Jul 23, 2011
"The unthinkable could happen." - Senator Pryor, talking about the August 2nd deadline, July 22, 2011. President Obama announced that it turns out that he can't stomp on the few crumbs that remain of the US Constitution, play dictator, and raise the debt ceiling. Oh well, maybe the Gmen can have a debate and issue themselves the power to do it next time, with a "constitutional amendment".
What happens to the average person if there is a US govt default? The answer is not really about what that means for the gold price in the short term, because I believe all of you, perhaps with the exception of sub Trex, need....more gold.
Will Aug 2nd prove to be an event that allows you to get more gold, before gold launches into parabolic mode? Guessing about the answer isn't going to make you richer, and likely makes you poorer.
The bottom line is that if the banksters have been successful in making you as afraid as Fudd is becoming as he watches the debt negotiations, then you need to buy put options on your gold. As always, put options are your main protection when you are ruled by Sir Fear.
Analysis of the situation will only increase your fear, and thus increase the odds of you making yourself poorer with irrational market actions. In the market, all that matters is price response action. There is monster HSR support on gold at 1578, 1432, 1227, 1033, and on and on, all the way to zero.
There are many other less powerful HSR zones in between those numbers. All that matters is what you do if price arrives at any of those numbers. In a crisis, enduring surprise is part of the game, a big part of it.
While team "August 2 is the day my gold weighs less on the scale, because the banksters say so" debates whether to "sell everything", for the millionth time,junior uranium stocks had a phenomenal day yesterday, ironically while the price of uranium itself drifted lower. The uranium stock charts look very powerful, but sadly, hardly anyone is in, having liquidated in failure after watching the Japanese radiation nightmare unfold. Hi ho, hi ho, it's lonely as.... kachingo you go! Buying all the way down on uranium into the "what's going on here, something is wrong!" zone was a new experience for some of you. Well, so is the kachingo and core position price action you felt yesterday!
Click HERE NOW to view the parabolic superhighway chart put together by Morris Hubbartt that I talked about yesterday. If gold does what he has pictured there (and try picturing that up pipe about 10 times as long as he's drawn it and you have an idea of how big I think gold could really go)....
Can you imagine what happens to GDX, GDXJ and various individual gold stocks if gold goes parabolic?
Most of the gold community couldn't imagine it, and when they couldn't take the years of agony anymore, they liquidated on the latest trip down to $51 from GDX $64. That was an epic liquidation and is part of the evidence that signals a possible parabola is at hand. Now you and I own their stocks, in part. The banksters own most of what was sold.
What the gold community, in general, couldn't imagine in the fear zone, they don't even want to contemplate now, because the only thing worse than blowing out a huge chunk or all of their stocks at losses after years of pain...would be to do it literally months before the real parabola arrived.
The gold superhighway is real, and the only thing Hubbartt has blown it on, is he's drawn the up pipe too small!!! Are you turning your golden car onto the superhighway onramp, or are you driving it over the cliff alongside Fudd?
For GDXJ, there's HSR support at $37, $35.50, $34.50, $33, and the question is, are you going to buy if President Obama signs the "GDXJ on sale for you" document on Aug2, or are you going to join the other 85% of the gold community and hand the banksters your stock at the lowest possible prices? I believe we need to see a price of GDX $75 to usher in the next price chase. The liquidation and total demoralization has been so intense that only a massive rise in price will bring them back.
To rebuild the morale in the gold community, $75 or even $80 GDX is required, not just a "breakout" over the $64 launchpad price to $65 or whatever.
The bottom line is that you got a break from the discomfort and pain zone of GDX $51, a big break. Obviously you have to take something off the table on a $10 rise in GDX to $61. I did, but not much. I've sold about 5% of my positions into this strength. I'm not going to be flip trading myself through the gold parabola in size, but a lot of people who couldn't trade through the $1000 to $1400 zone will be attempting to do so. They will be incinerated.
Whether GDX $51 is the ultimate low before we go into parabola time is totally unknown and "looking for clues" is going to make you poorer. Do you want to be poorer or...richer? I've chosen... richer, so I've chosen not to care about whether President Obama and the rest of the Gmen give me GDX under $51. I've set aside risk capital for a PGEN down there, if it happens. There's nothing more to do.
The risk of missing the parabola infinitely outweighs the risk of catching a flip trade to the downside to make some "pre-parabola" mini profits.
For GDX, I want more into the minor HSR areas of $58.50, $57, $55.50, $53. I believe the thought of eating into my core position now to get "more for cheaper" will go down in market history as one of the stupidest market thoughts of all time, as I absolutely believe the max upside for GDX is $1000 a share, and the minimum is $100-$200.
It's totally unknown how high gold stocks could go if gold starts rising much faster. How much faster could gold start rising? I think a gain of $1600 in one month is easily doable. It took ten years to rise to $1600.Basically what I'm telling you is gold's price could begin to rise 100 times faster than it has to date. If you want to play August 2nd master analyst, that's fine, but my focus is on getting more gold items and holding what I have as core with a nuclear-powered vice grip. Picture GDX rising 100 times faster than it is rising now. Can you handle that? Somehow, I thought so!
If GDX rises above $61, shave some more off, but know when you are shaving core and calling it trading position shaving. We have one Dr. Pinocchio. That's enough. Shave the hairs off, not your skin off.
I love being "in the parabola moment" because all around me, the Fudds start asking what is happening and I love laughing my head off telling them, "you're burning, that's what's happening, you treated gold like a penny stock, but it is you that is the penny stock and now the banksters are delisting you. Bye bye!". Fudd won't buy until gold is thousands of dollars an ounce, and even then, the banksters may shut off gold sales to the public, and laugh hysterically while Fudd grovels on the breadline.
You don't have to laugh alongside the banksters as Fudd burns, but I would suggest you follow them in action, not Fudd, or you'll burn too. Do the banksters look like they are afraid of Aug 2? If they are not afraid, should you be afraid?
While volume has dropped over the past week for both GDX and GDXJ, that doesn't mean price comes back to or below any of the HSR points I've detailed here. We could just drift sideways and then blast higher.
Attention gamblers: Mr. Macro, who told his people to short the market as Morgan Stanley issued their triple sell signal in 2007, then bought the Dow near the 6500 lows...he also bought interest rate call options with 1% of the account. Rates tanked and he made 8000% in 6 months and booked it. That's the kind of action that is likely at hand now, for GDX call options. I wouldn't put a number on it, but I would say this could be enormous. Pay up for time. I wouldn't buy any less than Jan 2013 for expiry, and roll those over by July 2012 if nothing has happened. Note that he used 1% of the account, not ten billion percent of it, something to keep in mind.... I like allocating 70% of the options capital to call options and 30% to put options, to stay sane.
Report Card Day. The GDX $51 lows seem like nothing more than a bad dream now. It wasn't a dream and when we go into the "parabola zone" many of our comrades will be burned like moths attracted to the punisher's flame. Think big. No, bigger. No, bigger than tha!
Thankyou
Cheers
St