Sep 20, 2010.
1. It is interesting to see Harry Schultz raise his ultimate gold price target to the same as mine, $6000.
2. The amount of my own money I am betting on $6000 is: Zero.
3. The final price for gold is not that important because the gold bull is likely to end with gold revaluation, or a series of gold revaluations, and central bank buy programs. These programs will likely be used to OFFICIALLY maintain gold’s price at high levels, to control the amount of new debt issued.
4. The final price for gold will be determined not by any one person’s prediction, but by the price required to manage new debt issuance. It is difficult for most gurus to admit that calling final price for gold is basically impossible. The reason it is impossible is because so much is hidden, so much is marked to bizarre models. Is $50 trillion in otc derivatives the number that is worthless? Or is it $500 trillion? The banksters, alone, know the answer.
5. Elmer Fudd Public Investor thinks the crisis is over, and the economy is now improving.
6. Wrong on both counts.
7. Corporate earnings are improving. New stats show 1 out of 3 Americans can’t pay their food, mortgage/rent, clothing/auto bills. That’s not an end to a recession. It’s a nightmare.
8. What “it” is, is a decision made 40 years ago by the banksters to move the world’s economic lead engine from America to China. The coming US-China trade war is a bankster-created game. Many in the gold community are starting to say, “enough is enough”, as China steams forward, using many “unfair” tactics.
9. It doesn’t matter. Nothing will be changed any more than anything was changed for the UK when the banksters moved the world’s economic engine from England to America. “There will always be an England”, yes. There will always be an America? Yes. But, while everyone debates about whether China is a currency manipulator (of course they are, as are ALL Gmen), the huge industrial revolution that is the REAL CHINA PLAY, rolls on, and will roll on for many more decades. Go with the flow….Go with the Chinese stk mkt Pgen, where crashes are embraced on the buy, not predicted as financial Armageddon while booking losses.
10. We all know that most in the gold community bought nothing into gold 1156 and now are buying in a crazed attempt to get in on the “action” before it “gets away”. Those buying now don’t really have any price targets or plan of action. Others have watched gold go higher than it “should”, and are now selling core positions, because “it has to correct at some point; this can’t go on, everybody is bullish!”. Do NOT engage in that action. It is WRONG. Sin by the amount needed to kill the wrong thinking. Not the amount that gets you DRUNK in as you take market action. If you own 10,000 shares in a core position, selling off 50 to 100 as we rise “impossibly higher without a correction”, is not a big deal. It keeps you HEALTHY mentally. Selling blocks of 500 or 1000 could see you with NOTHING as gold blasts impossibly higher and higher.
11. A core position is a core position. It’s not a trading position. It’s an APPLE. Not an ORANGE. What if you blow out your core bullion positions and/or gold stock positions, and the banksters announce gold will be revalued to the $1800 area, via a coordinated central bank “buy from anyone at $1800” program? There’s NOTHING WRONG with being left behind if your trading positions are sold too quickly. You only have 10 billion more opportunities to get in. There is EVERYTHING WRONG with liquidating HUGE BLOCKS of your core positions either on current strength.
12. I’ve repeated “only” about 10,000 times that using leverage will not be the ticket that sees you make big money in this market. Think bigger, much bigger, in terms of price ranges.
13. Here’s what I see out my market window: The public is starting to LOOK at gold. They are NOTICING it. Like any self-respecting price chaser must do, they are FIRST looking at gold’s price rise, BEFORE they jump on the price chasing RAT WHEEL, and buy from the banksters.
14. Elmer Fudd is OUT THERE now. He’s watching gold’s price rise. It’s starting to make the news. But remember that he’s been roasted in the stk mkt, AND the real estate mkt, and is a lot less keen to step up to the price-chasing plate than he was a few years ago. It’s going to take MORE upwards action to march these lemmings out to the cliff in a buy frenzy.
15. My intuition tells me that we need to cross $1300 and maybe $1400 before Fudd shows up. He’s in watch mode now, not buy mode. I’m not predicting a mass public move into gold like in 1979; rather, this would be more like in 2006.
16. A LIMITED portion of the public steps onto the price chasing wheel, gets SOME emotional satisfaction, THEN gets OBLITERATED by the unlimited-money BANKSTERS.
17. The public likes to watch price rise, then watch it rise MORE, a sort of EMOTIONAL CONFIRMATION that they are correct in rushing in to buy.
18. I also want to draw your attention to the fact that the “bailout” put TRILLIONS of dollars into the hands of the banksters, money they are sitting on, and can EASILY use to pile on MILLIONS of gold short contracts on the comex, should they desire to do so.
19. The tactics to use now for those of you that are not freaking out that you are “out”, nor played cannibal with your core positions, is: profit-booking with the trading positions you put on into 1156 or holding your ground. One of the hardest things to do for the amateur investor is “stand down”. There is an (primordial & deadly) URGE to chase price that is INATE within us all, and a great tendency to create the view that the market must answer to our positions in the market. The latter tendency is the cause of the dumping of core positions into a rise.
20. For those of you involved in the corn market, I want to remind you of gold $400. Many dumped core positions as gold rose to $500, and have never got those positions back.
21. As gold fell from 1266 to 1156, the gold world got smaller. $20 of price movement became “big”. Even $10 was substantial. The problem now for leveraged traders is the market is overbought (on the daily charts), but still marching higher. Professionals have buy orders on 1%, 2%, 3% corrections. Amateurs are demanding a selloff to some imaginary price point that satisfies them emotionally. With leverage, if you are buying 1-3% corrections, you have to use stoplosses, and hope price doesn’t gap thru your stoploss and ruin you.
22. For those of YOU who are out, consider something like a series of tight range pgens, to get you IN,without blowing up. Allocate a larger amt of money to a range pgen on, say, GDXJ, in the $30-40 zone, but have a smaller one “at the ready” at $25-30, so if price blows out the lows of your pgen, you are still in the game, but the risk capital allocations are much smaller.
23. The same for gold bullion would apply; a range pgen in the $1380-$1280 zone is fine, but you need another one in the 1280-1180 zone, so you don’t freak out and liquidate if price breaks down well below 1280.
24. Who wishes they had bought more gold at 1156? I do. Who wishes they bought more corn at $3.50? I do. Who wishes they bought more junior golds into the lows 2 months ago? I do.
25. Who wishes they bought more natural gas at $3.80?
26. I don’t. But I AM doing it anyways.
Operate in the discomfort zone, not the smarty pants zone, both on the buy and the sell. Stay humble, and you’ll continue to get richer.
Thank-you
Stewart Thomson
Graceland Updates