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Nov 29, 2010

1. I suggested in the early summer that gold juniors could be a monster play. They rose 50% just based on the GDXJ, and many rose 100% to 300%.

2. I then suggested that uranium juniors could be a major play. They stepped up to the plate, and the icing on the cake was the one "super spec" Eso Uranium that showed up for Thanksgiving.

3. GoldLion would like to draw your attention to the oil and gas juniors sector now for your next cash register ringing party. Just so you don't get "oiled", I'm arranging to meet him for dinner shortly to create a short list of top OIL juniors that could be takeover candidates ready to run thru the PGEN.

4. He agrees with my view that it's totally unpredictable as to whether we hit $1400 or $1300 next on Gold, and also agrees with my view that we make a new high in gold early in the new year at the latest, regardless of any bankster games between now and then.

5. I'm going to leave myself out of the debate on whether SILVER goes to $500 or not, and instead insert myself on whether you are a player in silver between now and $35.

6. I like the $20-$35 area as a silver to gold conversion zone via the PGEN. What are the mechanics of the conversion? I would suggest you may want to consider aiming for a swap of 70% of silver for gold by the time you are at $35.

7. I would also suggest that at $35 silver, most are not understanding how strong that price is for silverstocks.

8. I see many writers talking about how silver could triple or quadruple from here. Yes, but how many are thinking about what $100 silver would mean for silver stocks?

9. My suggestion is that you spend a "teeny weeny" bit of time considering risk as well as reward. Here are some issues to consider:

10. First off, remember the Dow at 14,000. As the market roared higher and higher instead of placing small monies in some high risk Dow-related bets, most investors decided to place massive monies in those bets. Insanity ruled.

11. My suggestion with silver is that if you move silver profits into gold bullion, and work towards a 70% gold and 30% silver ratio, if silver skyrockets, you are still going to make a lot of money. If there's a meltdown, the bulk of your profits have been locked in gold, so you party while the rest of silver land burns.

12. If you move a modest portion of silver bullion profits into silver stocks, and are essentially positioned in mainly gold bullion with silver bullion and silver stock "kickers", then if there IS an upside price parabola, your silver stocks could provide tremendous returns, while the gold manages the downside risk.

13. The reality is that if silver bullion were to move to say, $80 or higher, it is almost impossible that most of you could handle the downside if you were carrying a huge silver position at that point, if the banksters perhaps then sold their silver and tanked the price in a surprise total elimination of comex margins, going to an all-cash market. (yeah, I know that the rest of gold land tells you the banksters are naked short silver, and about to blow up any minute if price rises just more one cent higher, but let's assume for a few imaginary seconds that the banksters are actually long most of the world's physical silver bullion, and plan to dump it on the price chasing Chinese Gman later, then crash it, and cash in on their comex shorts at the same time as they dump their physical, let's imagine a realistic strategy for you in such a situation, just an imaginary strategy of course, since we all know silver can't crash and it's free money silver to the sky forever for us, as the trillionaire banksters blow up, or so those holding 2 silver contracts on max leverage with money borrowed from the banksters, are telling you...).

14. Let's concentrate on making a real one dollar in your hand today, rather than an imaginary $500 an ounce bird in the bush.

15. As the bond market implodes, remember that international liquidity flows follow interest rates. The Irish turn on centre stage is taking the spotlight away from the US bond market.

16. Is the US dollar rallying because of Euro to Zero, Phase 2? Obviously that is a factor, as it will be as for Spain too, as they get their turn as Head Paper Money Photocopier Operator For Europe. Nice title, they've earned it. But institutions are also looking at the possibility of higher US interest rates.

17. My prediction is that the institutional herd moving IN to the US dollar now, will move out of it not into the Euro, but into the stock market.

18. As they do so, they will find the banksters highly unwilling to buy those dollars in size, and price could take the US dollar down in an unprecedented downleg as a new "out of control" feeling starts to envelop institutional money managers as they think about the financial system.

19. Some are asking about what "evidence" to look for that the current gold correction/consolidation is ending.

20. My answer is: Look at your accounts. As you buy into the correction, your accounts draw down, as you buy more, they draw down more. As the correction ends, your accounts begin to rise in net worth. As gold goes higher and higher, your accounts go higher and higher. There's your evidence.

21. Comex margins. The New York comex market is the main gold market for the United States. The banksters set the main contract trading size at 100 ounces of gold. Unlike the stock market, where you can buy 1 share of a stock (some exchange traded funds have a 100 share min), on the comex you must buy 100 ounces of gold.

22. The current value of 100 ounces of gold in dollars is approx. $136,000. (100 ounces x $1360 an ounce = 136k). As an act of "generosity", the banksters have allowed investors and funds to buy a contract with just $6000. A recent tiny rise in margin rates angered many investors, who blamed the banksters for deliberately hitting gold by unfairly raising margins.

23. I want to be sure you are clear on how these margins work. If a heroin dealer gave you a needle, would you shoot up with it? OK, well, use the same level of caution when receiving an offer from the banksters to shoot up with financial drugs.

24. The margin of $6000 could buy you about 5 ounces of physical gold. That's what it IS. The average comex trader is basically trying to carry 100 ounces of gold while only paying for five. A mindblowing TWENTY to one leverage ratio.

25. Some put up a little more, to be "conservative". "I put up $8000 and I've got a stoplosss, so I'm pretty well protected.", is a common type of statement made by comex traders (junkies).

26. What I want you to focus on is the fact that the $6000 is what the banksters term "initial margin". On 100 ounces of gold, a ten dollar an ounce move in price is (100 x $10 = $1k) a thousand dollars.

27. So it would seem that if you put up your 6k, then you can sustain a move against you of $60 an ounce (100 x 60=6k). Wrong. The banksters don't want to take the chance that gold gaps lower thru your 6k and then they have to come after your broker for the money. If there are a lot of people who got stomped on a huge down day, the broker might not be able to pay, and nor would the clearinghouse that is next in line in the line of responsibility.

28. So, the banksters have what is called "maintenance margin." In the case of comex gold, the current number is approx. $4500. In plain English, what that means is that if you buy $100 ounces of gold on the comex with your 6k initial margin, and gold falls just $15 an ounce, then the banksters want more money or they force-liquidate your position.

29. In the case of leveraged hedge funds, who may not only be using the 20 to 1 leverage provided by the banksters, but also further leveraging their (im)possible reward with loans from the banksters. In those cases, the banksters often force the funds to sign contracts that if there is a margin problem, the banksters have the right to liquidate the fund's entire gold position, not just the amount needed to restore the fund to "onside" with their margin ratios.

30. Now you understand why I've told you for years that the reality is that the average US gold trader can only withstand $10 to $15 price movement against them, before liquidating.

31. OK, how does this relate to YOU? The bottom line is that you just saw gold decline $94 from $1424 to $1315.

32. The key point is this: That $94 decline was about 7%, and it occurred on just a tiny increase in margin ratios, and those ratios, today, are still greater than twenty to one.

33. Does anyone understand the power the banksters have to totally smash the price of gold if they announced they were going to ZERO LEVERAGE? A total bloodbath for the gold market speculators.

34. Leverage is for your gambling money. The banksters are able to maintain and build POWER thru temptation. The recent raise in margins is only a TINY taste of what is coming. Gold will continue higher anyways. It is important that you focus on accumulating gold and gold-related items with the PGEN on weakness, not guessing at what is next. Use price strength to reduce leverage.

Grid Time.

See You There.

Thanks!