Keywords: Housing; Long Bonds; Uranium;

Graceland Updates 4am-7am

Aug 25, 2010

1. Yesterday everyone got lesson number 1 million, as to why you don’t play market prophet. Those who bought no gold as it nosedived into the 1210 area I highlighted yesterday as the target of the micro h&s top (and the latest bankster game)…

2. Well, don’t worry, there’s “only” about 100,000 more such days coming, with VASTLY GREATER volatility than what you saw yesterday.

3. Expect $100 moves on gold that occur with light speed, and if you are leveraged with margin, you’ll either win the gold lotto or get the gas chamber. I bet you win a few lottos first. Then it’s likely, “hi ho hi ho it’s into the chamber you go”…

4. Options traders will survive, but futures traders might bite the dust en masse.

5. How did the PGEN do yesterday? Some of you reported a veritable machine gun performance and those in Canada, like GoldLion, saw things “out of control”. The USD has rallied against the Cbone (CAD) by the gold-equivalent of $60 an ounce.

6. Others missed the 1210 buy by a hair. C’est La Vie. Nobody says we can’t revisit 1210 even if we take out 1266 first.

7. Many of you bought 1220 and 1215 and your cash registers should be sounding today. Yesterday’s gold market action was a classic bankster game; work the metal down in the night in anticipation of gold negative news, while handing their shorts to the price chasers. Then it was, “oops, sorry Mr. Fudd, but your US housing bargain play just got a minus 27% home salespipewrench tossed into the your financial ENGINE’s financial GEARS. How’s your engine running now?”

8. You know my repeated view on housing; the bear has likely JUST STARTED and while, yes, there will be rallies, (if you call a price rally in an illiquid home bought with a credit card a “rally”) but the bottom line is that when the bond market implodes, housing could go minus 90% ACROSS THE BOARD.

9. I have no idea when the bond market implodes, and the only difference between myself and the other writers on that front is that I have no interest in calling the top, because the top could be here, or it could be at 500. All is possible, given the size of the OTC derivatives multi-hundred trillion dollar blowout.

10. Many of you continue to focus on the writers who have been trying to top call the T-bond market for many years, and I know what the arguments are. Unfortunately, none of them take into consideration the following: OTC DERIVATIVES ALREADY IMPLODED IN A NUMBER THAT DWARFS THE WORST POSSIBLE NUMBERS THESE OTHER WRITERS ARE PUTTING OUT REGARDING US GOVT DEBT, UNFUNDED OBLIGLATIONS, OFF THE BALANCE SHEET WAR DEBTS, OFFSHORE ACCOUNTS WITH US T-BONDS IN THEM, ETC, ETC, ETC.

11. The bottom line is that the worst possible debt implosion that 99% of the world can IMAGINE, has ALREADY occurred. Adding the Chinese $800 billion in t-bonds to a 300 trillion dollar marked to model garbage dump is TOTALLY IRRELEVENT. While it doesn’t HELP the situation, the reality is that 99% of the crisis is ALL about OTC DERIVATIVES and that debt has already imploded and been hidden.

12. Let’s get the record straight: The Chinese Gman price-chased US bonds and US dollars and now he’s claiming he had no idea of the dangers of what he bought. He’s a bully, not an “astute investor”. Let’s see how many bonds he’ll be buying when the T-bond tanks below par as our Pgens kick into action, while Elmer Fudd holds a newspaper telling him “bonds are finished, sell everything at a loss”, and he does!

13. The Chinese Gman will likely end up selling their bonds to the banksters at a big fat loss, and running to mommy. The Chinese Gman is a failed investor and nothing exemplifies that failure more than the lousy few thousand tons of gold he’s FINALLY started accumulating AFTER “only”FIVE THOUSAND YEARS OF PUTTING HIS CITIZENS THRU NUMBEROUS BOUTS OF FULL HYPERINFLATION, DICTATORSHIP, AND COMMUNISM. The bottom line is that the Chinese Gman is lucky his citizens are so forgiving.

14. Do you think Ben Bernanke, Chief Operator of the WORLD’S LARGEST ELECTRONIC PHOTOCOPIER is actually worried about the 1 in a million chance that China sells ALL its bonds at a rate greater than he could print money and buy them with his PHOTOCOPIER? Answer: no, No, and NO!

15. The issues outside of the OTC derivatives marked to model garbage dump are REAL, but they are issues that, alone, see gold top out at $1500, or $2000. They even could open the hyperinflationary door, but that would probably take another decade of increasing the debt levels. The OTCD’s nuclear bomb has its hand on the hyperinflationary door right here, right now, and we can only wait to see if the door is swung wide open or not.

16. Gold blew thru yesterday’s highs already this morning, but nothing has changed in the technical indicators situation. Check the video I posted this morning because yesterday’s low did create what could be the start of a “peppy” bull head and shoulders.

17. The “theme” of the current gold market, if there is one, is that you want to be able to buy on ALL down days, regardless of how you feel. Buying even a tiny amount when something appears “wrong” with the market can change your mental state, from negative to positive!

18. Remember that your competition are the other 95% to 99.9% of the investors out there, who are losing large sums of money consistently, as they chase price in one asset class after another. So if you only bought a TINY amount of gold into 1210 while your opponents SOLD LARGE AT A LOSS, the fact is that yesterday YOU had a fairly good day.

19. You CAN run separate inner core, outer core, and trading PGENS, or allocate a portion of each buy to inner, outer, and trading pgens. I personally do both, and with the growing number of gold ETFs/trusts that appear to hold all the physical gold they claim to hold, it becomes possible to run a trading pgen on one such item, an outer core on another, and an inner core on a 3^rd. That can reduce your workload.

20. If one fund has a high premium on the mkt price/NAV ratio, you may still be fine running a trading pgen on the item. On the other hand, paying, say, a 25% premium to get an INNER CORE position is a pretty hefty price tag.

21. For individual stocks, you can still separate the inner, outer, and trading pgens on a single stock, but you could end up adding to your workload, as it requires multiple accounts to manage different pgens on the same item.

22. I like to take delivery of inner core positions on stocks. Then I mark my cost to model, not to market. I mark those positions typically 20% lower (sometimes more) than the current market price. That way, I’m not staring into a quote screen and thinking I should liquidate, on a bad day.

23. I do the same thing with bullion. Most investors are MANIACAL about their accounting. I’m maniacal about UNDERSTATING the price of the items I hold. We ALL get totally surprised from time to time by the “impossible”. Obviously I know what the items are really worth, but the more you mark these things to model, DOWN, the less you think about the real value. With gold, I use $1000. NOT $1237.82 or some such number that I update every microsecond!

24. Uranium. Here’s the monthly chart. That gives you the big picture of a major energy asset that is down about 60-70% in price from the highs. Those of you with BIG MONEY could bring in some SERIOUS money operating a PGEN TO ZERO here, because the Uranium Fund is only $6-7 a share. Buying every 5 or 10 cents down for somebody with THUNDERCASH is EASILY possible on a PGEN that extends from $50 to zero, or even $100 to zero. The buys at current prices would be astronomically large, and even larger should price “impossibly” go to those lower buy points. This could be a 10 or 20 year PGEN CASH COW. I may have to bring this up with TREX and see if he’s interested in taking away the banksters’ uranium. LOL!

25. The daily chart for uranium shows some possible major bottoming action. Before you charge in on the buy, however, keep in mind this FOGHORN warning:

26. Remember: NATURAL GAS. There’s BIG MONEY in uranium and your risk likely is very low because it is SO CLOSE TO ZERO. But it’s at $6, not 6 cents. You can set your Pgen perak up to $30, or even HIGHER, but guessing that we’ve “about bottomed” is not very smart. Give up a little and set the base of the Pgen at zero, not $5.99 “cuz I know the turn is now!”.

Let’s Do It. See You On The GridLines!

Thank-you

Stewart Thomson

Graceland Updates