Thursday, April 15, 2010

Gold 1400 Tactics

¹²Gold 1400 Tactics

By Stewart Thomson | 15 April 2010

1. It's important to stay very grounded right now. The "good news" is that even the gold bears calling for a crash are looking for higher gold prices right now. For all intensive purposes, the bears have left the building.

2. That doesn't make me feel comfortable. April is typically a fairly down month for gold. See Moore Research for details. So far it's been an "up up and away party", with gold up almost every single trading day. Gold is trading more as a currency now than as a commodity, so the seasonal cycles are much less reliable, although a recovery in the jewellery markets could bring back some reliability to the seasonal indicators.

3. The latest liquidity flows Gold Liquidity Flows Report show the banksters shorted about 37,000 contracts of gold into the strength, just through Tuesday April 6. By Sunday night, gold had touched 1170. I would expect the 37k number has increased significantly since Apr 6 thru Sunday night.

4. There is no easy money in this game. It's all hard to make, and harder to keep. I bought gold this morning as it melted into the 1150 marker and right thru it, with no illusions that this is a "2 day correction". It could be a 2dc and we'll be at new highs within days, or 1170 may have marked a huge intermediate top. Nobody knows.

5. Oh, I forgot, yes a lot of people do know. Just as at 1085 they knew it was going to crash and sat at their computers with their head in their hands in vomit and bail mode, now they know it's going to the sky and they have all the juicy juniors mine reports in front of them, while they count all the risk-free money they have coming.

6. My theme right now is that most investors have bought a bit between 1150-1170, but have not taken much action. They are excited by the price action, but have not done much buying, and certainly zero selling, despite an $85 price upside blast. That "should" mean prices are going higher.

Investors will begin reporting to the price chasing wheel if we can take out 1170 on the upside. Just as the lemmings marched to the cliff at 1085, they will line up in a similar fashion to chase price above 1170. A move to gold $1400 is about a 20% move from 1170.

7. The $1225 - $1400 area is likely to see significant gold accumulation by weaker hands. They will tell themselves how smart they are, how they will sell at higher prices. Sell to whom? The banksters? You want to be positioned now to book profit on a move higher to 1400-1700, not positioned to jump up and down like a gold FAN as it surges and buy because "now it's really gonna go"!

Sorry to inform everyone, but the big money in gold has already been made, and it was made by the banksters. Gold has quintupled from $250 to $1225. In the futures markets, there are more dollars to be made on a move from 1200 to 5000, than from 250 to 1200, but I'm afraid the banksters are more than aware of that little detail. The beatdown they have planned for the leveraged gold futures traders as gold rises into the thousands of dollars an ounce could be an epic one.

8. The 1400 level will see the power of the huge weekly head and shoulders pattern diminish, until it is gone. Ironically, at that point the investors will bet heavier on their chart interpretations. We will be back dealing with much lower reward to risk probability plays. Combined with higher volatility, I think the end is very near for most gold traders who have not made the effort to consistently buy weakness and sell strength, with the mindset that gold is the ultimate asset and core positions must be gripped with an iron hand.

9. Complacency is the theme now in the stock market. The fiendish shorting of the market all around Dow 6500 and out of the hole to 9000 has been replaced with total complacency, by both the bulls and the bears. The bears continue to blab about how it's all a bear rally, but the reality is that all their shorting programs have failed. They are broken financially and emotionally. They continue to wave the flag, but in terms of action, they are really bulls now. [[The problem is, as John Maynard Keynes remarked, "…the markets can stay irrational for a lot longer than you can stay solvent"! And, oh yes, most market moves that are not sudden usually take about three times as long to play out as you had supposed.: normxxx]]

10. The bulls are in Pinocchio mode. At least many of the bears can admit their failure. Not so for the bulls. The bulls were obliterated in 2008 and most will never recover in their lifetimes. Most simply pretend it never happened and file the losses in some filing cabinet and lock the door and focus on the few investments they have that have recovered slightly. The thought of actually analyzing those losses and learning from them does not exist.

That involves pain and no self-respecting price chaser is willing to face any pain for any reason. The Dow might recover, but they don't own any Dow, other than Cititgroup and GM, both of which were mauled 98% in price. Their investments are in companies like Enron, Nortel, broken banks and smaller companies and funds that are smashed forever, as a group. They bought zero into Dow 6500 but are beginning to take note of the "recovery".

11. If you are a bull, you need to give yourself a reality check before buying now, after blowing a 70% rise, and blowing a 130% rise in the Chinese market. Think about the downside. Most investors have failed totally in the stock market, yet here they come again, ready for another beatdown at the hands of the banksters. Your buy orders on the Dow need to extend thousands of points lower, or you'll never survive if the banskters decide to change the tone of their media game from recovery to nightmare.

12. Those of you in the gold community who are obsessed with the stock market going down, need to decide whether you are a player or a blabber. I'm not interested in blabbers. If you are a player, step number 1 is to make a commitment to trade vastly smaller than you think is rational, step up to the plate, start shorting the Dow here and now, with tiny bits of capital. Show some commitment to something other than a trendline or MACD cross or "chart set up".

A 6 year old can draw a bearish wedge pattern. Making money out of it involves a campaign, a war, not some plop of capital on a single roulette wheel price number while calling yourself an investor, then blaming everyone else when price moves below your lonely price point, one that looks like a dingy in the midst of a naval battle. Would YOU show up at a naval battle in a dingy and expect victory? Most investors do, and then they get in a rage when they are obliterated.

13. I went over the volumes of trading on the LBMA gold market with subscriber "Lion of Lebanon" at dinner recently. He's a hardcore gold dealer himself who is phenomenally successful, and likely the best gold and oil juniors stock trader in the world. I said, "since the inception of the LBMA, given the numbers I've given you, which are the LBMA's own numbers, how much in commissions do you think the bankster owners of the LBMA have generated for themselves?"

14. His answer? "Those numbers indicate total commissions are likely in the TRILLIONS". In the political arena, in the freedom arena, the banksters are your enemy. Not in the market. In the market the retail public and the funds are your opponent, and the banksters are your supreme allies.

15. Technical analysis 101: The Euro exploded upside Sunday night, leaving a huge gap. Immediately the tech crowd surged in to analyze the gap. Why? I see that as self-sabotage. Keep things simple. The Euro gapped higher and could add fuel to a gold super-rally. Let time decide whether the gap is false or real, not analysis.

16. There has not been a significant price gap on the Euro chart, one that has not been immediately filled, for 3 years, on the charts I use. Sunday's night's action could be extremely significant for both the Euro and for gold. When the price of a stock gaps higher, it is an indication of demand overwhelming supply, but it doesn't take too much money to make it happen.

17. In the case of a major currency, it takes a huge amount of money to cause a gap, even on Sunday night. Here's a look at the Euro chart for the past year. Euro Major Breakout?

18. You can see the intermediate downtrend line was taken out to the upside with gap, an extremely positive development, and one accompanied by a massive bankster long position, a price-chased overleveraged fundster short positive, the media propaganda campaign of the year, and technical oscillators flashing buy signals. A number of my subscribers wrote in as we went into the Euro lows wondering how much more pain they could take as they bought the Euro. As the pain intensifies, it's sign of two things: You are trading too big, and at least a temporary [[short squeeze: normxxx]] rally is near at hand.

19. The Euro is the main component of the US dollar index. I don't need to connect the dots for you, as to what the setup is there for a dollar meltdown.

20. I look at liquidity flows. If you look at the actions of Germany's Govt, lead by Angela Merkel, the flows are $500 billion to the banksters in a free money blank check, while running a rock concert with the top song being, "not one cent to Greece", while mangling the currency of her people, supposedly to boost exports. Now you are told that Germany might raise rates "to defend the Euro".

21. The bottom line is the banksters are starting to raise rates and doing it all over the world with various tactical actions. I don't recall any point in modern history in the Western World when a mangled financial system came face to face with a major bond bear market. Most gold investors and analysts think rising rates are gold-negative.

I don't, at least not in this situation. I think rising rates are the single most gold-positive factor since the beginning of the bull mkt. It is likely surpassed only by the Pakistan nuclear threat, which has yet to take its horrific place on the gold stage.

22. The bond bear is one which many top bank analysts believe began in Dec 2008, a view I agree with. Rates are rising as two groups of powerful investors move money out of bonds, while the public moves in, mainly into junk bonds. The first group moving out is institutional money that feels the recovery will put upwards pressure on rates as companies need to borrow money.

I don't buy that view, and had a long discussion with portfolio manager Mr. Macro about it, the man king kong calls the top investor in New York. Companies are sitting on wads of cash, and they are looking at stock buybacks, not borrowing money. I think the first group moving money out of bonds is correct in its action— but for the wrong reasons.

23. The second group moving money out of bonds is institutional and bankster money concerned about the ability of Western Govts to meet their debt obligations. They are betting the govts will print money to meet the obligations, and buy their own bonds. That scenario, is essentially detailed with tremendous analysis by one of the top bankster organizations, the BIS, which is already essentially the central bank of the world's central banks, much like the US fed is composed of "feeder" central banks in various states.

24. Martin Armstrong has summed the situation up perfectly, calling the banksters drug dealers and the governments drug addicts. The drug of choice being borrowed money. I think the banksters are preparing to take away the drugs from the drug addicts, and the BIS is showing its teeth right now in that regard.

If you look at the history of the actions of the IMF in various 3rd world countries, the action is a severe raising of rates and cutting of spending. The BIS is an organization that operates very quietly but is really the most powerful financial entity in the world, and may be readying for an imminent attack on the world's bond markets, a sort of supersized replay of the Rothschild-financed Soros attack on the British pound, many years ago. Are You Prepared?

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