Gold Gridlines. Are You A Player?

Stewart Thomson
email: s2p3t4@sympatico.ca
Mar 23, 2010

1. Natural Gas. The technical condition in natural gas on the daily chart becoming insanity. Here’s the chart of the two major ETF’s, UNG GAS GAS New York and GAS Toronto.

2. Note the situation of RSI, drastically oversold, both in magnitude and time. When the Williams indicator becomes oversold for a long period of time, as it is here, and the RSI stays oversold, a major rally is often at hand.

3. A massive herd of investors tried to call numerous bottoms on natural gas over the past year. All have been destroyed. Natural Gas is the world’s most volatile commodity, and regular price rises of 500% and falls of 70-90% are the rule, not the exception.

4. If you are not prepared to buy natural gas as an asset to zero, you will join the ranks of the destroyed. I personally know a number of brokers who have had their careers destroyed playing in the natural gas market with leverage trying to call bottoms and tops. Some are still on payment plans, paying back their employers millions of dollars in losses as NG went lock limit against them for days, and they had no other market to hedge.

5. The natural gas juniors producers stand to skyrocket on the coming natural gas price turnaround. Are you prepared? The number of emails I’ve gotten over the past 6-8 months about natural gas as “the superbull play now!” has dropped from about ten a day to…Zero.

6. Which is why I’ve just accelerated my NG buy program.

7. Natural Gas could fall a lot lower and I’ve heard the 9 million reasons why the gas ETF’s are a “ripoff”. I see the 9 million reasons as valid, but the price meltdown in natgas itself is the other 99% of the reason why investors in natgas ETF’s are unhappy. If price had rocketed, the complaint would be we made only 90% while gas jumped 120%. I can live with 90% while others make 120%.

8. Home Prices continue to fall. The Gman’s theory is that if he shows you that your house is priced higher in his toilet paper money, then you are richer. The fact is that the average homeowner is now actually two workers paying the mortgage instead of one. Sounds like a 50% haircut in purchasing power to me. Some writers are calling to raise the retirement age. Sure, why not lower the child labour age too. Get the 4 year olds into the work force to pay that mortgage, and keep the $70,000 a year average Gman solvent. Any solution is the correction solution so long as it doesn’t involve chopping the size of the Gman himself. Reality Check: The Gman is the biggest of the too-big-to-fail entities. So he should be first on the chopping block.

9. Building homes is productive and great for the economy, yes. Pricing them ever-higher, is that really great for the economy? I say: No. Sorry, but a decent laptop computer is now $700. Should a house cost more than a laptop? I’m not so sure, but perhaps. Should it be 500-2000 times more? No. If the Gman focused on lower home prices thru competition and homebuilding and materials advancements, that would free up a massive amount of capital for investment in the economy instead of a competition to see who can pay the most for dirt, bricks, wood and other such valuable high technology. Most of the supposed home price gains are actually destruction of the value of money, and each new generation is welcomed to the world with a lower standard of living as a direct result of the home price investment scheme invented by the banksters.

10. The spirit of the gold community is broken. Not just somewhat demoralized. The spirit is totally broken.

11. “I have NEVER come across a group of people who are so passionate about something, and yet have almost zero understanding on how to gain from it, both emotionally and financially, as opposed to being routinely demoralized on both counts.” – Gold Lion of Lebanon. Greatest gold and energy juniors stock trader in the gold community, commenting on the total failure of the gold community to buy any gold into the current price weakness, Mar 22, 2010.

12. The gold market is a battlefield. It is like a football field with gridlines. If you walk off the field when the game is on, your team will suffer, and you will suffer. As gold drifts lower, air pockets of price begin to develop between yourself and the price paid for your stocks. Emotional demoralization sets in, and leads to inaction on the buy side. In a football game, each play is started with the opposed teams face to face in a line across a particular gridline. That gridline is 1100 in the gold market, here and now. Imagine you are on the defensive (you are) in the gold football game. Just before the next play starts, your entire front line moves 10 yards back down the field towards your own goal (zero price) line. Your opposition, with the ball, begins to laugh at your stupidity. When the play begins, all things being equal, they can surge forwards with zero opposition.

13. That is the picture of the gold community today. A team on the defensive, starting each day with more and more price distance between their prices paid for their stocks, and the current price, and doing absolutely nothing about it. The banksters are the opposing team, pressing forwards. It’s turning into a massacre, a turkey shoot.

14. My surveys show almost 50% of the gold community believes gold will be $1500 or higher by year-end. A solid 90% believes gold will be $1200 or higher.

15. Yet I’ll bet money that about 90% of the gold community has liquidated gold holdings over the past few days and that action is likely going to continue today.

16. The gold community thinks the banksters are hitting gold every morning. Wrong. The banksters push the snowball down the hill in the night, they start it moving. They aren’t part of the snowball. The funds and the gold community are the ones pushing the price lower. The banksters are on the buy as price falls. That’s where the gold and gold stock you sell is going: Into the hands of the banksters. How does that make you feel?

17. The banksters don’t care if Captain Squiggly Wiggly says the downwedge has failed. They don’t care about the microscopic head and shoulders top pattern completion, nor the up trendline failure on silver. They care about one thing:

18. Taking what you have. The question is, are they succeeding?

19. The idea that gold might fall to $700 but if it does somehow you’ll buy at the exact low point is a fantasy. Stealth bombers are going to be loaded with 10,000 massive bombs with Iran’s military targeted for obliteration, according to many military experts. How will Pakistan respond to that action should it occur? Will your favourite technical indicator get you back in, or will the chart suddenly look like a vertical flagpole with no chance to buy?

20. There were massive rallies when gold fell to $680 from $1033. Those who bought what the funds and gold community sold, all the way down from 1033 to 680 (the banksters and a few pros), had limited drawdowns and made good money into the rallies, and a pile of it as gold recovered. You can’t know that gold is going to $700 or even to 1 dollar lower than where it is now. All you know is fear, and fear must be bought.

21. The gold bears love to talk about the US dollar rally. They drag out all their deflationist analysis drivel while the Dow is up 60% in a year and gold sits at $1100. My question to them is: As the dollar has rallied, have you booked any profits? How about one? Or are you just chasing your roll of USD toilet paper money higher in price on the buy, side by side with the fundsters? The time to buy the dollar is OVER. This is profit-booking time. Kachingo time. Remember months ago when I said, “save gold, buy the dollar”? Save yourself, and book profit now on those positions. In stages, into this price strength.

22. Head European central bankster Jean-Claude Cliché, who alongside Angela “gimme all the taxpayers’ money and hand it to the banksters while I wreck their currency” Merkel, is a leading actor in the Euro to Zero movement. I suspect the Euro to Zero trade will end for the funds somewhat like it did for the short oil trade did for the funds, as they shorted oil from 90- 120, only to see the banksters take it to 147 while they went bankrupt. When the Euro turns, there will be no mercy for the funds who are now not only “all in” but all in and ultra leveraged. This is a “lifetime” trade for the funds. There is no short term profit booking. They are not going to settle for anything but a massive win, and Bloomberg’s mentioning of 116 and 120 for the Euro this morning is the kind of action the funds are looking for. The question of WHO will buy their massive short position should it get there is a more difficult question to answer. My view: There won’t be any buyers, and they’ll blow up in a short covering rally that goes vertical as gold goes parabolic. Timeline? Perhaps this fall, but it could really be at anytime before that too.

23. The good news is you now understand the fear you have, that gold could go much lower. The heavy hitters in the gold community are monitoring your fear, as are the banksters. They know that to make money in the market they have to take it from somebody else. Picture yourself in the school yard and the bullies are coming. Hold your gold tight now, or they’ll take it. In time, the idea of selling gold at 1100 on weakness will be revealed as the insanity that it is, by price itself, regardless of where gold is going. All weakness must be bought by the gold community as a group. We don’t take out the banksters by throwing our gold in the garbage while pipedreaming about getting it back cheaper.

24. Your personal gridlines on the gold football field must be bought only on weakness. We have weakness now. Turn your brain and emotions off, and set your personal gold buy gridlines on weakness in line with your investment capital, not in line with which line Captain Squiggly Wiggly says will be touched in the next month, according to his crystal ball full of wieners. Tell him you’re really not interested in a gold wiener with your name engraved on it. Football players follow the ball and respond to where it goes. Hockey players follow the puck and respond. Professional gold investors follow the price and respond. Here comes Granny on the gold buy. Watch out, because the Grannies are shoving most of the gold community out of the way and there might not be any left for you.

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Mar 23, 2010
Stewart Thomson