Graceland Updates 4am-7am
Jan 10, 2012
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There seems to be a contest going on in the gold community. It's a contest to see who can make you the most afraid of owning gold, silver, and gold stocks.
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I love competition, so I've decided to enter the contest. Click this ultimate fear chart now. Why draw miniature fears on the chart when you can have the big enchilada?
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What is your biggest risk in the gold market? Your biggest risk is that gold goes off the board against the dollar.
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Face that risk, or consider selling out and going home. I'm interested in sending the dollar bugs home. This is a war, and you need to get stronger. Stop thinking and start fighting. In the gold war against the dollar bugs, you're a solider.
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"I've looked at 10,000 charts, but I have never spoken to one person from India about gold, and I can't figure out why the price of gold makes me so terrified when it falls down against the dollar" - Not you, hopefully, Jan 10, 2012.
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If a government has brought in significant austerity programs for itself, a case for the benefits of deflation can be made. When a government continues to expand itself, general price deflation only harms the citizens, because the government itself then expands its powers dramatically, as you saw in the 1930s.
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In the case of this crisis, serious deflation would close the financial system. The system is already bankrupt, but it remains open.
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Money printing and gold revaluation are mechanisms that buy the government time to implement serious austerity programs. Serious deflation will likely occur after those austerity programs are put in place, and that could be many decades away.
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Think like a winner, rather than a fear-generating machine. Silver is a winner, and it just broke out from a head and shoulders bottom formation early this morning.
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Click this silver blast off chart now. Keep a positive attitude, and keep fighting.
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Some of you know there are two seasonal events for the stock market that I take very seriously. Unlike most of the gold community, I view the Dow as one of the "good guy" assets. The dollar is the stock of government, and is the "bad guy" asset, in my view.
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Having said that, I take "crash season" very seriously. I define it as the months of August, September, & October, and I like to largely stand aside from the Dow during that time period, because the worst crashes in history can offer the Dow at incredible sale prices.
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The other ultra-important seasonal event that I focus on very intensely is the "January indicator". I define it as the first calendar week of the year. The Stock Trader's Almanac defines it as the first 5 trading days of each year. The basic idea is that if the first week of trading sees the stock market rise, then it is likely that you see a positive market for the entire year.
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I've looked at the Dow from its inception, and assigned an approximate 80% accuracy rating for my January indicator. Stock Trader's Almanac says that their version is now 87% accurate basis the SP500, using a timeline from about 1950.
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Whether you use the calendar week ending January 6, 2012, or the first 5 trading days of 2012, the bottom line is that the stock market has had a positive week to kick off this year. Click this Dow January indicator chart now.
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Does the Dow look afraid of the dollar bugs? No. Does the Dow look afraid of you? No. For 2012, I think the Dow, gold, silver, commodities, and gold stocks deliver a mind-numbing beating on the dollar bugs. Don't fight the Dow with dollars, or you may not be financially around anymore by the end of this crisis.
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Click this gold fight chart now. Does gold look afraid of the dollar this morning? No. It seems that it is the dollar bugs who are really afraid of gold, silver, commodities, and gold stocks, as they should be. The big question is, are you onside?
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Iran's government has just issued the death penalty for an alleged American spy. There was an earlier incident with 3 hikers that was fairly serious. This is more serious.
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World War One was started over an assassination. This person served in the US military and it will be much tougher to convince the Iranian government to let him go.
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It's probably impossible to predict how the Iranian situation plays out, but it doesn't look good for any citizen living in the region. Click this Oil to the sky? chart.
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Look at the head and shouldering action. The right shoulder is itself a head and shoulders pattern, and price has already burst up through the neckline. Do you think a soaring oil price is going to have any effect on the gold market?
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Some analysts argue that there is a geo-political "premium" built into the gold and oil price. I would argue the opposite is true. I think most analysts are treating the entire situation with kid gloves. I don't think most oil or gold investors are fully pricing in the seriousness of the Iranian situation.
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They may be forced to price it in on a Saturday or Sunday when most markets are closed, and those who are shorting oil and gold may not like the experience, to put it mildly.
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There are elections in many countries this year. Geo-political issues are heating up. The January indicator is in bullish play. The wheat crop is dealing with a growing rust disease, and the solution seems years away. There is a big head and shoulders pattern in play on oil. Silver has a flag-like pattern on the long term chart. I've never seen so many bullish factors in play for gold and related assets, while so many investors are so terrified. The gold billy goat is climbing a Mount Everest of worry, and loving every step of the climb!
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Cheers
St
