Aug 13, 2011

"It's going to feel very hard, harder than anything they've experienced in their lifetime now, for a long time to come." - Tim "the terminator" Geithner, July 2011. (bold & underline is mine) "If you let Italy and Spain default, you will have 10 years of depression in Europe," Matt King, global head of credit strategy at Citi, CNBC news, Aug 12, 2011.
What the above two statements are telling you is that gold will rise high, and stay high, for a very long period of time.
This is not 2008. The crisis has stages. 2008 was one of those stages. In 2008, institutional money managers bet that the system would not collapse, and bought US treasuries. They were correct. They will be correct again, when they buy gold stocks.
Bank America is not Lehman brothers. It dwarfs Lehman. Bank America is a massive commercial bank that does business with 80% of the world's top 500 corporations.
If Bank Am goes down, if the largest wealth manager in America goes down, money managers have the very highest probability of buying gold first, and the Gman's toilet paper second. If Bank America shuts, I'll give you 90% odds that the world's banks close for a few days, and I'll give you a 50% chance that a one-time revaluation of gold occurs while the world's markets and banks are closed.
That revaluation would see the gold market re-opened at a minimum of $3000 an ounce, with all major central banks prepared to buy gold from any seller at that minimum price. Do I think Bank America goes down? No, but it is possible.
Meantime, the gold community obsesses about whether $1700 gold holds or not. That obsession is 50% joke, and 50% horror.
I took delivery of all my core gold stock positions in 2008 and 2009. I have no idea what the holdings are worth, because I don't even look at them. I do know they are worth more than I paid overall, because I bought them into the agony zone into the exact lows of 2008. I didn't call the 2008 bottom.
I bought it.
I expect to hold those gold stocks for probably 10 more years. Most investors in the gold community have, vastly, a too small time horizon for gold stocks, because they don't really understand the size of the crisis. Things that would normally take a year or two in a regular severe down turn, take ten years, or longer, in this super-crisis.
Let's leave aside those maniacally obsessed with bottom calling the Dow on the edge of crash season, after shorting it at 6500 and blowing up like a stick of dynamite. The only thing different this time for team "master of operating a row boat in a hurricane" will be the size of their losses.
Instead, let's focus on what the crisis is, so you get richer, instead of becoming a bigger mark for the banksters to pick apart. Look out your financial window at items like Bank America and Italy. With all due respect to Sir Shadow Stats, those focused on inflation are doing so... far too early in the crisis.
His "real inflation" numbers are correct, but they are not yet relevant, when it comes to institutional money flows, which are the key to sending your gold stocks into the next galaxy.
We are still in the implosion stage of the crisis. There has been re-capitalization (reflation) of parts of the system, but not of the system itself. Derivatives have been marked to model. That's not reflation or re-capitalization. It's coming, but not here. Crisis-fix tools like rates to zero and QE are still widely viewed by institutional money managers as having some hope of fixing the crisis. The bond market has suffered some loss of confidence, but the concern remains with deflationary forces, not inflationary forces.
While an event like Bank America blowing up could cause the bond market to tank, that's a coin toss probability. What is certainly going to end the bond bull is real fears of hyperinflation starting immediately, by institutional money managers. At minimum, it will be fears of very high inflation or a US dollar crash. Are their fears here now? No!!!
Food prices are at 1970s levels. Central bank buy programs for gold are only in the earliest stages. Institutional money managers are starting to wonder about where this crisis is headed, but they are only on the outskirts of "panic mode". They are not in the panic zone, so therefore their money flows are not in the gold stocks zone.
GoldLion believes most gold juniors stocks are now in bankster hands. He is the largest shareholder in a number of junior situations himself and has been instrumental in the survival of a number of juniors stocks that many of you own. Rumours persist of massive OTC derivatives bets in the hundreds of billions, with the banksters long gold stocks and the fundsters short them. That is parabolic rocket fuel, but not a parabolic rocket launch.
The banksters have gone to great lengths to drive the gold community out of gold stocks and create a massive short position held by leveraged funds, with the leverage provided by the banksters. YOU can't call your broker and short a gold junior with 10 to 1 leverage, but the hedge funds can. The problem for the funds is that the banksters have the right, at any point in time, to tell the fundsters they are no longer comfortable with the loan, and they can pull the plug on the fundsters in a very fast and very big way.
Why would the trillionaire banksters devote such an immense focus to gold stocks? The answer can only be that tremendous potential reward sits there, and they want it for themselves.
You can't order the crisis to proceed at a faster rate than it already is. That can't work, by definition. If the crisis were to proceed at the rate that most of the gold community wants, what would happen is the banks and markets would shut down, permanently. The global financial system blew up with Lehman, and was marked to model. Just because it is open doesn't mean it is solvent.
Slowly, it is being marked to market, at the rate it is being recapitalized. The annual bleed in the US dollar against the punisher reflects that recapitalization. A fast move to mark the system to market doesn't send your gold stocks higher. It puts them.... off the board.
There are not billions, but hundreds of trillions of dollars in OTC derivatives that are now marked to model, and kept off book. The winners of those bets, the banksters, want to be paid, but that takes time when the system is insolvent, and when the size of the wins arguably exceed the world's net worth. Bit by bit, the entire imploded financial system is being marked to market, by the punisher.
If you look at any typical gold juniors stock, or even an item like soybeans,(which I'll start covering today for those of you who want more action in the food market on any item with a miniscule chance of going to zero), the liquidity flows into those items reflect the marking to market of debt bombs, not the ravaging inflation that follows the re-capitalizing of the system with printed toilet paper money. The gold price, here and now, reflects a fear trade, not a reflation trade. That will change, and it will send gold stocks vertical, but you can't order it up before its time.
The timers think they have it rough now. They will be totally blown away by big picture investors as the reflation trade begins. Wider PGEN increments are required as the reflation trade replaces the implosion trade. Why? Because I'm not interested in calling mini-markets alongside mini-minds, in the parabola zone. I'm interested in...Getting Richer!

Report Card Day! Did you book some profits into gold $1800, or did you buy it, "before it gets away"? The banksters bought silver heavily this week. Maybe gold's little brother isn't such a bad thing to be, with moderation. While silver isn't gold, it isn't toilet paper either, and the toilet paper bugs should keep that... in mind. The gold punisher will tolerate some teasing of her little brother by the toilet paper bugs, but there's a limit to what she puts up with, before she burns the bugs alive in the punisher's blast furnace, and my question to those of you holding hands with gold's little brother now in the dejected zone is... ARE YOU ONSIDE?

Thankyou

Cheers