Tit For Tat: Key Gold Valuation Metrics

By: Stewart Thomson | Tue, May 31, 2011
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Graceland Updates 4am-7am
May 31, 2011

1. Click here now to view the one month gold chart. The green HSR (horizontal support and resistance) lines are areas where you will be more aggressive buyers of gold and sellers of dollars. I think you need to spend some serious time asking yourself which side of the trade is really the exiting transaction. Is it selling gold for dollars, or is it selling dollars for gold? When the possibility of hyperinflation is not just possible, but likely, suddenly the actual wealth building achieved by ringing the cash register with dollar gains becomes highly questionable.

2. Tit for tat. The English call that "equivalent retaliation". If you are stubborn as a mule, you have to expect to take some knocks in life. If you insist on only measuring the world's lowest risk investment, gold, with a high risk valuation measurement like government paper currency, one that has a perfect record of going off the board itself, then you have to expect to take some serious financial knocks in life.

3. If you like building wealth, then value your dollars in gold currency. Ounces, grams, and grains are your unit of account. Gold's valuation is now properly measured with a scale, not with dollars. As you will see with absolute clarity today....

4. It is not your ounces of gold that should be measured in dollars, but your dollars that should be measured in ounces of gold.

5. What are your dollars really worth? A dollar is worth about 0.31 grains of gold. That dollar was worth almost 2 full grains of gold when the current dollar bear market began. You are experienced an epic bear market for the dollar, and it is poised to get a exponentially worse. A dollar is currently worth about a third of a grain of gold. Look at a grain of gold like you view any other paper currency's unit of account, because that's what it is.

6. For example, the Yuan is the unit of account for the Renminbi currency of China.

7. Ounces, grams, and grains are the units of account for the currency of gold. The gold community has got to get a whole lot tougher if you are seriously interested in surviving what is coming during the main act of this crisis. Getting tougher starts with understanding when to use one unit of account, and when to use another, to build maximum wealth.

8. If you say, "Stewart, I have only dollars, so if I buy some gold, then I want to know what kind of wealth I'm building in terms of dollars!", then I say, "Do you understand that there is a subtle difference between building dollars and building wealth?"

9. Do you understand that there is a time to use one method of valuation, just as there is a time to be invested in one item or another? Do you understand how high the risk of hyperinflation really is, are you really facing that risk? Do you understand how totally useless the dollar valuation of gold during hyperinflation is, as a measurement of both the price and value of your gold? Do you really understand that nobody cares what the dollar price of gold is, during real hyperinflation?

10. All that matters during hyperinflation is how much gold weight you have. Do you understand what an institutional money panic out of the dollar really is, and what the ramifications of such a panic really are?

11. There is a time to build dollars of wealth, and I will be front and centre promoting that method of wealth building, if and when it comes. It comes after gold is locked to the dollar and/or to debt, and interest rates are very high. Now is not the time for serious use dollar valuation as a wealth measurement tool, nor is now the time for dollar wealth building.

12. Now is the time to build ounces of gold wealth and value that wealth with the gold currency unit of account. The 1970s gold bull market was about building dollar wealth, but not this one. Run a chart that gives you a weekly gold weight valuation of your gold stock holdings. If the dollar hyperinflates, it doesn't matter what your stocks are worth in dollars. All that will matter is how many grains, grams, and ounces of gold you can buy with those stocks. Do you understand?

13. Most of the gold community is biting hard at the dollar valuation worm on the bankster fishing line, at the worst possible time to do so. Get off that sugar-coated hook, or you may find yourself financially dead.

14. "2008 again" is coming, and paper currency is the item in play. With the flick of a hyperinflationary light switch, you are about to become obsessed with the gold currency price of your dollars, far more than than you are now obsessed with the dollar currency price of your gold.

15. The problem could be that when the hyperinflation light is flicked to on, you have no significant amount of gold weight, because of your current full-blown heroin addiction to dollar valuation. Price chasing, price plopping, and dollar valuation are 3 brands of heroin sold by the bankster drug dealer, and the only question is...

16. Are you an addict?

17. If the number of ounces you hold is not increasing, is any wealth being built, and if so, how permanent is that wealth? The saying, "don't wish for something too hard, or you just might get it", can be directly applied to the wish for a higher gold price during a real hyperinflation.

18. As the hyperinflation begins, dollar wealth is built, and it appears solid. As the hyperinflation of paper currencies accelerates to a point where it is out of control, the entire financial system seizes and only those with the most amount of gold bullion weight remain in any sort of "driver's seat" position. Vast bread lines form, and dollars become a focus of hatred.

19. Think of the tremendous harm that the obsession with dollar valuation of your gold has already caused most of the gold community already. Most are trying harder and harder to build dollars of wealth, while the practical usefulness of that method of wealth building is diminishing exponentially.

20. Click here now to view the one month silver chart. You need to think less and act more. Become a financial robot. As price descends down towards the green HSR lines, you act more aggressively selling dollars and buying silver.

21. Strive to achieve a mindset of mild confusion as to what the entering or exiting side of the transaction is. Do you really know what it is? No, you don't. Operate in a fog, not an ego-driven prediction machine headed for a head on collision with the reality of surreal volatility.

22. As price rises into the blue HSR lines on the silver chart, you become a stronger buyer of dollars and stronger seller of silver. There is no real exiting transaction. There is only a flow back and forth between assets, building more dollars, building more ounces of silver, with a diminishing focus on the building of dollars and a growing focus on the building of your silver stockpile.

23. Click here now to view the annotated GDX daily chart. Notice in particular the position of the long series TRIX indicator, and the 3 HSR lines where you will be selling GDX more aggressively and buying dollars more aggressively. This is a very powerful looking chart, but those who bought nothing into the lows, and liquidated into them, are now stuck in "no man's land", wondering if there will be a correction, or if price will surge higher with them left behind.

24. Click here nowto view the same GDX chart in gold currency. Gold stocks are indicating they are poised to blast higher against both dollars and gold. Stay calm. Just function as mildly confused robot, selling GDX for gold bullion (or gold bullion ETFs) into the blue HSR lines. Note again the placing of the long term TRIX indicator. Gold stocks are likely to blast higher, yet there is an insane obsession with the possibility of them falling down against dollars. Get out of the obsession with the dollar valuation world, before you are hyperinflated into oblivion. Move back and forth between gold stocks (GDX or your favourite individual ones) and gold bullion, not dollars, and you will fly through the main act of the crisis profitably!

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Thank-you

Cheers

St, out!

 


 

Stewart Thomson

Author: Stewart Thomson

Thank-you

Stewart Thomson
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

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