Aug 24, 2011
Don't blink. Why? Because by the time you do, you might have missed the "gold correction". One of my big focuses in the newsletter is focusing on strategy that has a practical application, rather than a grandstanding application.
Projecting a correction in gold, here and now, garners attention. But is it profitable? Is it even helpful? Is it even intelligent? Why is a correction so important to gold investors?
I bought weakness yesterday, with a focus on silver, and some GDX. Robin Griffiths at Cazenove (reputed stock broker to the Queen of England) basically says back up the truck if you are lucky enough to see $1700. Dev Cheekock at www.goldsproutprofits.com wonders if $1800 might be the low of any correction! These guys see gold rising hundreds of percent higher, from basically....here!
Obviously these power-traders are prepared to buy lower than their projected numbers, and do it in size, but the point at hand is that the wiener patrol is busy projecting the fantasy correction they need after blowing up into $1478, while the pros who bought that weakness hard, are almost saying..... chase price now!!!
The bottom line is that gold is in pre-parabolic mode, silver shows the greatest base pattern in the history of markets, and the bozo patrol stands there in a lobotomized competition to see who can hold the most amount dollars at the most dangerous time to hold them, in the history of the United States!
As team seasonal donned their clown suits in May/June and issued their hilarious "summer doldrums now!", "dollar rally now!", and "gold stocks are dead forever!" calls, I told you to prepare for the parabola. As I've told you, repeatedly, once we started the pre-parabolic rise out of $1478, the risk is now being in dollars, not in gold. Few understand, and few will avoid the mind-blowing agony coming to the dollar bugs.
Some of you are still asking, "why aren't gold stocks moving yet?" Possible Answer: Because you're in the greatest financial crisis in the history of the world, and before it ends you are likely going to be asking yourself, "why didn't I take some cash out of the banking system before it began a series of repeated closures, why didn't I just pick up some powdered milk, rice, green tea, dry beans, vitamins, and some other carry-me-overs, why, why, why?"
Until the reflation trade begins, institutional money managers are not going to buy gold stocks in a panic. Right now, all they are doing is hoping that the Dow doesn't totally collapse in Sept/Oct if Europe implodes. Juicy junior gold stock gains are the very last thing on their minds.
Angela "euro to zero" Merkel and the rest of the Euro Gman clowns threaten to send gold vertical with their daily madman propaganda about the Europe debt crisis. There are creating a bigger nightmare for the region, and the world, by the day.
Martin Armstrong is talking about the possible emergence of dictators in Western Europe, and investors want junior golds to start soaring now? To put it mildly.... It's time to get more realistic about the crisis.
This is not 1979. It's 1929 and 1979 combined and then exponentially supersized. When the bond collapses, your junior golds are going to be the last thing on your mind. The survival of your bank is going to be at the top of your "what's on the table for today?" list. A one or two day "bank holiday" could cause disruptions to supplies to grocery stores.
The amount of gold revaluation and/or money printing required to manage the coming implosion of the bond market, to keep the financial system open, is going to make QE look like an ant standing beside an elephant. You can't seriously believe that Ben Bernanke can buy substantially more T-bonds than he already is, with a photocopier, without wiping out the dollar and causing a global panic in bonds, can you?
As far as Richard Russell's idea of a pubic greed phase in gold goes, I think he should get a time machine back to the breadlines of the 1930s and ask those "investors" if they got their juicy gold juniors portfolio all pumped up. They owned nothing. No gold. No gold stocks. They were bankrupted by the punisher. It will be the same again, only much worse. The good news for Richard, who owns a mountain of gold, is the punisher doesn't need team breadline to power it higher. Institutional money managers will do far more for his gold price than team public could, on their best day. 1980 was their best day. Wait till you see team institution's best day. It will give you the adrenaline rush of a lifetime....
GDX $70 is my trigger for the launch of the gold stocks pre-parabola, and the parabola follows that. When does GDX $70 happen? I think it happens within weeks, but I don't know, and I don't care. All I know is I've accumulated a lot of GDX in anticipation of the event. If price drops unexpectedly, I'll take more buy action. End of gold stocks story. Patience is your road to victory.
I don't see anything "out of line" with where gold stocks are, and where we are in this crisis. Enduring time is the key to profiting in any crisis, but most try to predict their way thru it and many survive for awhile, before blowing up.
Most also think the lows of 2008 were the pinnacle of horror in this crisis. Wrong. That was the warm up act. The breadline is the pinnacle of horror, and it's coming when the banksters blow up the bond, and the otc derivatives attached to it follow, creating a financial nuclear winter. Real estate bargain hunters will get a whole new understanding of the term, "buying all the way to zero".
Team silver timer is afraid of the $50 mark on silver, just as team gold timer was afraid of $1033 as price rose up ready to burst thru the "Michaelangelo h&s pattern" there. Team gold timer went into a maniacal competition to see who could predict how many pennies gold would fall, after it broke out over 1033, while they held dollars.
How did that work out for them? Supersize that failure, and you have a teeny idea of what is coming to team silver top caller. I don't think most investors have a clue about the real price ramifications of a 30 year base pattern that is a head & shoulders bottom. Silver is likely going to "somewhere" between $100 and $1000.
Wait til you see the mob of flip traders who show up around silver $70 to guide you thru the silver parabola zone with various hamburger flip trades. I suggest a bowl of popcorn to entertain yourself as you watch what happens to them....J
If there is a disconnect between oil and the Dow, with oil rising while the Dow tanks, that is one event that could trigger institutional concerns with coming rampant inflation. Regardless of what happens to the Dow in the shorter term, I expect it to act like gold is acting now, skyrocketing higher, but that will be down the road a bit. The Dow will become the main target of an institutional money panic out of dollars and bonds, with that liquidity pouring into the Dow.
I have to believe the Dow goes lower first, however, because there are still a huge number of Fudds invested in the stock market. The great Dow bull that began around 1982 began will almost all Fudds out of the market. Most super bears end with Fudd demoralized and quitting the market for good.
This bear market still has many Fudds hanging on, although they have taken multiple beatings at the hands of the banksters, for over 10 years. That's ok. The banksters have generational patience, and enjoy torturing their marks, before finally exterminating them. It's like getting the electric chair, after serving a 50 year prison sentence... Nice financial life Fudd has chosen for himself. The repercussions of greed are truly gargantuan....
Dow monster trend player Mr. Macro notes some similarities between the Dow now, and that of the 1937-1938 period. The bottom at 6500 is likely the bottom for the asset destruction part of this crisis, but a nice tanking of maybe a few more thousand points, followed by time in that garbage can, would probably be just the type of action required to say good bye to Fudd in the stk mkt, permanently. From there, the banksters would begin the great reflation of the financial system, and institutions would panic into the stk mkt, sending it probably to above 30,000 while gold rises beyond 5,000 to 10,000, and perhaps much higher.
Tactics. I posted a key evening gold tactics video on the site last night. I'd suggest you check that out, but the bottom line is that you must "live in the now". That doesn't mean predict what's next, now. Gold rises and falls like you breathe. So do other major markets. When you come into a market for the first time, or with new capital, the first thing you need to do is.... Look down. Look down at HSR lines below you. Ask yourself, realistically, what you would do if you place X amt of risk capital in the mkt now, what would you do if price fell down to each of those HSR levels?
Gridtime: When you come into a market in the grip of a bear, it can only fall to so many HSR levels before it reverses or goes off the board. When you come into a market "in upside play", it can fall thru a myriad of HSR levels before reversing. The problem that investors face coming late into the market game, is that they make demands to perform like those who bought in not just the pain zone, but the "pain for time" zone. That can't be reality. They start killing themselves to call turn points rather than building the ability to endure price dropping thru their turn call points. I expect gold to probably rise $500 in one daybefore this dollar bear ends, if it ends. More on the endgame scenarios tomorrow...
See you out there.... On the gridlines!!!
Thanks!
Cheers
St out