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Gold: Keep Your Fingers On The Buy Trigger!Stewart Thomson 1. Are your gold buy orders in the market right now below current prices? If not, why not? 2. Gold investors have gone from denying the head and shoulders pattern on gold exists, to claiming "it's too popular, it won't work", to finally yesterday's "I'm missing out, gold will never correct and I'll never get any." Three strikes. An all-wrong Triple Play. Today I'll help those who struck out, I'll help you bat several way out of the park. 3. You have seen the power of a massive head and shoulders continuation pattern in action. The era of gold volatility has begun. You have seen the upside. Not the downside. Don't worry, you will. 4. The downside is going to feel like the banksters put a $100 downside price sword thru your head to your toes and pulled it out as fast as it went in. If you like adrenaline, what's coming will make the action into $680 seem tame. 5. If you have no orders to buy gold at lower prices in the market right now, you will miss out and fail again. Stop planning on some fantasy correction that will be served in a high-class gold restaurant by a classy gold waiter offering you a selection of gold stocks to choose at your leisure. Think of the gold market as a battlefield. Because that's what it is. If you have no orders to buy in the market, you won't get filled. Worse, it's just unprofessional market behaviour. The more perfect a major head and shoulders chart pattern is, the more perfectly it follows the theoretical playbook. 6. Let's review that playbook: As gold rose up from 905, Dennis "the gold market menace" and many other gold bears, some apparently operating from the insane asylum, others related to Bernie Madoff, successfully convinced many in the gold community to short gold. Many of you listened to these nutbars. As gold ran up to 930, many shorted even more, sure their magical top was "in". The gold menace himself then called gold "overvalued" in the 930 area. Gold responded by astro-blasting higher, soaring out of the symmetrical triangle. That targeted a break upside thru the main neckline in the 1030 area. As gold neared that neckline of monster significance, a contest emerged, to see who could watch gold breakout upside while personally holding the least amount of gold. Here's the story in pictures via the gold weekly chart:  7. The contest was a tie amongst thousands of gold analysts and millions of investor wieners. Gold ran to $1070. I immediately issued my neckline report by video. I highlighted tactics for the conservative and moderate investor, and the gambler, to use to buy gold on the pullback to the neckline. 8. Gold then fell to just under 1030 and a few of you, very few, bought. Then another contest broke out amongst the gold emperor analysts with no gold bullion clothes. The great debate began as to whether 1000 or 980 would be the next price stop before blasting to $5000 ensued. Bottom Line: Dollar Wise and Ounce Foolish. Many again went short gold, having learned less than nothing from their 930 obliteration. A huge crew of gold spectators watched as gold super-surged to $1140! 9. Which brings to: Today. Head and shoulders continuation pattern price targets normally are highly unreliable. The reason is because the patterns are shallow. The patterns lack depth. 10. The current pattern is not shallow. It's Deep. It is perfectly formed. The neckline can be drawn in the 1030 area, but all possible necklines are above $1000. That is a critical point to understanding what is going on in the gold market. Going on right now. 11. The most important point today to understand is that a picture-perfect head and shoulders pattern features an initial pullback to the neckline immediately after the breakout (we got that from 1070 to 1025), and then an after an initial run, there is a 2nd pullback towards the neckline from a higher price level. That is what you need to be ready for, right now, with orders in the market. 12. You have felt a small taste of the price power this head and shoulders pattern has brought to the gold table. The top callers have not even begun to feel the pain that is coming from the gold punisher. After Dennis the gold menace called gold overvalued at 930, one would think he might actually have the guts to at least mumble, "Ok, I blew it, gold soared $200 an ounce from my failed top call and I got it all wrong, but nobody's perfect, this is the market". 13. Remember, he didn't just call gold overpriced at 930, he called it "Way OverValued". But wait, you haven't heard the best part. The gold menace kicked off this week, not with an apology, not with an admission of total gold market analysis failure, but with this new cracker jack box prize analysis: "Gold is a Bubble!" A bubble? 14. Hello? Earth to the furthest star in the universe, is anybody home? A thousand trillion dollars in OTC derivatives blown to smithereens against a backdrop of Ben Bernanke operating his nuclear-powered printing press on hyperdrive, and gold responds by punishing these debt loaded markets in price, and he says gold, not these items, is the bubble? The gold bears have totally lost it. 15. Fraudulent mark to model accounting and no audit of anything in the Fed, means that by definition the gold punisher's response must be to devalue these items in price and value. Those items are falling in price against gold, and more importantly, falling in value. Gold is the Punisher, the control mechanism for all markets. Those who ignore or mock gold, will be punished themselves. It is happening now, and the world's investors have only received the first few lashes of what is a lengthly 100 lash punishement. Those taking actual market actions based on this clown view of the gold market as a bubble, well, the reality is they run a greater than 50% chance of winding up on a real Bread Line. Mr. Gold Market Menace can write that down and paste it to his computer. The Gold Punisher is deflating the greatest bubbles of all time, in debt-loaded assets around the world. The gold bears have it ALL backwards. 16. Focus on protecting yourself, protecting your family. Rather than playing with gold bear bubble gum and making a total mess of your money, I suggest you seriously consider converting a percentage of your bank deposits to federal govt t-bills and the shortest possible term federal govt bonds. Take delivery of 1/3 of your stock certificates if possible, your core positions. Do what you can to establish the strongest link of ownership between you and your gold stock. Schwab has done some good work in this area. Talk to them if you think you could be at risk. Vacuum-pack cash and bury it underground along with gold bullion, preferably at multiple property locations. Do not keep anything like gold or cash in a safe deposit box without an enclosed copy of the purchase receipt. If the Gman comes knocking, he'll take it and label you a criminal if you have no records. You could end up watching gold soar while the Gman makes all your profits! If you can insure that safebox gold or provide serial numbers of the cash to your insurance company, all the better. 17. The most important news item of the past few weeks is Dr. Ben Bernanke's statement yesterday. He says he sees no overvaluation, let alone bubble-action, in the "asset markets". His number 2 man Kohn backed him up. This is a very powerful statement from the Fed. Note that he spoke of valuation more than price, and correlated the rise in commodity assets against the 64% rise in the stock market. 18. What is he really saying? First, he's saying that soon the gold bears will soon have so much gold bubble gum in their mouth they will risk choking to death on it. Seriously, Dr. Bernanke is laying out is that he doesn't care about $80 oil against a Dow at 10,000. He doesn't care what your food costs. He's pretending prices are low and giving the green light to dollar devaluation. Here is the oil chart. Oil looks set to blast to over $100. Just as on the breakout over $1000 in gold, the move over $147 will feature the oil community in spectator mode, while the banksters make all the money. Don't watch the banksters. Join them!  19. The three main errors that amateur technical investors make are: a. failure to focus on the monthly price charts b. operating on a sort of "block mentality", and c. failure to buy weakness and sell strength. The first error is pretty simple. 60 minute charts and daily charts are "exciting". Most investors don't have the patience to accumulate a situation for years. You may buy and book profits regularly during an accumulation period with a portion of your position, and so you should. So you are working with more of the market's money, less of yours. But the focus is: Waiting. Patience. Gold will sell off into your buy orders. But not if they don't exist in the market right now. Take the action you know you must take.  20. The 2nd error is more complex, but the current analysis of the US dollar chart by the gold bears is a perfect example. If you look at the green "pipes", the histograms, on the US dollar on just the weekly chart, never mind the monthly chart, you will see a very slow drift upwards. Powerful rallies rarely commence from such a condition. The most important point today is to have your gold and gold-related item buy orders in the market. The 2nd most important point is to understand the conditions are near-perfect for a crash in the US dollar, one that could be followed by a real attack on your bank accounts by the banksters, via a massive devaluation of their value while legally preventing you from liduidating. This is the opposite of the silver market in 1980, which went to liquidation only. This time, the banksters plan to take your bank accounts to a No-Liquidity-For-You-Ha-Ha-Ha situation. I have repeatedly said that while the US dollar could rally, this is more like a situation at 6500, only it is as if the Dow failed at 6500, instead of soaring as it did. The lows at 72 on the dollar are at maximum risk of blowing out early in the new year. The odds of a US dollar crash and panic are growing, and doing so exponentially. Here is the dow compared to US dollar with a focus on the macd histograms.  21. How this plays out in the bond market is unknown. A crash there could follow a US dollar currency wipeout. At Dow 6500, the green pipes on the macd monthly chart histograms extended far down the chart, and the slope of those histograms was very very steep. That is one of the reasons I suggested right at the low that the Dow was more likely to have made a bottom. It could have crashed and started a whole new downleg, but the technical indicators suggested: No.  22. The US dollar monthly chart is in a horrific situation. It shows many of the major indicators on sell signals. This is a disaster in the making, and Ben Bernanke has better chartists in the world at his beck and cal. He knows the score, and the score is: Thumbs Down On The US Dollar. Are You Prepared? I again ask all those in the gold community who have no gold, who blew it all out betting on some $50 or $100 micro move: sit down and calmly reason things thru. Ben Bernanke and the US Treasury are going to revalue gold against the dollar. The mechanism is the US dollar carry trade, not a confiscation of gold. Joe Public doesn't have any gold, he sold his 2 carat ring to the pawnshop months ago. 23. You have been taken by the banksters, if you sold all your gold "to get in a 100 bucks cheaper". It's already $230 above the 905 "overvalued" point, the point where all this "get me out of my gold now!" madness began in the gold bears analyst kindergarten. The get it cheaper strategy is a Total Failure. The team hero Mr. Gartman is blowing bubbles with gold bubble gum that you paid for. You have no gold and now the banksters are preparing their plan to come for your bank accounts. Their strategy is to convert your deposits into some sort of fixed govt bond that you can't sell. Then they'll order Dr. Bernanke to turn on the printing press and devalue you straight to the bread line. Most of the world's investors have spent the past year buying bonds and moving money from the stock market to the bank. By definition, that is the next target of the banksters. It is their grandstand play. The banksters are holding gold and gold's commodity market relatives. The public is holding a giant across the board gold short dollar-long bet, by being long paper currencies and bonds. All is in place for the ultimate bankster gold-play. 24. You failed if you listened to the gold bubble heads and the topsters. You can fix all that failure, right now. You must enter buy orders for gold every 10 dollars down from here in a pyramid formation, each buy rising in size. Don't think about it. Do it. And put some focus on gold's relatives. Some of these items haven't even moved in price while you blubber about missing out on the entire gold bull market. The only thing you've missed out on is the right mindset. Your mindset, right now, is exactly the mindset the banksters want you to have, so you really do miss out. They will be in party mode while you are in shell-shock mode. Terminate that mindset today. The CRB index, which is the index of general commodities and the Van Eck Gold Juniors ETF both look to me like they are hooked onto gold bullion with a massive elastic band for the ride to Pluto. The juniors will slingshot right past Pluto. The only question is: Are You Onboard? I'm posting a number of Pgen scenarios for the juniors on the site this morning. Gold is already down $14 from yesterday's highs as I send this off. If you are covered in gold bear bubble gum with no gold, I suggest you, ASAP, spit out that gum and hit the real buy button! Nov 17, 2009
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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 newsletter is attractively priced and the format is a unique numbered point form; giving clarity to each point and saving valuable reading time. Risks, Disclaimers,
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