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Nov
16, 2010
1. "I
cannot overemphasize the critical importance of factoring
the bond
market into
any analysis of the crisis now." That
was the sentence I started yesterday's update with, and it's
probably the sentence I should start every update
with, for the next six months!
2. I
see a lot of gold analysts trying to gauge the "gold
market correction" but they are seemingly unaware that the
bond market just imploded, and
Bill Gross basically issued a massive sell signal on his own
fund, the world's largest bond fund. For the past
few months I've urged you to understand that when the bond
implodes, there would be initial weakness in gold followed by
tremendous strength. Here and now, the words "Gold"
and "Bond" must be mentioned in the same sentence, or
you are out to gold market analysis lunch.
3. The
conventional view in the public, and a view held by many
institutional money managers, is that lower rates produce
higher gold prices (correct), and higher rates produce lower
gold prices. Well, sometimes, yes. Sometimes,
no. Sometimes higher rates produce an upside
gold parabola.
4. On
the second situation, higher rates and gold, in a commodity
demand-related gold bull market, higher rates are
a negative for
the price of gold. In such a situation, gold
functions as a commodity, and the economy gets higher prices as
demand for goods increases. The cost of borrowing
increases as the demand for loans increases because business
conditions are solid. As the
cost of borrowing rises, that hurts demand. Prices
(int rates) for money and the price for goods both fall.
5. Look
out your market window. Do you see a booming
economy, or potential economic Armageddon? My
message to you: the
new bankster game is in play, and it's a big one; the
bond market. Bond
market chaos that could send gold stocks parabolic on the
upside. Here's why:
6. I
coined the term, "The Institutional Awakening". The
awakening is a bankster game to create
a mass mindset of terror amongst institutions, a
mindset that further QE won't work
to continue the markets recovery, and instead further QE will
see bond market prices stagnate or even fall, while
the US dollar falls like a rock. All
in all, a nightmare situation, given the backdrop of the marked
to model OTC Derivatives quadrillion dollar. Marked
to model is: Marked to Lies.
7. In
practical terms, meaning flows
of liquidity by institutions,
what the institutional awakening means is a mass panic out of
bonds and into...?
8. What
the gold community needs to understand is the
LAW. Institutional money managers have written
mandates as well as unwritten mandates on what they can and
cannot do with their assets. Pouring money
into gold is
not on their "oh yeah, let's do it!" list. It's
on their "if we dump our assets into gold, then our
investors pull out, we get no pay, and we could get charged
with securities violations" list.
9. The
history of institutional money flows in a currency and bond
panic is a massive flow of liquidity into the stock
market. Having said
that, what do YOU think happens to the Gold Price Thermometer
of global financial health what that occurs, or
is thought to be about to occur? I
don't think most in the gold community really understand what
just happened to the bond market, and what this event means for
gold.
10. I
know that because, other than Bob Moriarty at
www.321gold.com and
Trader Dan Norcini at www.jsmineset.com,
almost
nobody is even mentioning the imploding bond market,
yet they are conducting one study after another as to why gold
"could be in a correction". Translation: "Here's
all the reasons why I just sold all my gold and you should do
the same." Thanks, but no thanks. In
regards to the bond market, to quote John "Sir Johnny"
Templeton, who uttered these words after the first phase of the
markets crisis began in 2000,
11. "Does
anybody know what just happened?"
12. Markets
anticipate price and factor in what has already happened. The
gold market is on the verge of anticipating the Institutional
Awakening, meaning the gold price is on the verge of surging
higher, not lower, while most are wasting current buy prices,
standing there with no buy fills, thinking the game is to be
the one to guess how LOW gold goes. Wrong
tactics. Wrong tactics, bigtime.
13. The
winning tactical play is to be the one who is buying gold here
and now as it goes down. Much more importantly, the
game is to buy gold stock,
partially because there will be some buying of gold stock in
major size by institutional money managers as the awakening,
the mass terror, sets in. Gold stock has not even
begun it's parabolic move. The bond market
demolition man is the trigger.
14. You
can't expect a monster fundamental factor like the implosion of
the bond market to roll onto the gold market playing field and
not cause a massive spike in price volatility. This
is not business as usual. This is the factor in play
now that could literally put Elmer Fudd Public Investor, Elmer
Fudd Public Moron, onto the bread
line. Millions of Fudds
impaled by the Gold Punisher's bond market harpoon. Those
who thought gold was risky, and bonds lower risk than gold as
an asset, are being revealed as complete market
imbeciles. Their final revelation comes standing in
the coming bread lines, created by the banksters to entertain
and enrich themselves.
15. My
view is the bond mkt-caused initial shock to the gold market
comes after we
make a new high above $1424, which would stun the current mob
of gold top callers who you know, full well, are
sure they have got 1424 as the top,
after blowing almost every other top call, since the bull
started at $250. One more for the Golden Gipper?
16. That
initial shock on gold is going to involve the
wrong view by institutional money managers that higher rates
are negative for gold. If the scenario plays out, it
could cause a big hit on gold of hundreds of dollars to the
downside, perhaps as much as $500, a massive handoff of gold,
from the fundsters to the banksters. But
what actually occurs is going to depend on how the banksters
play out their Awakening Game.
17. The
theory is that falling bond prices are positive for the US
dollar, because a higher rate of interest attracts
institutional capital. I want to draw your attention
to the 1979 period of time, when the US dollar began to rally,
and the floor traders and large speculators began to short
gold, thinking they were about to make piles of free
money. The banksters were on the other side of that
gold trade. Long Gold. What happened? Gold
accelerated its rise, while the US dollar itself surged
higher. The (leveraged) gold top callers shorted
more, sure the top had to be in. Instead, gold surged
hundreds of dollars higher, frying Team Shorty Pants to a
golden crisp.
18. Today,
analysts are thinking that a declining bond market is a
positive for the US dollar and a negative for gold. That's
the view the banksters want everyone to have. All is
fine, all is A-ok. A-ok or Z-ok, what's a few
letters in the alphabet of difference? For the record, I'm
in the things are Z-ok camp,
and have been since Dec 1999, when I told my people to get out
of the stock market and begin gold items accumulation. Arthur
Ziekel, head of Merrill Lynch Asset Mgt at the time, said "it's
1929 again". Ironically, millions of Merrill clients
said, "No, it's wieners to the sky forever time".
19. What
you are witnessing here and now with Bill Gross' investors is
an instant replay in the bond market, of the stock market with
Arthur Ziekel. The
firm's own clients are too stupid to listen to the sell signals
being given by the lead man. "I have $2 million
in bonds. The
head of the world's largest bond fund just issued a sell signal
on his own fund. Can I bring
myself to sell one dollar of
bonds now? No, because I'm ruled by greed." -Elmer
Fudd, Public Bond Market Investor, Nov 16, 2010. Fudd
probably is being told by his golf ball advisors this morning
that bonds are an ultra-bargain buy, gold is finished, and he's
lapping it up. Let's give Fudd a pat on his
head. Good lapdoggie, buy what the banksters tell
you to buy, when they tell you to buy it, and all will be
fine. "Take some more financial heroin, it's
better than vitamins, really." -Banksters, Nov 16,
2010? Fudd, his bonds, and his golf ball advisors, are
only things that I see being finished. Not
gold.
20. Institutional
monies will flow, and are flowing now, into the US
dollar, yes. But
notice the modest rise in the dollar compared to the fall in
bonds. US
Dollar "Big Rally" Chart. While
subs know I've bought the dollar all the way down with my pgen
buy generator, and the weekly chart shown here does look
possibly positive, the extent of any rally is unknown, and all
strength should be used to book profit on trading positions in
preparation for a possible total wipeout type situation to the
downside. There's
really not that much strength in the dollar given the magnitude
of the bond wipeout. Here's
the Weekly
Bond Mkt Chart. What
a horror chart. It's
critical that you see what is really on this chart; you are
looking at a potentially classic technical play of what happens
when a massive head and shoulders top "fails",
meaning price rises above the right shoulder high. That's
what just happened recently and such a failure is a buy signal
for a pipsqueak rally yes, (which occurred) but it is
all-critical that you understand that such a failure is much
more of a harbinger of danger to come, particularly after a
major rally. The final top is generally near when
such a h&s top failure event occurs. You may be,
here and now, live, looking at the "bread lines trigger",
being pulled by the banksters. The
coming pain to the real estate bottom callers is
nearly unimaginable if
the bond market end game scenario is now in play. The
movie Apocalypse Now is reborn...
21. I
believe a substantial portion of USD sells into any rally here
should be re-allocated into the purchase of gold
stock if
this USD rally materializes into anything. I've
talked about "Three Gold Nets" of buy zones for you
on the GDX and the GDXJ/ZJG-tsx. Here's the Gold
Juniors Chart. [GDXJ] Notice
that I've now added a 4th much
larger net in
the upper price range. These "nets" are areas
where you place buys on weakness. The larger net
does not mean you allocate more risk capital and chase
price. It means that at some point you are going to
be faced with the reality of price in that range, and odds are
high price is much more volatile than it is now.
22. Most
bond investors are all-in on bonds now. Some institutional
managers are cautious, and want much higher rates before buying
the bond. There is an undercurrent of worry, the
cusp of the awakening, a worry that QE targeted at govt bonds
has reached the point of maximum saturation. "What
happens if we load up on bonds, and the central bank QE
programs cause the dollar to tank, while bonds go up only a
bit? These rates of interest can't compensate for a
hit on the dollar!" -The Institutional Money Manager's
Mind. Nov 16, 2010.
23. If
I was bankster, today I would be working feverishly to bait
institutional money managers into the worldview that the dollar
is a superbuy, and bonds are a superbargain. I'd
look to get a rally in bonds from here and loan them money to
buy more of their "winner". Then I would
look to take the bond down under 125 and start pumping the
media with "maybe the situation has changed, maybe the
situation for the dollar is much worse than we thought, and
bonds may not be such a good investment."
24. Watch
the gold price thermometer while buying solid amounts of gold
stock into this weakness. Ignore the analysis of the 1424
top callers who don't understand the real implications of the
bond market implosion. Get on the buy as the losers
liquidate their gold stock in failure this week. Buy
it... before the banksters take it
all!
25. I
have to go to the dentist. Be in touch in 3 hrs..
Maybe I'll see Fudd there...getting ALL his bond market teeth
taken out by the bankster dentists. Sorry Fudd, they're
out of painkillers! LOL!!!
Gridlines. Stick
to 'em! (Donald
Duck can see the macd sell signals. The question is,
does Mr. Quack see what happened to him when he played top
caller in all the other gold mkt corrections? Hmmm...)
Thanks!
Cheers,
St
out
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