Gold: The Big Picture Gets Bigger!
Aug 31, 2010
- Welcome to the Big Leagues. I keep telling the gold community that the Chinese people and Chinese corporations should not be confused with the Chinese Gman scumbag.
- Stratfor, one of the most respected information services in the world, announced that the head of the Chinese central bank might be missing, and now it's hitting the mainstream media, although the spin machines are in power mode downplaying the situation. Imagine Ben Bernanke running away! That's the magnitude of the situation! I told you, repeatedly, that the Chinese central bank/Gman had massive losses on their US dollar and bond positions they bought in a crazed price chase, from the banksters. Almost nobody listened. Instead, they told me what a master investor the Chinese Gman was, while I called him a bustout. Let's repeat the issue today, in a different way:
- Knock, knock. Anybody home?
- The horrific bottom line is that it appears that bank chief Zhou Xiaochua lost "only" $400 billion. Why would he buy bonds (in US dollars!) in that kind of size, after 30 years of a bond bull market, and at the end of the US dollar bull market? Sadly, I suspect only his personal tooth fairy knows the answer.
- $400 billion of Chinese taxpayer money burned up in flames. If I was in Zhou's place, I'd try to run away too. So much for him "dictating" to Helicopter Ben. Speaking of helicopters, I wouldn't be surprised if the banksters offered Chief Zhou a ride in the Bre-X company helicopter, for his "getaway", if you know what I'm saying...
- I also told you, again repeatedly, that the Chinese US bond position was about as worrisome as a fly to Ben Bernanke, when compared to the abyss of hundreds of trillions of dollars of worthless OTC derivatives garbage. Now you see the reality. The Chinese bond blowout, in terms of hilarious stupidity, is topped only by the Chinese Central bank's microscopic gold position. "After five thousand years, we've managed to accumulate one, maybe two, maybe even three thousand tonnes of gold. Honestly, we're pro-gold for our people, we promise!" The Chinese banksters have zero intention of putting any serious gold holdings in the hands of the people, unless it is at sky high prices.
- The global banksters, including the Chinese banksters, who are 100% in on the game, use gold to control the paper money system. There is no intention to replace paper money. The game is to dilute the common person and lock debt levels. There is no strategy to end debt. Why would the banksters want to end debt just as rates are set to soar, set to make the average person almost a financial slave? The banksters are slobbering for the end of the bond bull market. "My golf ball advisor told me there wouldn't be any more bear markets in bonds. It's a new growth with safety era, he read directly from the company's research report and that's what it says, and he's highly respected. I'm putting my stock market carcass into growth with safety. I can't take another hit with anything risky. I made 15% last year in bonds, and my dog promised me that will continue forever. My golf ball advisor has me fully diversified in 35 growth with safety investments. I'm very happy with my new safe strategy" - Elmer Fudd, Master Price Chaser, Aug 31, 2010.
- Prediction: The US dollar will blow out the lows and send Public Investors (who I term, "Elmer Fudd") into a terror that will rival the terrors of 1929, as the news headlines (operated by the banksters) scream, perhaps by the hour, "The End of Paper Money?!". It will be at that point of terror that the banksters begin a massive accumulation of US dollar paper money, while Fudd hits the bread lines with no job, his "growth with safety" bond and paper money cash scheme in a bonfire. He and his price-chased pipedreams will be 100% broken, mentally and financially, by the banksters. How totally horrible.
- At that point the world would not look good. Professional money managers would be buying the stock market out of fear, not optimism. The stock market will soar, but Fudd won't be a player, not for another 50 years. The news headlines will talk openly of real hyperinflation. The double dip will have turned into a vertical nose dive for the common person. Commodity prices, except home prices, will be in the stratosphere, and gold juniors will be "beyond stratospheric". While the t-bond might not have collapsed (unlikely that it doesn't), the junk bond markets (Fudd's growth with safety clownshow) are likely to be in Armageddon Mode.
- All of that is without even mentioning the horrific geopolitical situation developing in, and enveloping Iran, Turkey, Lebanon, and Israel.
- You will soon witness a transition of "lead man" in this crisis from Ben Bernanke to Mr. Tim Geithner, head of the US Treasury, for the gold revaluation stage. QE will be kept alive as a tool, as low rates are kept alive as a tool now, but gold revaluation will take the big stage. Remember, if Helicopter Ben devalues the dollar without the Treasury's permission, he heads to the clink. It is the US Treasury that has sole power to devalue the dollar against gold. Sole power to devalue most of the world, while the banksters screech with laughter.
- Silver. A firestorm of "Silver Breakout, Buy!" calls occurred as silver rose above the supply line of the symmetrical triangle. I sell all upside breakouts. There were "only" several dozen opportunities to buy silver a full dollar lower than the breakout point. Few did. Now, as we approach the Jobs Report, aka The Bankster Games Report, all the price chasers are on board with their overleveraged futures contracts, ready for the silver moon shot. There must be a very large number of stoploss (takeloss) orders in the silver market now, and the bankster hunter-killer algo robots will be in full seek and destroy mode, looking to take those long silver positions for themselves.
- If silver gets hit here, will you be a buyer, or part of the takeloss inferno? Here's the chart. Silver Chart. I am the very first to say the triangle looks excellent. The better the look and the larger the size of a chart pattern, the more reliable it is, and the more the banksters are going to want to hog all the profits from the move for themselves.
- Let me be crystal clear on my position that Gold is the world's most powerful financial market. Silver and Gold Stocks, particularly Gold Juniors, are preparing to confirm gold's move to new highs. I would be concerned about gold if silver went to new highs but gold didn't. The reverse is the case here. While gold is the world's most powerful financial entity, it functions as a control mechanism, and only asserts its power when push comes to shove. No asset, except perhaps arguably food, can defeat gold in a market death fight, but most of the time there is no death fight, even now. In a death fight, gold goes to infinity against paper money and paper money goes off the board. End of Story.
- The silver triangle is part of a much larger head and shoulders bull continuation pattern. Here it is, with the Kitco chart providing the best illustration of what is going on: Silver H&S Bull Continuation Pattern. Notice how I've drawn the neckline. The neckline in the head and shoulders is not started from the high at 21, but from the rally high after the decline from 21. Head & Shoulders bull continuation patterns are not understood by most investors, with many actually believing they are top patterns.
- When gold formed its own H&S bull continuation pattern, I got a plethora of emails from readers who got their technical analysis education from every book except the Edwards and Magee "bible", informing me that gold was topping because a head and shoulders top was in place. The top callers were destroyed (They lost, & I won for you). A head and shoulders pattern can be a reversal or a continuation pattern. Reading the cover page of Edwards and Magee doesn't make you a head and shoulders master, unfortunately. You actually have to read the book, numerous times.
- In regards to the stock market, paid subscriber Ironman points out the latest Hulbert numbers show Corporate Insiders are more bullish on the stock market than at any point since the March 2009 wipe out lows, the point where Elmer Fudd Public Investor accelerated his great "growth with safety" expedition in the bond markets, that he started in Oct 2008. Here's the daily chart for the Dow. Dow Daily Chart.
- The insiders are on the buy, yes. The technicals are becoming oversold, yes. Elmer Fudd Public Investor wants nothing to do with the stock market, check. Still, September is stock market hurricane season, so you want to keep in mind that while the Dow "looks good", we could easily drop a thousand points lower and the insiders would likely be joined by the banksters on the buy side while the funds freaked out and liquidated.
- It's important that you see the Dow as a ten dollar stock. Not a ten thousand point monstrosity, a 10,000 foot cliff with you teetering over the edge with your only support being a stoploss on a pile of SP500 overleveraged futures contracts. View each thousand point increment like a dollar move on a 10 dollar stock. You buy a little at $10, and if it falls to $9, do you freak out and run to mommy? No. If you are using my Pgen, your buys are kicking in while you are in yawn mode, just as a veritable machine gun firing of profit booking kicked in from 9000 to 11,500. Relax, that's all the Dow is, a little ten dollar stock. Take control, with precise allocation of risk capital, not pot shots with your granny's life savings.
- Here's a much bigger picture look at the situation, via the Dow Monthly Chart. You can see that in the big scheme of things, it's just a ten dollar asset, and whether we bottom here, or drop thousands of points, it doesn't matter, provided you are not trying to take on the bankster aircraft carriers with an overleveraged popgun. There's a zillion products available to play the Dow in small increments, including allocating 30% of your risk capital to a shorting component. Trade smaller than you know is rational, and you'll start booking wins, while your competitors book themselves a spot on the bread line.
- What about gold? My partner "GoldArtist", who trades like Jim Sinclair's father, with no charts, just an understanding of people and a sort of 6th sense about the market, notes that the short covering move up to the 1230 area happened very fast, and his "sensing" is the banksters want gold higher before their next hit. He's called for 1240-1250 from the 1160 area, and that's where we are now.
- Our sell orders in the 1240 area were hit, and there's more up to $1250. I'm happy whether gold rises $100 from here, or falls $100, and nobody in the gold community should have themselves positioned so they freak out if gold fell $100. Quite the opposite. You have to be prepared now, to buy when such a hit occurs.
- Here's the Gold Chart. Note carefully the 4,8,9 MACD series. It's starting to roll over, and has given a sell signal, and the 8,16, 9 series is on the verge of doing the same thing. Whether that is voided, or it carries into the 12,26,9 series that is obsessed over by most technical traders, we can't know. "Don't fall asleep at your gold wheel", is the theme of this week. Just because gold is quiet now, does not mean we end the week in yawn mode, not at all. We had $110 of weakness that was bailed on by many in the gold and fund community, and now we've had $90 of strength, that has been bought by the same people. Do NOT buy strength. Booking profit is the story of any and all action you are taking, here and now, with your trading positions, while tightening the vice on your core positions.
- Here's the GDX Chart. I've heard the talk, got the emails, on the supposed head and shoulders top. There is no top on GDX. There's rectangular consolidation. You could also draw it as an ascending triangle, but the demand line angle is so slight it's a waste of time. The bottom line is that when price rises into either a rectangular consolidation or into an ascending triangle, you have about a 66% chance that your gold stocks break upside. Juniors could go berzerko if we take out 55 on the GDX! First, however, we need to make it thru the Bankster Games Report, aka the Jobs Report. Use any hits the banksters unveil to add to core and trading positions, and use any "breakout" above the $55 area highs to book profit on trading positions, not to chase price and buy a core of toilet paper while the banksters sell. We're going higher, way higher. The question is, are YOU going to be onboard for the ride? If you chase price, the banksters will grind you up like hamburger. Stay professional, lock your core down, and put on your Golden Space Helmet!
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