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- "And then there were none". ~
Agatha Christie, mystery writer. One by one, all of the supposedly great
paper assets of safety are falling by the wayside. Yes, the US dollar is
currently rallying against some of them, but the overall picture is the
death of a thousand paper cuts, for all paper assets.
- I'd
like you to remember the 1990s, when the stock market was "here
to stay", and depressions were eliminated for all time,
according those who almost opened one history book, but failed at the
task. Then there was real estate, solid as a credit card on a rock.
- The
Euro was next up on the island of safety plate. It was supposed to be
the showcase preview of a one-world currency, and a one-world central
bank. Now it's a model for a possible run on the banks and breadlines in
the street. The Swiss Franc was supposed to be as good as gold. Now it's
been revealed as good as the amount of gold backing it, and not one
ounce more.
- Silver
was supposedly the "new gold", the "better gold",
the "poor man's gold". I'd agree with the last part, because
those who tried to replace gold with silver in this crisis on anything
but massive price sales have found they do indeed wear the poor man
label well.
- Gold
and T-bonds are the two "last men standing" in the financial
crisis ring. I'll give you one guess as to who emerges as the winner,
and who joins the rest of paper-land in the blast furnace. I'll give the
public 25 guesses, and I still don't think they can guess the answer,
let alone buy one ounce of the answer. Hi ho, hi ho, it's closer to the
bread line they go.
- George
Soros is speaking opening of Western governments having "lost
control". Do you want to own gold, or promises from Gmen that have lost control?
- Gold
took out the September 27th highs last night. That's a significant
technical event, and more importantly, a positive emotional event for
those in the discomfort and pain zones.
- You
can't seriously be considering buying gold at, say, $3500 an ounce,
"before it gets away and really goes parabolic", but
buying absolutely nothing on a $400 price sale from $1920 to $1530, can
you? Oops, I forgot, this is only a $390 sale. Just ignore
the sale and wait for $3500, when it's really safe to buy. The banksters promise that's
your "easy-ride from here" number.
- The
crisis is accelerating into the out of control stage, while fund
managers and a huge portion of the gold community are focused on booking
losses in gold and related items, and making their way to kneel in front
of the Gman's massive photocopier machine, in
reverent worship. What a horror.
- When
I say, "always trade smaller than you know is rational",
I say that with a focus on reward, not just risk. The greatest wealth is
built not on momentum moves, but on values plays, which means buying
assets at close to the lowest possible price they trade at. Work hard at
making that lowest price... All yours!
- In
giant financial crises, price tends to fall in surprise moves, and to
levels far below what you and I know is rational. Analysis becomes
meaningless. Your only friend in this crisis is your personal ability to
"go to the mat", which is your ability to buy an asset with
some portion of risk capital, at prices far below what you thought could
ever occur.
- Even
beyond gold, it will be your own character that ultimately determines
whether you make it to the other side of this crisis financially intact,
or whether you are ravaged by the actions of your political leaders who
have "lost control".
- That
fact means you must trade smaller than you know is rational, or at best
you become a floating cork on an all-red price grid, headed for a
personal lost decade. At worst, the period in time that extends from
2000 to 2100 AD could become the "lost standard of living"
century. Are you onside?
- Dow
Theory involves closing prices, not intraday prices. Few investors like
to follow the Dow Transports, because doing so is not exciting. All real
wealth building involves a level of Chinese water torture, which is why
so few ever build and maintain real wealth, in the market.
- Click
this Dow Industrials link now to view the new
closing low action for the Dow, confirming the repeated closing action
of the Transports. Click here now to view the key closing lows for the
Transports. Dow Theory is about confirmations, but amateurs focus on
non-confirmations, which I view as naturally "confirming"
their obsession with calling turns.
- The
bottom "Dow line" is that the crisis is accelerating, and the
risk of system shut-down is higher now than it was in 2008, if the
market were to go into crash mode. Rather than bonds, put options, and
short Dow futures contracts, focus on gold ownership.
- October
is crash month, and it is here. If the global financial system closes
down, do you really expect your put options and Dow short futures to pay
you anything? Even if they do, it would be in dollars, and gold could be
re-valued thousands of dollars higher by the US Treasury, under direct
Presidential order, if the global financial system shut down.
- The
big risk in the stock market now is the risk of closure, not price
decline, and there are a number of events unfolding that are magnifying
that risk on a daily basis.
- The
world's investors appear like they are being herded into the dollar and
bonds. Will it end differently for the dollar and the bond than how it
ended for the stock market and real estate? Perhaps, but I wouldn't bet
25 cents on that idea.
- Gold
juniors have been smoked recently. The theory of buying high risk stocks
first with huge plops of capital, and using fat profits to buy bullion
later, has been revealed as total madness. Never forget
the lessons of this crisis. Always place your safest money first. That
means for the very first purchase in any investment portfolio must be
gold bullion. How many advisors really build a portfolio by starting
with managing the biggest risks? To see the answer requires an
electron microscope.
- Those
who managed greed professionally and bought bullion first now have
plenty of dollar profits and/or ounces of buying power to purchase gold
juniors stock.
- The
theory that gold would decline if oil declined has been destroyed by
market reality. Food and energy prices are tanking, yet gold continues
to power higher. Bonds are the last "paper man standing"
alongside gold in this crisis. Click this bond chart link now to view the actual
performance of bonds against gold since the crisis began in the year 2000.
- It's
very important to stay focused on gold bullion, alone, as your sole
lighthouse in the crisis storm waters. I own silver, wheat, corn,
uranium, oil/gas, and gold stock, but these items are all
"reflation plays". Gold is not a reflation play, or a "safe
haven". In the final analysis, gold, alone, is the ultimate
asset. If you want to be an ultimate investor, you know now
where your focus must be. You might have to hold gold-related items for
decades, before they pay out in the way you have hoped for.
- You
need to be able to go to the mat on gold-related items. Because so much
is marked to model, it is impossible to forecast when the
"reflation trade" comes into play, and thus it is impossible
to forecast when your gold-related items might skyrocket to the levels
you have hoped for. As an example, oil is trading at about $76 this
morning. If you buy it every $10 down, that's something most of you can
manage. There's only about 7 entry points between the current price and
zero. Everyone can handle that. If you buy here with large capital,
trying to call a turn, you'll likely fail. Most in the gold
community are in a state of emotional despair, and the reason is a
massive over-allocation of financial resources to gold-related items,
and under-allocation to gold bullion when it goes on sale, as it is now.
Those who believe that deflation is gold-negative need to ask themselves
if a closed down financial system is gold-negative. Understand the
difference between the reflation trade, and the "risk to the financial
system" trade. The latter involves gold bullion, alone, and
the question is, are you onside?
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Thanks!
Cheers
St out
Stewart Thomson
Graceland Updates
Email: stewart@gracelandupdates.com
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