- etimes mountains seem to be created from molehills.
When investors focus on these mirages, tremendous excitement or
disappointment occurs. After all the smoke clears, all that matters is
that no wealth has been built.
- The current
“in vogue” molehill is the gold versus gold stocks
performance issue. You are living in what may be the greatest
crisis in the history of the world, and trying to get richer from that
- A very difficult job
indeed. Your competitor, Elmer Fudd
Public Investor, looks like financial charcoal. He’s been reduced
from an egotistical price-chaser praying to a debt devil, to a pathetic
child-like entity, cowering in front of Ben “Dr. Pinocchio”
Bernanke’s photocopier machine, praying for a solution from Daddy,
so he can resume buying houses on a credit card. Ben tells us the
solution to the crisis is to buy more houses on more credit cards. That’s not happening.
- This is not the end
of the crisis. Rather, it is the endgame. The crisis is
accelerating. How will it end? The end, and the only solution to the
crisis, is millions of people, or even billions, on 1930s-style breadlines. In
a massive crisis, almost all predicted events take far longer than
anyone predicts. Prices move to fundamentally “impossible”
levels, and many black swans show their face in the market pond.
- Embrace the impossible
becoming the norm as part of the nature of this crisis.
- Since the lows at
Dow 6500, the Dow has risen, but on relatively light volume. Click
here now to view the Dow reality check chart. That light volume doesn’t mean the Dow
is about to fall or should have fallen already, as team shorty pants thought would happen. The
light volume reflects the impoverishment of the average investor.
- Likewise, gold
stocks are not “undervalued” in the strictest
definition of that word. Gold stocks are trading at prices that
reflect the impoverishment of most investors during this crisis.
- Click here now to
view the GDX volume chart. As with the Dow, the falling volume reflects
the destruction of the wealth of your failed competitors, not a bearish
technical situation. Fundamentals make charts.
- While gold has risen
from $1300 to $1500, the public has actually become less interested
in gold and gold stocks, again, because this is a crisis and greed will
play a diminishing role, while fear plays an exponentially increasing
- The public’s
disinterest in gold is a huge positive for the long term price and
stability of the gold sector, but not an immediate catalyst for powerful
liquidity flows into gold stocks.
- Forget about gold
stock ratios and individual gold stock analysis for now. Until the US
dollar goes into a fall that causes institutional panic, focus your
energies on patience and endurance.
- The money being made
now with individual gold stock picking is good, but it is difficult to
do consistently, and more importantly, it is crumbs money in the bigger
- As the
dollar goes lower, an institutional money panic will occur, causing
massive liquidity flows out of the dollar and into the general equity
- Gold stocks as a
group, including even some scams, should go vertical for a
substantial period of time as that institutional panic occurs. It should
have happened already. It could have happened already. It would have
happened already. It did not happen already.
- It will happen. Take
the pain. Endure. Gold bullion is rising now against the
dollar because of central bank buy programs. Remember that central banks
are not interested in buying your favourite
junior gold stocks. In this crisis, if it takes more time than you
thought physically possible, to build monster wealth with gold stocks,
well… Welcome to the
- My cash is where my
mouth is, as every writer’s cash must be, so I stepped up to
the buy plate yesterday and was filled on a hundred GDX buy fills, at a
myriad of price points. GDX “impossibly” tanked
yesterday, while bullion soared.
- As I will keep
repeating, the impossible becomes the norm in a crisis! The
current gold stock price levels are not a problem. They are a gift,
from the ratio-obsessed hedge funds, to you!
“thank-you” to these funds will be laughing in their face,
after the banksters cut off their financing.
The destruction of the long bullion/short gold stocks ratio trade likely
begins as price surges over $64 on the GDX. Click here now to
view the gold stocks launchpad chart!
about the fact that GDX is trading below its Oct 2010 levels when
bullion was $1387. Forget about the fact that GDX is $60 now while
bullion is $100 higher at $1497. Instead, remember that I labelled that day in October, as it happened, the
“loss of sanity” day, for the price-chasers in the gold
- Forget about the
fact that gold stocks might be trading at levels associated with the
gold price of 2001. Forget about what is “wrong” with the
gold stocks and focus on what is correct with them.
- The gold stocks are
correctly factoring in two things. First, gold stock prices reflect the
impoverishment of the public. Second, gold stocks reflect a crazed add
to positions by leveraged ratio trading funds.
- The rewards in gold
stocks are going to be distributed to a very small number of investors;
those who endure.
- While $64 represents
the point of the beginning of the end for the GDX ratio trade-a-holics, the reality is that GDX already broke out
upside from a massive bull continuation pattern. The
target is $100. I think we go to $200. Declining
volume means nothing except that more of the final profits are for you!
- Click here now to
view the massive GDX bull continuation patternchart. Focus on that chart, not the ratios
from 2002. GDX is on the road to $200 now, and the only question is, are
you jumping off the gold stocks train to chase the USD photocopier that
the gold punisher just threw off the train? Or are you manning the
golden engines with buy orders into this price gift to you!
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