Graceland Updates 4am-7am

Aug 14, 2010

1. One of you sent me a note about a growing number of wealthy people putting gold in a home safe. My suggestion is that you have that gold insured and it should NOT be your “supercore”. Sorry, but a home safe is NOT good enough if things go bad. If an armed gang shows up you want to be able to give up something to them, and preferably what you give up is insured so you lose nothing but some nerves. Your supercore needs to be buried. Diversify your storage locations and insure some of your holdings and/or store them with a reputable institution.

2. The number of gold bears is growing. Just in time for the banksters to take all their money like candy from a baby. I met with my billion dollar bond fund manager “buddy” yesterday. I showed him the Graceland Juniors top ten takeover charts and asked his opinion. He said, “whether gold goes up or down right now, it doesn’t matter, those charts look phenomenal, and I think you are right to be focusing more and more on the juniors sector in terms of timing. Sady, because of their dual roasting in 2006 and 2008 at the hands of the banksters, most juniors investors are now reading the paranoid statements from the growing army of gold bears and jettisoning the carcass remains of their holdings.

3. NOW is not the time to be jettisoning your gold stocks. Quite the opposite is what you should be doing. My bond buddy returned 15% over the past 12 months while his peers made 5%. He wants YOU to know that when you are looking at your junior gold company OPTIONS outstanding (how many options the directors have issued themselves) that when juniors are going to stage a MAJOR MOVE UP what you WANT to see is a LOT of options outstanding, regardless of the appearance of those options causing the number of fully diluted shares outstanding to rise significantly. You WANT to see the insiders issuing themselves LARGE UPSIDE BETS.

4. The “gold juice” is ready now, the gold juniors are being wheeled out to the launch pad and goldland is thinking, “if I can just get back to breakeven, I’m out of here”. WRONG MINDSET TO HAVE. Bondman went so far as to call juniors a relative “safe haven” here and now. I wouldn’t go that far and prefer GoldLion’s term, “Cash Register Haven”.

5. I don’t know if most of you have quite got your head around what is happening here and now with gold juniors. I don’t think a fall in gold to $900 would really change the situation as I see it, and I think gold is more likely to hit $1300 than $900, so that should give you an idea of how bullish I am on the juniors sector. Don’t get overly obsessed with where the juniors are going. Focus on running your pgens and wherever they are going, you will be a player. I mentioned Jaguar yesterday, and I’ll mention Samex today. You want to buy these companies when you KNOW with your FEELINGS they are going to the dustbin. Bet money against yourself. If you want to win the MARKET.

6. There are a LOT of these stocks out there, and when I read the words of most writers about the gold stocks, my view is regardless of what they are saying, in terms of ACTION they are LOOKING TO BAIL on any MICRO RALLY. Most of you should play either the GDXJ or the ZJG.to ETF’s, BEFORE buying even ONE individual junior, because most juniors have a greater than 50% chance of going to ZERO.

7. I asked GoldLion what he thought about my view that 1 in a thousand people are lifetime winners in the market, when you do the measuring across secular bear and bull mkts together, not just during the PEAK of a secular bull, which is when most of the studies are done. He said, “I think your numbers are in the right range”.

8. I have, reluctantly, informed you that most of your favourite gurus, both bull and bear on gold, are at risk of getting left behind as we go forward into 2011. Those who called for gold 1130 and sold out at 1200 are already losing sleep, wondering if they’ve blown it, and of course they have. 1200, 1180, and 1160 were all buys, and 1200 especially featuring gargantuan capitulation in the gold and fund community.

9. Market TURNS often come at CAPITULATION POINTS, but not always! What MUST come at capitulation points is buying by you, not a crazed bottom hunt. 1200, 1180, and 1160 were “big talk” points. Goldland analysts each stepped forwards to give the “big talk” on what might happen, myself included. None of the big talk has any effect on my market actions at those points, other than some minor tweaking. If I think gold is going to $1100, that might have a 5-20% affect on the size of my BUYS in place going down there, not on whether I place them or not.

10. You CAN stop buying when discomfort becomes pain, and SHOULD do so. But if you are OUT of gold, then playing analyst and giving the “big talk” while buying ZERO gold at any point during a $110 an ounce price decline….that’s totally IRRATIONAL.

11. I’m personally going to lay in some additional risk capital to the juniors sector immediately with some pgens.

12. I want to talk a bit about TIME and the BANK SYSTEM. The system is bankrupt. If it wasn’t, then Ben Bernanke would reveal the names of the TARP recipients TODAY.

13. Picture a giant balloon. That’s the global assets bubble. As it began to implode, immense cash was injected into the banks. It wasn’t just cash, but govt bonds as well. Elmer Fudd public investor moron thinks the system was liquefied, and all is AOK now. The reality is that marked the START of the economic crisis, the start of the SPIRAL DOWN. The system was BANKRUPT, and the cash and bond injections, listen to me carefully on this: Those injections were accompanied with stricter lending laws.

14. There is a lot coming down the pipeline over the next 2 years that is going to change the LANDSCAPE of the financial system, and change the net worth of Elmer Fudd Price Chasing Master Investor, in a MAJOR WAY.

15. First off, we have the BASEL accords. Do YOU understand that by 2013 the proprietary trading business of banks is being ENDED? Elmer Fudd and many in the gold community are cheering these REACTIVE moves. It’s STUPID to end bank trading now, because that’s the MAIN SOURCE OF EARNINGS FOR THE AMERICAN ECONOMY. That should have been done at the START of the otc derivatives games, not after it was a quadrillion dollar nuclear bomb.

16. The Basel accords are economically DEFLATIONARY. The banks are HOARDING the cash they got for two reasons. First, they would be legally bankrupt if they lent it out. Second, they know what is coming down the pipe by 2013.

17. Elmer Fudd moron investor is involved in various income investments know, his “growth with safety” clown act. Dividend stocks are going to find the ratio of money they need to take from OPERATING EARNINGS is going to go ballistic to maintain payouts. Payouts will NOT be maintained.

18. All of that is going to be occurring while the MAIN BUSINESS of the banks, TRADING, is going to be shut down. My argument is this is planned by the bankster families themselves, to create a new leg down in the crisis, creating a DEMAND for superbanks and superinstitutions that are another step towards a global central bank.

19. You know my view that we have YET TO SEE real money printing and the money printing to date, as HUGE as it is, has totally failed to match the rate of ASSET PRICE IMPLOSION. The amount of cash out there is falling, not rising, when you look at the NET WORTH OF THE WORLD.

20. What the gold community needs to understand is we are not even at the ramping up stage yet of QE, let alone revaluation, let alone official money printing. The deflationary vortex can go on and on, and on, and on. For a long time beyond what seems reasonable.

21. If you look at the statements made in the latest FOMC meet, you are seeing the central bankster managers telling everyone in very couched terms, “this is a NIGHTMARE, and it’s about to get FAR WORSE”. People are DESPERATE for safety, and the NEXT LEG DOWN is going to show you a whole new level of desperation. If you thought the buying of bonds to date has reached EPIC numbers, wait till you wait what is coming down the pipeline.

22. Have you given SERIOUS CONSIDERATION to the fact that people are in a BIDDING WAR to make 4% a year on their money? Take a look at the rates on the 10 and 30 yr Japan bonds. Yields can go FAR FAR lower.

23. Until the rate of money printing surpasses the rate of marking to model (including the $2 trillion in assets the Fed bought) of the hundreds of trillions in OTC derivatives, there’s not going to be any hyperinflation or any goods inflation.

24. And THAT should give YOU a TINY idea of how POWERFUL the GOLD MARKET is. During DEFLATION of the world’s net worth, the price of gold is SOARING. What do YOU think happens when the rate of money printing PASSES the rate of asset price markdown or even when INSTITUTIONAL MONEY MANAGERS start realizing that’s going to happen?

25. If the Fed released the TARP names today, the people would get out pitchforks an hour later. The problem is that because the entire financial system would have CLOSED DOWN the SECOND the tarp names and numbers were released, and the people with the pitchforks would be STARVING before spearing any banksters.

26. Within the gold community, we have a large group of investors who believe the dollar will rise and gold, gold stocks, and the general stk mkt will fall because of deflation. Another group believes the money printing has redlined and inflation/hyperinflation will arrive any minute now, and stocks, bonds and the dollar will go into a death spiral while gold goes parabolic. The public believes everything is AOK but they need to REACT (chase price) to the “slow recovery” by holding “some income type investments”.

27. It is likely that what happens is all are correct in what happens, but not in the TIME FRAMES they fantasize about. Almost none are focused on the OTC derivatives situation, which is 99% of what the entire crisis is centred around.

28. I believe you will notice a substantial and consistent decline in bank earnings as we go towards 2013, as the banks withdraw from proprietary trading. That is EXTREMELY DEFLATIONARY. The funds on the other side of the banks’ trades may find the banks highly reluctant to lend them money when their own cash cow has been silenced, at least temporarily. How does that affect existing OTC derivatives trades the banks are holding? The contraction in bank lending appears set to ACCELERATE.

29. I would bet that within 5 years, Elmer Fudd public investor is, on average, totally out of the stock market, sealing the fate of a GENERATION of investors as LIFETIME LOSERS. Go knock on doors around your neighbourhood. See whose portfolio is up. They’re virtually ALL holding a mangled carcass or LYING about what happened to them. Yes, people are spending more. They’re liquidating their investment portfolio carcasses and spending the money.

30. Before the banksters rip apart the bond market, TRILLIONS more could pour into that market. Remember that the stock market was drastically overbought in 1995 by many measures, and it soared for 5 more years.

31. I think there’s a theme to be summed up today it’s got to be: confusion. I’m told gold stocks haven’t performed yet I’m highlighting HUGE moves in the juniors that the Pgen is milking. GoldLion told me this morning that the juniors look “tired” here, but after a REST (NOT A CRASH!!!) we go on a MOONSHOT in sept. I’m bringing additional capital to bear on the “rest” period and I just posted a summary of “The Leader” in this leg, Tanzanian Royalty on Graceland Juniors with a $5 to $6 buy range pgen suggested. For those who haven’t signed up for Juniors yet, you need to decide if you are a risk taker or not. I can prorata your payment so both juniors and graceland renew on the same date. Juniors is NOT for everyone, but I think everything the gold community WANTED from juniors is sitting right in front of you, right now, but most can’t see it because they are too beat up from buying way too early.

See you grid stalkers out there, and for the record, my view is exactly the same as GoldLion’s right now, a rest, and then it all goes BERSERKO on the upside and we sell our trading positions to a million price chasing morons who go equally berserko on the BUY. You know I’ve called 2010 the year of “gold aggression” and you can expect to see me vastly more aggressive in the coming “rest period” on the buy, while my competition tries to predict how long and how deep the rest period is. I say: How long? How deep? Who knows. Who cares. Are you prepared with your pgens while your competition goes to sleep? With the juniors, you might not be able to actually keep track of all the fireworks, like a fireworks FACTORY being lit on fire, EVERY GOLD KID’S DREAM COME TRUE! It IS going to happen!

Have a great weekend.

Thanks

Cheers

Thank-you

Stewart Thomson

Graceland Updates