Sep 19, 2011
I'll be posting a summary of all 30 Dow stocks on the site very quickly this morning.
There's a lot of key action there that all investors need to understand in terms of where we are now. I use Nov 1st as the official end date to Dow crash season. I don't know any other analysts in the gold community that follow all 30 Dow stocks, let alone any that actually bought any, hard, into the lows of 2008 or sold into Dec 1999, as I did.
What's happening now, is that the Dow monthly chart, the "big kahuna" of all technical stk mkt charts, is showing a series of horrific sell signals on the osciallators. The temptation is to ignore the fact that the Dow has already fallen thousands of points on the grid, and just wade in with (another) failed plop of put options and futures short positions.
When you look at all the 30 individual components of the Dow, a different story is told. Some stocks look they are either going off the board, or will be taken over or reverse split. Obviously, as a wealth builder, you want to stay away from those unless you think they are more likely to turn around than fail or get diluted. The a
Some stocks look like what is happening is the monthly oscillators on the Dow are going to turn up, "impossibly", and begin a big leg higher. Why would that be? The answer is not earnings. The answer is.... The dollar.
This crisis is about debt and the dollar, much more than about the economy. The technical positioning of some Dow stocks suggests that the dollar may be on the verge of a new leg down, particularly against gold.
I've talked about Mr. Macro's crew pointing towards $200 a bbl for oil. There comes a point where crowing that "Dow stocks love rising oil because it means the economy is growing its way out of the OTC derivatives crisis!" becomes a broken record headed for the trash bin.
The chart for Chevron looks massively powerful, as does Exxon. Obviously if oil is going to $200 and maybe to $500, the possibility of hyperinflation becomes real. At minimum, you want to own oil stocks rather than the Dow. Put options on the Dow, with oil components in there, just doesn't make sense for anything but a small money bet on crash season.
There are still 6 weeks to go, approximately in crash season. There seems to be an "analyst mix" of those trying to call the "next wave down in the bear" (madness) and those yelling, "forget crash season, everything is wonderful, just buy!"
The reality is that you still have 6 more weeks to go in crash and burn season, and with gold and oil both looking superb here, why waste capital on either buying or shorting...the Dow? The analysts, both long and short, are working far too hard to figure out the next Dow move. It's irrelevant, but they can't accept that fact.
I would not be a seller of bullion to buy gold stock, and here's why: Just as dow players need to understand we are still deep in crash season, so gold bullion holders (should be 100% of you) need to understand we are still very early in this crisis.
I am comfortable with you selling dollars to PGEN into gold stocks, but less comfortable with seeing you sell anything but token amounts of bullion to do it. There are still massive legs to the crisis yet to unfold, and it's hard to accept that the very companies that mine the world's ultimate low risk investment are themselves ultimately very very high risk investments. If you want to "make more profits", fine, but don't eat into the crisis insurance portion of your bullion holdings.
Most in the gold community have a theory that the US govt will enact huge taxes on gold investors. I think the opposite scenario is much more likely, although neither is a sure thing bet. Because Elmer Fudd Public Investor has no gold, the only people the banksters hurt with massive taxes on gold is.... themselves.
Further, in the case of a forced gold revaluation, the US Treasury is going to want to offer maximum incentive for investors to turn in maximum amounts of gold, so a "tax holiday" is a very real possibility for those who turn it in, if a forced reval occurs. The US Tmen aren't stupid. They know most of the gold community thinks the debt problems and freedom robbery has made it justifiable to hide their gold.
In the last FV (forced reval), the public held huge amounts of gold as savings. Now they hold Nortel, Enron, and "house prices to infinity on a credit card bonds", whatever those are. There's more need for incentive than punishment in this crisis. In the 1920s people never thought govt was on the edge of blowing up. Now the situation is more murky, and gold is much more international, so if you are the US Treasury and you want international gold, you need to provide incentives.
Click HERE NOW to view this morning's "gold positive" action. Note the green downtrend line that 99% of technicians are looking at.
I don't like up or dow trend lines very much, except to broadly define channels on the monthly charts. Horizontal support and resistance should be your focus. It's an emotionally positive event that gold took out that little green line, and nothing more.
Bonds are taking a run at the highs, which is another positive for gold, but in the end price is still in the $1700-$1900 box, and that's a monster positive for gold stocks, and "it is what it is" for gold.
Natural gas is down today pushing at new lows for the month, and wheat and corn are also down. Silver bulls are hopefull, but still somewhat disappointed in the price action while gold leads the show. It's very important for most investors to segregate investments into different accounts.
Most "respected" advisors hate that. They want a one account picture. Sounds great in theory, but in practise it is a total nightmare. Do you keep your bathroom in your kithen or living room?
No. So my suggestion is to operate the same way in the markets. If you have foods in one account and gold stocks in another, you can focus on the job at hand, rather than sort of "devolving" into a "I'm losing on everything, this is a total disaster" emotional mood.
In the funds I professionally manage, I don't mix gold bullion investments with ANYTHING ELSE. I want that investment held pure, alone in an account totally designated only for bullion. When I'm in that account, I don't have some wheat man telling me, "look over here, look at me!" There's no natural gas analysis going on. No oil truck is seen falling down a cliff, so I need to sell gold to cover that situation.
Become a financial surgeon in your operations, rather than.... The financial blob. Look at gold bullion like your favourite room in your house. It's your showcase, and you don't want anything else in there to clutter up your operation.
The other major benefit of segregating assets is you are going to be much less likely to take ad hoc action. Plopping risk capital into a situation wildly is a very easy occurrence when you are operating with a single account. You have X amt of cash in there, and it's much easier to over-commit some of it to what makes you feel good now, and feel horrific later....
Gridtime! Stay pro out there. With assets segregated to sub accounts, you become the boss. If uranium is tanking, you might say, "yes, I want to increase the size of my PGEN buys, but I just don't think I'm fully comfortable committing the amount of capital that I would have when I had all my investments in a blob account. Now I understand what I have on the line here, and yes, I'll commit more, but since I have to put the funds directly in that account, now I have a better appreciation for the actual size of my investment in this asset. I want to operate as a financial surgeon, rather than as King Ad Hoc...." I've got some blockbuster natgas news I'll be going over on the site after the Dow components update, thanks to one of you...
Thanks!
Cheers
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