OTC derivative bagholders (which is now most of the world’s citizens, unknown to them) do their accounting. My physical gold is currently marked to model, at $1000 an ounce. If price fell below $1000, I mark it down. Down to $800. The professional uses mark to model accounting to mark down prices to manage emotions professionally. The wiener uses mark to model storytelling. Most storytellers are eventually marked to a market pricing of zero. My suggestion to you is to focus on my professional application of mark to model accounting with your physical gold.

3. I don’t like to leave any stone unturned when it comes to managing emotional or financial risk. Obviously, in terms of my physical gold, the July 1^st gold mauling of gold, incited by the banksters, but carried out by the funds and vast swarms of the gold community, a mass loss-booking extravaganza, obviously that mauling has zero effect on my inner core physical gold position, since the market price of gold is still a staggering $200 above the US dollar price I use in my accounting.

4. OK, on to TRADING: I spent Thursday afternoon, literally, smoking a cigar and drinking a beer and laughing my head off “insanely” as my trading accounts, marked to market, soared to an all-time high by the close of trading. While I watched the gold and fund communities go cliff diving for toilet paper money, lemming-style. I even posted a cartoon of EXACTLY what that would look like, early thursday morning.

5. Here’s how you can feel, going forwards, like I do now: I refer to Friday as “report card day”. As each week ends, the report cards are handed out.

6. To get an A in performance, weakness is bought and strength sold. There are no exceptions, and I don’t care what your analysis of the market says. Strength is sold, weakness bought, or no A in performance. To get an A in effort, weakness must have been attempted to be bought, and strength attempted to be sold. Maybe you didn’t execute, maybe you even sold, but you at least tried to buy.

7. The road to performance A’s on your report card begins with effort A’s. To get a D on all fronts, you put on a gold bull mask while pressing the sell button on your computer machine gun style, across all your gold holdings, as gold falls in price. You celebrate not with a cigar, but together with your gold community buddies, proudly showing each other your new rolls of Charmin USD toilet paper money. “Look at what I got for my gold today!” Thanks, but no thanks, to be polite about it…Some people today have their new toilet paper money rolls mounted in their display case. I’ve got my gold mounted in mine. You decide who came out ahead.

8. The current “air” in the gold community is a little shocking to me. Most are pretending, “what happened, gee, I didn’t see anything, did you?” Gold doesn’t fall down like it did on Thursday, on record volume, because the banksters sold it. It fell down because the gold community and the funds bailed in failure, bailed in mass loss-booking.

9. Some, a few, are more honest, and I appreciate the honesty. Just say it: “I’m burning!” Just say it, “I couldn’t stand the pain! “I bought too much in an earlier price-chase and I sold out into the lows!” For years, I price-chased and price-bailed with the best in the business. I got a lot of A’s for effort in market tactics, and a lot of D’s for performance. If I was me then, now, my accounts would be at new LOWS, not new highs. Nothing you have done in the market, wrong, have I not done myself. As a broker I have sold clients want they wanted to hear, to satisfy their price-chasing urge. THAT Stewart is LONG DEAD. I killed him, or what was left of him, after the banksters had their way with him. Eventually, you have to face yourself in the mirror, and I did. Now, unfortunately for those have not “evolved”, the penalty for dumping gold for toilet paper money is getting higher, not lower. Nothing is gained by wearing a gold fan club hat, while trading your gold for toilet paper money in terror. There is zero shame in bailing. There is infinite shame in lying about it.

10. Team Pinocchio is out there, a huge crowd, and they are only putting themselves in a worse position with their failure to step forwards. Let me repeat: gold falls when the banksters goad the funds and gold community into bailing. The banksters were on the massive buy this week as gold was mauled on supermonster volume, and a MOB of price-chasers bailed. If it wasn’t the biggest one-day gold wealth transfer of all time, it was certainly one of the biggest, in the history of the gold markets.

11. More horrifically, the pain for the price-chasers may be just starting. Not ending. If you feel like you just got electrocuted reading that sentence, well, welcome to the big leagues. Wealth-building isn’t about buying a worthless OTC derivative called a principal-protected note, after blowing up in the stock and real estate markets. (“You’re 100% safe, we promise, so we leveraged it for you!” –banksters, Oct 2008.) Leave Elmer Fudd public investor to his green shooters and his new NOgrowth with NOsafety otc derivatives price-chased clownshow. There aren’t very many market winners, and they are likely outnumbered by market wieners by about 1000 to 1, literally. In a bull market, the stats get skewed. Over history, only a tiny fraction of investors actually make money, because only a tiny fraction actually have a clue that the banksters want you on the other side of ALL their trades.

12. I spent 2 hours meeting with my billion dollar bond trader friend yesterday, who is short gold, short equities, and long bonds. In the big picture, I believe my tactics are superior to his, and the fact is that his personal trading accounts are nowhere near a new high, while mine are at a another peak today. We’re measured by performance, not analysis, and just as I outperformed the US dollar bulls when the dollar rallied even though I’m a superbear on the dollar, likewise I’ll outperform the gold bears in any gold sell-off, beating them at their own game as well. Will there be a REAL gold sell-off? Well, that’s what we’re going to look at today, we’re going to look at you facing your worst fears, at a time when they ARE real.

13. A lot of what my bond trader friend has to say right now, is highly applicable to the gold community, and, sadly, highly ignored by the gold community. First, the bond market: What goldland fails to understand is that bond prices do not move in a linear manner to yields. The yields in Japan on the 10 year bond are at 1%. Prices moves vastly more, when yields are low, than when they are higher.

14. Second, liquidity flows are what move markets. Not analysis. Liquidity flows trump fundamentals, technicals, cycles, everything. The gold community has been shorting the T-bond for 10 years, and failed totally. It’s not time to short it again. It’s time to admit total failure.

15. The US bond is trading at around 3%. A fall in the yield, as QE is ramped up, could send the yield to 2% easily. There is no solution to the quadrillion dollar otc derivatives crisis, since $500 trillion of it is marked to model. There may be further hundreds of trillions that are simply “off limits” to any accounting. The net worth of America is $50 trillion. How do you pay a 500 trillion dollar debt with 50 trillion? Answer: You print it out of a photocopier machine. The fact that you are impoverishing most of the world as you do so, is a minor detail, a minor concern, for the banksters.

16. You don’t print 500 trillion all at once. You do it slowly, and with each wave of QE, the gold community rushes forward and shouts, “short the bond, it’s all over, the Gman can’t pay!”. And then each time, the Gman turns on the photocopier again, and he pays while the gold community’s latest round of bond market put options expires worthless.

17. After 10 years of blowing it, it’s time for the bond mkt top callers to admit total failure. The US t-bond is fundamentally a piece of garbage, but because the US dollar is the world’s reserve currency, trillions of more dollars can be printed to buy the bond without causing a bond bear market. We’re nowhere near the limit of what can be done. Stop calling the limit to how much money can be printed, if you’ve already failed 25 times in a row. 25 blowouts in a row means you don’t know what you are doing, you’re incompetent. The right shoulder of the h&s top has been voided. Is the bond a TRADE on the short now? Yes. The daily and weekly charts say it is. The monthly chart says the bond is a BUY.

18. So it is likely that any coming decline could be followed by a massive rally, and the lower the yield goes, the more price moves exponentially higher, as yield falls, because of the non-linear relationship of price to yield. The bond could fall 10 or so points from here, yes. It could then blow thru the 142 highs, and even hit 200, depending on the level of QE undertaken. Screaming, “I know the bond is finished, I don’t care about QE, just short it heavy!”, while pressing the “sell 50% of all my gold holdings at the market now!” button on Thursday July 1 at gold $1200, is not the hallmark of a professional investor.

19. Higher bonds are good for gold. A collapse in the bond market is GREAT for gold. Any money made shorting the bond when it finally collapses, will not make up, in most cases, for all the money already lost trying to call the top for the past 10 years. More money has been lost in the fund community trying to call the bond top than in any other asset class, other than OTC derivatives (if you call otcd’s an asset). The gold community is not far behind. Do not be a top caller. It does not build any wealth. None. Top calling builds poverty, not wealth.

20. The bond could collapse in 6 months, or it could go to 500 over the next 20 years, as the US morphs into a giant version of Japan. You don’t want to see the next generation of you standing here 20 years from now, still shorting the bond, babbling “I got the top, if they print one more cent, it’s all over this time, I know it!”. There are actual members of the gold community who shorted the Dow all the way thru the bull market from 1980 to 2000. Whether that was you or not, who cares. Today is today, it’s time to move forwards and focus on wealth building. It is the gold era, so that by definition means wealth building is measured in ounces, not paper money.

21. If you focused on pot shots in the past, if you fell “behind”, that’s all the more reason to focus on professional market action now, not a reason to increase your pot shotting. Leave the bond alone until it collapses, until the dollar collapses. Then buy the asset, in a pyramid formation. And end the insanity.

22. Now, what about GOLD? The bond story is similar to the gold story. The GLD-n ETF is the most hated investment entity in the gold community. I’ve read only about a million write-ups about why it is a total fraud. Money talks, bullcrap walks. If you think GLD is a fraud, short the piece of crap. Going on and on about it in writing is a wet noodle in terms of building wealth for you. I’m running a shorting program on GLD-n with my pyramid generator, and will continue to do so. Obviously, 99% of the gold community now wishes they had shorted gold into Thursday.

23. My own estimate is that somewhere between 80-90% of the gold community sold gold in PAIN on Thursday. One of the largest loss-booking capitulations in the history of the bull market. Question: How would you feel if the G20 held an emergency meeting this week-end and re-valued gold 70% higher against the toilet paper money you got from selling your gold? It is toilet paper money that the banksters want to harm fundamentally, not gold. Many are saying, “I’m in cash, the market is too volatile to trade!”. I say, “You’re in toilet paper, not cash. Get with the program, gold is the currency of winners, not paper money. It’s the era of gold, and the more time you spend in cash, the bigger a loser you will be.”

24. This is not like the 1970s, where the winners were measured in paper money they made, as gold went higher. This time, the winners will be measured in ounces they made from buying and selling paper money against a base currency of gold ounces. A night and day difference, and one that maybe 5-10% of the gold community understands, and .0000001% of the mainstream community understands. Failure to understand leads directly to the breadline, by design, over time, to quote subscriber goldsong. And to quote the banksters.

25. Buying gold in the physical market or with a high quality gold fund, like GTU-n, PHYS-n, SGOL (or CEF for gold-silver) while shorting a smaller amount a suspect fund like GLD, also in a pyramid formation, is a spectacular play, in my opinion.

26. Here’s an extensive video look at the gold chart. Let’s see if all those with their heads in the sand after pressing the sell button all day Thursday, let’s see if they get to press it a LOT MORE next week:

Gold Market Update for Sat July 3

27. The stock market is in tricky territory. I can see downside to the neckline of the monster large h&s bottom built in the 6500-9000 price band. It’s pretty normal for price to pull back to the neckline after hitting the h&s technical price objective, which it has.

28. The bulls have been buyers in the 10,000 area, and are starting to sweat it, with good reason. Stock market “hurricane season” is aug-sep-oct. Elmer Fudd Public Investor thought it was sacrilegious be out of the market, while for years I have maintained that by some point in august you want to be on the mkt sidelines.

29. What are the odds that the Dow soars during the Sep-Oct period if there is no crash? How much will you miss out? Not much, and odds are high you avoid being financially KILLED in many years, because the worst crashes tend to occur in that timeframe.

30. So, what we are dealing with is a 4 week “window” to get long and cash out as a trade. That’s not a great risk/reward play for the bulls. IF we fall down towards 9000, I think the bears will go hog wild shorting the market, without no thought for the LEVELS of the Dow. If you played Japan with a 70% long and 30% capital allocation using my Pyramid Generator and started your work on the day of the top in 1989, you ‘d be in the black today. I think the risk is high that the Dow collapses towards 9000, or even a bit below there, but the shorties then lose their senses and start thinking “Dow to zero now!”, forgetting that the market will be closed long before it gets close to zero, and their bets probably cancelled by the Gman. So right now, the risk is high that both the longs and the shorts get murdered. It is not a time to allocate big money to the market because of your analysis. I’m obviously a buyer into this weakness, but my focus in on 100, 300, and 1000 point Dow gridlines, not an account full of SP500 ultra-levered puts and calls, because I’ve got the big one. Gridlines are like prisoner-capture points. As a market soldier, you “have” to attack at 10,000 on the way down from 11,000, and you have to attack at 9,000. The lower the price of the gridline, the higher the likelihood that the banksters leave you alone, because they themselves are in at those levels. The 9,000-11,000 level is not a great entry point zone for anything in SIZE except anticipated hyperinflation, and the likelihood that markets could be closed under Dow 6500 makes shorting the market a questionable play as well, at least in size.

31. I don’t believe the USA is going to morph into a giant Japan replay, although it is very possible that it happens. I think it starts out that way (it already has) and then morphs instead into a hyperinflationary superspout that is halted with the gold punisher locking the US dollar’s decline in gold cement, after the dollars is an emaciated skeleton. That point, while unknown in terms of price, is likely best defined as the point of “maximum bankster satisfaction”, meaning the point where the banksters feel they have collected enough trillions from the OTC derivatives buyers in relative payback (paper money asset destruction of the losers), to call it a day, and begin focusing on the next growth era, with China at the centre, and the banksters in full control of both the Chinese Gman and the population.

32. Make sure you take a good hard look at what you bought on Thursday to put in your display case this weekend, paper money or GOLD. I bot gold for mine, and I’m VERY satisfied that my actions were SOLID. I’ll leave those who bought rolls of Gman toilet paper money to put in your display cases, to decide if you took the correct action or not, and since it is a holiday week-end, the banksters have given all toilet paper buyers a full extra day to stare at those rolls of paper, and carefully consider what they just did. Now, sadly, I have to leave you, because the cigar store closes early today and I’m running low…

Thanks

Happy July 4 weekend

Thank-you

Stewart Thomson

Graceland Updates