JWU JUL 3

July 3, 2013

 

1.     Well, the bears had a good day yesterday, in gold stocks land, but the battle continues today.  The volume was modest on some gold stocks, which is a positive sign, but the non-stop “gold will crash now!” rants from mainstream media like CNBC make your battle difficult. 

2.    Barrrick and Newmont are hedge fund shorting targets, and they can drag the whole sector down. 

3.     You cheer for the low to be in, but understand why I was a seller and shorter of GDX in the pre-mkt yesterday at $24.70, after buying at $22.80 last Thursday.  Monster broker, and CNBC favourite, brokerage Jeffries, raced out yesterday and ranted that more “carnage” is coming, screaming that gold never should have been called a “safe haven”.

4.    If you look at the statements made by bank analysts and the mainstream media about gold, the bulls talk very methodically and sound quite tame.  If you read JP Morgan’s analysis, it sounds quite rational.  There is no “gold is goin’ to da moon!” talk.  In contrast, when the media has a bear on their shows, there is ranting and screaming that “gold must crash!  Gold is a horrible asset to own!” 

5.    No bear talks about “a modest decline to the $1050 area”.  It’s always spoken as, “gold is gonna tank to 1050 right now!!! Sell everything, now!”  The media hates gold, and they hate you.  Keep that in mind anytime there is a price decline.

6.     Note that JP Morgan recommended that institutional buyers buy a load of put options along with their new commodity space buys.  Bears like Jeffries, and media rant chants… are the reason.

7.    What about the GDXJ split?  A number of you have asked about that.  OK, first, remember that I bought GDXJ in a pgen to zero, not a pipedream to infinity.  When most of the gold community was 90{7d2759035a2769ee7a6afa7c646e6642b67314b0cd0e17ac0c6ae4f965ff87d9} invested in junior gold stocks, I was probably 2{7d2759035a2769ee7a6afa7c646e6642b67314b0cd0e17ac0c6ae4f965ff87d9} invested in them.  As GDXJ tanked from $40 to $8, my pgens began to fire a lot more aggressively.  Did I think I would see GDXJ $15 or $10?  No.  But unlike all other gold writers, my wealth is built buying my own bad calls, not buying my good ones.  Wealth is built buying your own greatest pain, not the greatest pain of others.  Few understand, so few get richer.

8.    The way I handle all stock reverse splits, not just junior stocks, is that I have either set aside capital to continue to buy after a reverse split, or I have not. If I have not, and the stock splits, then it’s the end of the buying road.  Period. 

9.    YOU need to look at how much capital you have applied to junior gold stocks, and whether it is realistic to apply more.

10.                Another strategy is to apply more, but against a much bigger GDX or GDXJ shorting pgen, at the same time.

11.                I didn’t even begin buying junior gold stock until the 2008 crash was pretty mature, so I can handle a lot lower prices.

12.                Having said all that, in regards to the GDXJ split specifically, I endorse the split.  Here’s why:  Most institutions can’t buy stocks that don’t trade on the NYSE. 

13.                To trade on the NYSE, the exchange requires stocks to trade at $5 or higher, and many institutions are also mandated to sell stocks if they trade under that $5 marker.

14.                The pinhead patrol waits until their stock trades under $5, and hopes it will start rising strongly, before the NYSE orders them to either reverse split it, or get booted off the exchange.

15.                The problem, for the pinhead patrol, is that institutions start selling as the price approaches $5, and sell much more, potentially creating a panic, once the price goes under $5.

16.                GDXJ (Van Eck crew) did the RS (reverse split) at $8, and did so just as brokers like “the ace” suggested to institutions that gold stocks were beginning to offer potential value.

17.                I don’t like reverse splits, but in terms of how this one was handled, it was “A Grade”.

18.                Meantime, in interesting Indian Gman news, it turns out that the country’s finance minister, MR. CP Scumbag, aka CP Chidambaram, may have actually increased the country’s current account deficit, with his decision to take huge payoffs from the banksters, in return for attacking his gold buying citizens and trying to destroy Indian gold dealers.

19.                Jewellery exports affect the current account directly.

20.                Jewellery exports have started tanking, because the Indian exporters can’t get enough gold to service their clients.  CP Scumbag doesn’t care.  He doesn’t care about the current account deficit.  All he thinks about is his next payoff check.  50{7d2759035a2769ee7a6afa7c646e6642b67314b0cd0e17ac0c6ae4f965ff87d9} of Indian exporter gold comes from ScoMo (Scotia Mocatta) bank. 

21.                Scotia had arguably the largest short position in gold futures when CP Scumbag, by coincidence, “asked” the ScoMo crew to cut off supplies to Indian dealers.

22.                The Indian Gman promised that jewellery exporters could get gold and perhaps some credit (how generous of the scumbag), but it was all a lie. Big surprise; another Gman is a liar, filth, and scum.

23.                While CP Scumbag lines his bank accounts with dollars, and his safe boxes with gold, the Western media continues to pound the table that Indian demand is weak. 

24.                That’s like saying a prisoner of war in a Russian gulag continues to eat very little.  He wants to eat more, but the guards are starving him.  Indian gold demand swamps anything the Western bozo patrol has to sell, but paid-off Gmen make sure only a tiny portion of what the Western bust outs sell, makes it to the Indian gold demanders.

 

Gridtime!  I’m surprised that nobody has executed CP Scumbag, but then again, in this super-crisis, black is white, white is black, and super-surprise is the main theme.  He may also be protected by Indian mafia.  The jobs report, not today’s rally or decline, is going to determine the next flow of liquidity for gold stocks.  Be prepared for anything.  If you are overloaded with gold stocks, don’t buy any more unless you also buy put options, JPM style, or add short positions, st-style.  Cheer for the low to be in, but don’t demand that it be in.

 

Thanks!

           Cheers

           St

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