Oct 14, 2011
Archduke Ferdinand, part two? Apparently some Iranian Gmen decided to kill a Saudi Ambassador on USA soil, and now things are escalating. Quick, sell all your gold, because some top caller's tick chart says it might fall down $15 an ounce any microsecond now.
Oops, a mountain of leveraged fundsters already did.Click this gold panic chart now to view how terrified the weakest hands are right now, in the gold market.
That's significant volume, on just a fall from $1670 to $1655. This is the world of the leveraged trader. Can you possibly imagine the panic that will occur up in the reval/volatility/end of leverage zone, on, say, a $1500 fall from some number like $4300?
The theme I would suggest you want to work diligently on now, is destroying the "what's next from here?" financial ebola thoughts that have dominated gold players from day one of this gold bull market.
If you can't defeat the obsession with timing before we get into the parabola/reval zone, I think the risk is greater than 90% that you'll be wiped out financially, before the end of the gold bull market, ironically, as gold goes hundreds of percent higher overall.
Each intermediate swing will become more violent than the previous one, generally, and the tendency of investors is to sort of "demand explanations and answers". That's not how the professional trader manages themselves in the parabola zone in the gold market during an epic crisis of paper currency.
You have to let go of the past methods; let go of the natural tendency to seek explanation for the huge movements in price. Most won't be able to do so, and instead will demand more explanation and analysis, a horrifying mistake. The picture you should have in the reval zone of most of the world's investors is hundreds of millions of crazed chickens with their heads chopped off, running madly all over the place, without a clue what they are doing.
My 70% long 30% split for options players/gold traders will be about the only thing that works, so you can simply respond to the price action by booking some profits whichever way the price happens to be leaping, when you get out of bed.
Oil traders should consider drastically curtailing your operations once price moves over $100, and better still, consider doing it now.
A number of you have noted recent selling of T-bonds by foreigners is at high levels. That's true, but it's also true that the Fed can easily overwhelm all selling with QE. Focus your bond market top calling energies on the ramifications of such Fed action on the dollar, and therefore, on gold.
Somebody has to buy these bonds, if they are to be sold, and if it is the Fed and other central banks, then dollars need to be printed to buy those bonds. Massive selling of t-bonds doesn't necessarily lower the price of t-bonds, if Ben Bernanke buys more bonds than the sellers unload, and Jim Rogers believes Ben is already in action, and lying about it.
When the choice is between buying gold and shorting bonds, in terms of capital allocation, I would personally say you should have 100 times more risk capital in gold than you do in a short t-bonds play. Don't wag the gold dog with the t-bond tail. You will lose.
Top calling tempation. In a major bull market, technical indicators and oscillators spend far more time and price in the overbought zone, than in the oversold zone.
Amateurs don't understand this phenomenon, so when these oscillators become overbought, then tend to take drastic action, in terms of flowing their liquidity.
Taking huge amounts of risk capital off the gold table in technically overbought zones in a major bull market is a giant mistake, but that's what temptation and lack of understanding of what the indicators are really saying, causes investors to do.
It's like saying that because you took the elevator to the top floor of a skyscraper, the building might fall down at any time, so everyone has to evaculate, now, now, now! Wrong.
Likewise, the oscillators and indicators spend very little time in the deeply oversold zone. You need to "pre-empt" any oversold conditions with your buy PGENS, because they may not happen at all.
For example, the RSI on the monthly gold bullion chart has never gone to the classic "oversold" position of 30 during the entire bull market to date. Not once! In fact, only once has it even fallen to the neutral zone of 50.
The gold beaver is hard at work this morning, chewing at that $1680 log of USD toilet paper again. Click here now to view today's three HSR lines in the sand chart. Keep it simple, or get destroyed. That theme will intensify in the reval zone.
Let's drop the guessing about which HSR level we are going to fall to, and start preparing to respond to them, if it happens.
Offshore action update. I've met with a number of Cayman financial professionals who administer billions of dollars. I know many of you have offshore set-ups.
The offshore world is changing, and there are going to be winners and losers in the deal. The bottom line is that the US passed legislation making it illegal for any bank in the world to fail to hand over the name of any former US citizen who has a bank account with any bank, anywhere in the world. Some Canadian banks say it will cost $100 million to put the system in place to comply with the IRS.
The IRS estimates it will get $60 billion in revenue from the move, and they aren't paying any part of the costs the banks will incur to comply, obviously. The real benefit, going forward, of an offshore entity is: compounding. Investments can compound tax free until the onshore entity removes cash from the offshore entity.
I fully expect other nations to follow the IRS lead. The old "I'm hiding and you get can't me" offshore game is about to die a very ugly death, unknown to most of the world's tax hiders and asset protection believers. Compounding wealth tax free remains untouched as the prime benefit. Most offshore investors don't make money. They lose it, ironically, while setting themselves up to get fried on other fronts. In time, tax rates should fall in the USA. The winning offshore move now is: "keep it legal, and keep it compounding tax free."
Gridtime. Gold feels strong here. Another opportunity for those who over-comitted at higher prices to trim exposure to something realistic. You can be 100% invested in gold, and I have nothing against that position, but if you do it at one price point, you are setting yourself up, emotionally, for a train wreck. All aboard.... the price diversification train!
Thanks!
Cheers
St out