Graceland Updates
US Dollar/Gold
A Sea Change Is Coming
Stewart Thomson
email: s2p3t4@sympatico.ca
written Aug 24 2009
posted Aug 25 2009
1. "The people who delivered
this problem to us don't have a whole lot of sanity, except where
it reflects their own personal wealth." -Jim Sinclair.
2. Approx 65% of all
monetary transactions in the world involve US dollars. Think
about that very very carefully. If the bankers were to create
a "situation of insanity", where the dollar began to
hyperinflate, or even appeared set to hyperinflate, a
stampede out of dollars and into gold would take place. Think
about the economic ramifications of such an event. It would be
a global economic catastrophe of unprecedented size.
3. It would be the largest
wealth transfer in the history of the world, because for every
seller there is a buyer, by definition. Somebody has to be a
buyer of all the sold dollars, or the price of the dollar would
collapse to zero.
4. I don't think most investors
in the gold community have even a tiny understanding of how much
buying support the bankers provide to the gold price in panic
sell-offs as the funds and retail investors sell in one panic
after another. The size of the COMEX buys made by the bankers
match the fund and retail sells, not the size of some otc or
exchange traded gold products they sold clients and are hedging
against. Last week's gold exit involved the bankster-created
fear that the gold head and shoulders pattern must fail because
so many people know about it. And the gold writers swallowed
that fear hook line and sinker.
5. The bankers are already
long gold, in Jim Sinclair's words "up the yin yang".
She who owns the most gold, makes the rules. Never forget that.
Those who control gold control the US dollar.
6. The bankers are perhaps
better termed "wealth transfer specialists". They are
financial engineers focused on the greatest wealth transfer in
the history of the world right now. They have already taken virtual
control of the stock market. Retail investors and funds are at
their mercy. Having ordered the central banks to unload gold
(or simply not add any in the case of the United States) for
decades, most major paper currencies (except Switzerland) are
in a very weak situation fundamentally. An extended period of
money printing currencies that have little or zero gold backing
could cause a final catastrophic selloff in price of global paper
currencies. A sell-off against gold.
7. Australia and Canada are
termed "resource currencies". Canada has sold virtually
all the gold backing its currency. While the Cbone, the Canadian
dollar, may rise against the dollar, it could still drastically
decline against gold. Particularly if the US economy were to
take an extended nosedive. Only the Swiss Franc has a significant
gold backing and is in a position to ramp that up quickly.
8. China's communist govt is
betting that exports will protect its currency against a fall.
Each country's government has its own strategy to boost the value
of its currency, but the common denominator of all the plans
is that gold plays a zero or token role.
9. Most in the gold community
have a picture of the US dollar falling drastically in price
in coming years. So do I. But few are focused on where all
those dollars would go. The top in the US dollar in 2001-2002
came because the major European banking families began selling
their dollars. The dollar is held now by government and funds.
Price chasers. They are badly underwater now on their dollar
positions against gold, and the situation could get a lot worse.
10. At some point the situation
will reverse. The bankers will become buyers of the dollar again.
When the bankers sell their gold, obviously they want to get
the maximum amount of dollars possible for their gold. Rather
than looking at chart levels for the bottom in the dollar alone,
I look for a fundamental trigger, which is of the re-backing
of the dollar with gold. I will be a buyer of the US dollar into
50-65 area on the USD index, should be get there.
11. I believe at that point
the emotional situation will be very similar to what happened
in the Dow as we came into Dow 6500. Panic will be extreme.
The possibility of real hyperinflation will exist. Just as
the possibility of major bank and stock market closures was very
real at Dow 6500, it will be even more real should the US dollar
decline to those levels.
12. As I bought the Dow from
8000 to 6500, I was prepared to buy all the way to zero. Price
stopped at 6500. While I thought 6500 could be the bottom, I
didn't know for sure. What I was sure of was that the risks of
a system implosion were just as high as a Dow bottom. So while
I was buying the Dow I was also taking delivery of gold stock
certificates, removing cash from the banking system on a regular
basis, securing bullion outside of the financial system, and
purchasing basic dry foods. All on an ongoing and consistent
basis. On the rally to Dow 9000, I have continued these insurance
actions consistently.
13. Here is a point that is
absolutely critical: If the US dollar falls into the 50's on
the index, the risks of a total collapse of the currency, and
perhaps all paper currencies, will be just as high as the odds
of a major US dollar bottom. The economic wipeout that would
follow the destruction of the world's reserve currency is a nightmare
vastly worse than a Papa bear market in the Dow.
14. While I will be a buyer
of the US dollar in the 60's and 50's, I will be prepared to
buy it all the way to zero. Do not sell core gold holdings to
buy the dollar if the US dollar is not re-backed by gold in some
way, regardless of price levels or chart points, and technical
oscillators. And, every step of the way down on the dollar, increase
system insurance levels. That means dry foods, cash, small bits
of bullion.
15. I have substantial relationships
with a numbers of major farmers. I have secured ongoing food
supplies for all my family should a hyperinflation or food crisis
take place. These farmers are immensely concerned about farm
yields several years down the road. They believe the government
has (deliberately?) neglected farm infrastructure to the point
that a natural weather disaster could produce actual starvation
in the Western world. These are not drunken hobby farmers reading
the rantings of some nutbar doomsday writer on a Saturday night.
I'm talking about major commercial farmers of substantial wealth,
who are isolated from the gold community and anything but "survivalists".
Their bottom line: "You can't eat your gold. If food shortages
hit in a big way, it may cost you more gold than you think to
buy even a modest amount of food."
16. While odds are very high
that any coming food shortages would be a short term temporary
situation, please note that the world's largest gold trader,
Jim Sinclair, lives on his own self-sufficient farm. He's got
more gold than most of the gold community combined. If "Big
Jim" is worried about HIS food, where does that leave you,
with no dry food stored?
17. Don't waste time slobbering
over the stock market rally while the insiders and bankers unload
$53 of stock for every one dollar they buy. What you are buying
is the eye of a force five hurricane, gleefully sold to
you by the bankers and insiders.
18. Different fires require
different firefighting equipment. The last thing you want to
have happen is to find yourself in a position of having to liquidate
big portions of your gold to buy a few week's worth of groceries.
Just as it's possible that the US dollar hyperinflates against
gold, it's possible that gold hyperinflates against food. Use
gold to protect against the bankers' scheme to devalue the world's
paper currencies. Use food, not gold, to protect against their
plan to starve you.
19. Gold is the safest major
currency in the world. The US dollar is the 2nd safest, but it
is many light years behind gold in terms of safety. The bankers
make the financial rules because they own the most gold. They
don't want the public to buy anything they are not selling. When
they are ready to sell their gold, then they will order hundreds
of thousands of financial advisors around the world (many of
whom will be working from the bread lines) to sell the US dollar
and buy gold. The bankers will sell the gold to the advisors'
clients, and buy their US dollars in the greatest wealth transfer
of all time.
20. If the Dow rally fails
and takes out the lows at Dow 6500, I will be a buyer of any
and all price weakness as it chews into new low territory. In
terms of the public, I believe that will mark "the end"
for this generation of retail investors. Their pipedreams of
the stock market as their personal "long term wealth builder"
will be 100% destroyed. Mentally and emotionally broken, they
will begin a complete and total liquidation of their holdings.
21. Here is another critical
point: As the above occurs, the only question is whether the
bankers want to see the carcass of money from the stock market
then flow into the bond market first, and then to gold, or immediately
from the stock market into the gold market. To move gold
to say $1500-$3000, money from the stock market would easily
do that. But a US dollar currency wipeout could see money flowing
from paper currencies into gold on a mass scale, which would
send gold to levels like $10,000, and perhaps much higher. Using
the same calculations Jim Sinclair used to put a $900 target
on gold in the 1970s now yields a possible target in excess of
$30,000 an ounce for gold.
22. President Obama, Tim Geithner,
and Ben Bernanke are all committed to sustained money printing
and dilution of the US dollar. The key word there is "sustained".
All the chess pieces are in place for a massive revaluation of
gold upwards against not only the US dollar, but against all
the world's paper currencies. Just as the central banks worked
together to stick the taxpayer with trillions in worthless OTC
derivatives, they will the stick the taxpayer with US dollars
just in time for them to watch it decline heavily.
23. Your friend is your enemy
and your enemy is your friend. The gold community outnumbers
the bankers. No amount of money satisfies the bankers. They always
want more. Because they only buy weakness and only sell strength,
and are prepared to buy to zero, they cannot be defeated, except
by those who do the same thing, and do it for hundreds of years
as a group. In time, the gold community will replace the
bankers as the controlling entity in government. That is hundreds
of years away. The primary focus in the gold market must always
be yourself, but not the sole focus. My pyramid generator is
a "machine of discipline" that lets you to replicate
the actions of the bankers. Without discipline, most of you in
time will revert back to making bets, gambles, guesses in the
gold market. In time, your trade size will grow excessively again
and eventually the market will move "impossibly" against
you repeatedly. Financial destruction will follow at the worst
possible time in history. To become a consistent market winner,
embrace discipline and moderation, and the buy weakness sell
strength tactics of the bankers (without embracing them personally).
24. There is no other solution.
###
Aug 24, 2009
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
email for questions: stewart@gracelandupdates.com
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Stewart
Thomson
is a retired Merrill Lynch broker. Stewart writes the Graceland
Updates daily between 4am-7am. They are sent out around 8am. The
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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
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