Written by Stewart Thomson | 
| 
|
Jan 31, 2012
1. If a tree falls in the forest, does it really make a sound if nobody
hears it fall? Click here now [5] to view a falling OTC derivatives tree
being marked to “_it never made a sound_” model.
2. In the simplest terms, credit default swaps (CDS) are a financial
insurance product used heavily by hedgers and speculators in the
government debt arena.
3. A lot of investors thought that a huge deflation would occur when
the OTC derivatives written on real estate blew up, but what they
didn’t anticipate was that rule changes would be made by the Financial
Accounting Services Board (FASB).
4. The FASB allowed banks to value OTC derivative products like bonds,
with a maturity date. OTC derivative accounting was legally changed from
“mark to market” to “mark to model”.
5. The deflationists were almost destroyed by the FASB move, as gold
surged from about $680 to $1920. They have re-emerged since the Greek
government has taken centre “default stage”. As you will see, the
deflationists are likely to meet their mark to model maker once again.
6. Companies like MF Global thought they could make big profits by
using investor monies to make bets with CDS products. Their view was
that the Greek government couldn’t pay what it owed, and that failure
would trigger a default event. They were wrong because they didn’t
understand how far the banks have taken the concept of mark to model
accounting.
7. In the above document provided by the International Swaps and
Derivatives Association (ISDA), you can see that how the ISDA defines a
credit event (CDS payout time) is open to _substantial interpretation by
the ISDA itself._
_8. _If you take the time to read the document carefully, you will
realize that for all practical intents and purposes, the ISDA _votes_ on
whether any kind of payout can be made to the CDS holder, _because they
vote to decide if a “credit event” has occurred. _
9. Can you imagine _your situation_, if at the end of the day the
people who are shorting your gold stock took a vote amongst themselves
to decide what the closing price for the day would be for your stock?
10. In the biggest picture, that is essentially the situation that the
CDS holder is experiencing. Simply put, a default becomes “not a
default” _when the ISDA votes that default out of existence._ The
bottom line is that “Team ISDA” will likely put “Team Deflation”
into the dustbin, and the only question that really matters is, are you
onside?
11. If so, I’d like you to give the gold chart a kiss this morning.
Keep it simple, sweetie. Click here now [6] to view the simplest view
you can have of the gold market. Note the three sell signals on the
14,7,7 series of the Stochastics indicator that I have highlighted.
12. Example A shows the gold price blasting three hundred dollars
higher after the Stochastics crossover sell signal was given. Example B
shows the gold price declining rapidly after a Stochastics sell signal
flashed. What will “Example C” bring to the gold market? What will
happen when the lines on that Stochastics indictor cross, as they are
threatening to do now?
_13. _The bottom line is that you can’t know the answer. Selling
huge amounts of gold because it is technically overbought can have
disastrous consequences for you. You can be left standing in the train
station _while a gold bullet train speeds away._
14. Moderation brings the best wealth-building results. Selling a bit
of gold into this strength is wise.
15. The professional investor doesn’t buy gold because, “_It’s
about to rally!_”, and they don’t sell gold because, “_It might
fall down!_”. If gold is falling in price, you need to buy a small
amount of it. If gold is rising in price, as it is now, you need to
book some _light profits_. End of professional investor story.
16. Using theories of where the price of gold may go next to buy and
sell huge amounts of gold is “market madness”. All “gold is
crashing!” nonsense that occurred into $1525 has now been marked to
“skeleton in the closet” model. The epic loss-booking has been
replaced with new nonsensical stories that_ _gold is going to infinity
any day now, so you have to buy in enormous size. The unfortunate bottom
line is that _primal urges_ continue to dominate the actions of amateur
investors.
17. Operate on the gold price gridlines not as a sea-changing prophet,
but as a capital placement machine. You understand that gold is the
ultimate asset, so you place capital into it like a machine on a factory
production line.
18. Note the four HSR (horizontal support and resistance) lines that
I’ve highlighted on the above gold chart. They are created by support
and resistance at the prices of $1640, $1700, $1770, and $1800.
19. Based on this HSR, you would place orders to buy gold in the $1700
and $1640 price area. Place orders to sell gold in the $1770 and $1800
price area. Keep it simple. I would prefer that you place no buy orders
unless gold has fallen $50 to $100 from these highs, regardless of where
any support is sitting.
20. I think the average daily range for the gold price will increase
dramatically. Unfortunately, the average high speed (flip) trader lives
in a world where a $100 move in the gold price is mistakenly viewed as
critically important. I would suggest that the flip trader lives in a
make-believe world. The only thing real about the flip trading world is
the enormous size of the booked losses that are experienced by the vast
majority of its citizens. If you are living life as a flip trader who is
obsessed with the supposed importance of the next $100 move for the gold
price, you might consider the possibility that in the gold world, you
are an illegal alien.
21. Default and quantitative easing are not the themes of this
financial crisis. Surprise is the theme, and you need to embrace
surprise, rather than fight or outsmart it. Don’t try to become an
expert at predicting surprise in a crisis of this magnitude, if you want
to get richer. You can only embrace the theme of surprise by becoming a
risk capital placement machine.
22. Simplicity is the fuel of the successful financial engine. Is it
time for a fill-up?
23. Click this key silver gridlines [7] chart now. Support sits at
$28.50 and $31. Those are your simple buy points. On the profit booking
side, you’re doing it now in the $33.50 area, and you’ll sell more
at $35.50 and $37.
24. Take about 1% of your position off the table at each sell point,
and add about 1% to your position at each buy point. Most investors
“only” trade about 100 times too large for their financial britches!
SPECIAL OFFER FOR WEBSITE READERS: Send me an Email to
This e-mail address is being protected from spambots. You need JavaScript enabled to view it. [8] and I’ll send you my free
“Keep It Simple, Sweetie (KISS)” report, highlighting the simple
actions you need to take here and now in the GDX and GDXJ markets!
Thanks!
_ _Cheers
St
Stewart Thomson [9]
Graceland Updates [10]
Written between 4am-7am. 5-6 issues per week. Emailed at aprox 9am
daily.
_ _
_WWW.GRACELANDUPDATES.COM_ [11]_ _
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. [12]
MAIL TO:
STEWART THOMSON / 1276 LAKEVIEW DRIVE / OAKVILLE, ONTARIO L6H 2M8
CANADA
Risks, Disclaimers, Legal
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 a tiny portion written off officially. The bottom line:
Are You Prepared?
Links:
------
[1] http://r20.rs6.net/tn.jsp?llr=rv4uj6dab|+|amp|+|et=1103765099455|+|amp|+|s=0|+|amp|+|e=001hTTdHE6J6RAXgm4u09c-q75r9-hGbru-qwCuY5mgaURH7puxb1bnhD7fiaWL-QGrNLeCZk30oTCqmqK3PPZXOSSaALHk0603-Wn-l8e1fVdnOhFvC9CP9A==
[2] http://r20.rs6.net/tn.jsp?llr=rv4uj6dab|+|amp|+|et=1103765099455|+|amp|+|s=0|+|amp|+|e=001hTTdHE6J6RAXgm4u09c-q75r9-hGbru-qwCuY5mgaURH7puxb1bnhD7fiaWL-QGrNLeCZk30oTCqmqK3PPZXOSSaALHk0603b5nklMiP5QEAVta4oFOetQ==
[3] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[4] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[5] http://www.gracelandupdates.com/images/stories/jan2012/isda.pdf
[6] http://www.gracelandupdates.com/images/stories/jan2012/2012jan31gold1.png
[7] http://www.gracelandupdates.com/images/stories/jan2012/2012jan31si1.png
[8] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[9] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[10] http://www.gracelandupdates.com/
[11] http://www.gracelandupdates.com/
[12] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
1. If a tree falls in the forest, does it really make a sound if nobody
hears it fall? Click here now [5] to view a falling OTC derivatives tree
being marked to “_it never made a sound_” model.
2. In the simplest terms, credit default swaps (CDS) are a financial
insurance product used heavily by hedgers and speculators in the
government debt arena.
3. A lot of investors thought that a huge deflation would occur when
the OTC derivatives written on real estate blew up, but what they
didn’t anticipate was that rule changes would be made by the Financial
Accounting Services Board (FASB).
4. The FASB allowed banks to value OTC derivative products like bonds,
with a maturity date. OTC derivative accounting was legally changed from
“mark to market” to “mark to model”.
5. The deflationists were almost destroyed by the FASB move, as gold
surged from about $680 to $1920. They have re-emerged since the Greek
government has taken centre “default stage”. As you will see, the
deflationists are likely to meet their mark to model maker once again.
6. Companies like MF Global thought they could make big profits by
using investor monies to make bets with CDS products. Their view was
that the Greek government couldn’t pay what it owed, and that failure
would trigger a default event. They were wrong because they didn’t
understand how far the banks have taken the concept of mark to model
accounting.
7. In the above document provided by the International Swaps and
Derivatives Association (ISDA), you can see that how the ISDA defines a
credit event (CDS payout time) is open to _substantial interpretation by
the ISDA itself._
_8. _If you take the time to read the document carefully, you will
realize that for all practical intents and purposes, the ISDA _votes_ on
whether any kind of payout can be made to the CDS holder, _because they
vote to decide if a “credit event” has occurred. _
9. Can you imagine _your situation_, if at the end of the day the
people who are shorting your gold stock took a vote amongst themselves
to decide what the closing price for the day would be for your stock?
10. In the biggest picture, that is essentially the situation that the
CDS holder is experiencing. Simply put, a default becomes “not a
default” _when the ISDA votes that default out of existence._ The
bottom line is that “Team ISDA” will likely put “Team Deflation”
into the dustbin, and the only question that really matters is, are you
onside?
11. If so, I’d like you to give the gold chart a kiss this morning.
Keep it simple, sweetie. Click here now [6] to view the simplest view
![[6]](http://www.gracelandupdates.com/images/stories/jan2012/2012jan31gold1.png){kind=link}
you can have of the gold market. Note the three sell signals on the
14,7,7 series of the Stochastics indicator that I have highlighted.
12. Example A shows the gold price blasting three hundred dollars
higher after the Stochastics crossover sell signal was given. Example B
shows the gold price declining rapidly after a Stochastics sell signal
flashed. What will “Example C” bring to the gold market? What will
happen when the lines on that Stochastics indictor cross, as they are
threatening to do now?
_13. _The bottom line is that you can’t know the answer. Selling
huge amounts of gold because it is technically overbought can have
disastrous consequences for you. You can be left standing in the train
station _while a gold bullet train speeds away._
14. Moderation brings the best wealth-building results. Selling a bit
of gold into this strength is wise.
15. The professional investor doesn’t buy gold because, “_It’s
about to rally!_”, and they don’t sell gold because, “_It might
fall down!_”. If gold is falling in price, you need to buy a small
amount of it. If gold is rising in price, as it is now, you need to
book some _light profits_. End of professional investor story.
16. Using theories of where the price of gold may go next to buy and
sell huge amounts of gold is “market madness”. All “gold is
crashing!” nonsense that occurred into $1525 has now been marked to
“skeleton in the closet” model. The epic loss-booking has been
replaced with new nonsensical stories that_ _gold is going to infinity
any day now, so you have to buy in enormous size. The unfortunate bottom
line is that _primal urges_ continue to dominate the actions of amateur
investors.
17. Operate on the gold price gridlines not as a sea-changing prophet,
but as a capital placement machine. You understand that gold is the
ultimate asset, so you place capital into it like a machine on a factory
production line.
18. Note the four HSR (horizontal support and resistance) lines that
I’ve highlighted on the above gold chart. They are created by support
and resistance at the prices of $1640, $1700, $1770, and $1800.
19. Based on this HSR, you would place orders to buy gold in the $1700
and $1640 price area. Place orders to sell gold in the $1770 and $1800
price area. Keep it simple. I would prefer that you place no buy orders
unless gold has fallen $50 to $100 from these highs, regardless of where
any support is sitting.
20. I think the average daily range for the gold price will increase
dramatically. Unfortunately, the average high speed (flip) trader lives
in a world where a $100 move in the gold price is mistakenly viewed as
critically important. I would suggest that the flip trader lives in a
make-believe world. The only thing real about the flip trading world is
the enormous size of the booked losses that are experienced by the vast
majority of its citizens. If you are living life as a flip trader who is
obsessed with the supposed importance of the next $100 move for the gold
price, you might consider the possibility that in the gold world, you
are an illegal alien.
21. Default and quantitative easing are not the themes of this
financial crisis. Surprise is the theme, and you need to embrace
surprise, rather than fight or outsmart it. Don’t try to become an
expert at predicting surprise in a crisis of this magnitude, if you want
to get richer. You can only embrace the theme of surprise by becoming a
risk capital placement machine.
22. Simplicity is the fuel of the successful financial engine. Is it
time for a fill-up?
23. Click this key silver gridlines [7] chart now. Support sits at
![[7]](http://www.gracelandupdates.com/images/stories/jan2012/2012jan31si1.png){kind=link}
$28.50 and $31. Those are your simple buy points. On the profit booking
side, you’re doing it now in the $33.50 area, and you’ll sell more
at $35.50 and $37.
24. Take about 1% of your position off the table at each sell point,
and add about 1% to your position at each buy point. Most investors
“only” trade about 100 times too large for their financial britches!
SPECIAL OFFER FOR WEBSITE READERS: Send me an Email to
This e-mail address is being protected from spambots. You need JavaScript enabled to view it. [8] and I’ll send you my free
“Keep It Simple, Sweetie (KISS)” report, highlighting the simple
actions you need to take here and now in the GDX and GDXJ markets!
Thanks!
_ _Cheers
St
Stewart Thomson [9]
Graceland Updates [10]
Written between 4am-7am. 5-6 issues per week. Emailed at aprox 9am
daily.
_ _
_WWW.GRACELANDUPDATES.COM_ [11]_ _
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. [12]
MAIL TO:
STEWART THOMSON / 1276 LAKEVIEW DRIVE / OAKVILLE, ONTARIO L6H 2M8
CANADA
Risks, Disclaimers, Legal
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 a tiny portion written off officially. The bottom line:
Are You Prepared?
Links:
------
[1] http://r20.rs6.net/tn.jsp?llr=rv4uj6dab|+|amp|+|et=1103765099455|+|amp|+|s=0|+|amp|+|e=001hTTdHE6J6RAXgm4u09c-q75r9-hGbru-qwCuY5mgaURH7puxb1bnhD7fiaWL-QGrNLeCZk30oTCqmqK3PPZXOSSaALHk0603-Wn-l8e1fVdnOhFvC9CP9A==
[2] http://r20.rs6.net/tn.jsp?llr=rv4uj6dab|+|amp|+|et=1103765099455|+|amp|+|s=0|+|amp|+|e=001hTTdHE6J6RAXgm4u09c-q75r9-hGbru-qwCuY5mgaURH7puxb1bnhD7fiaWL-QGrNLeCZk30oTCqmqK3PPZXOSSaALHk0603b5nklMiP5QEAVta4oFOetQ==
[3] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[4] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[5] http://www.gracelandupdates.com/images/stories/jan2012/isda.pdf
[6] http://www.gracelandupdates.com/images/stories/jan2012/2012jan31gold1.png
[7] http://www.gracelandupdates.com/images/stories/jan2012/2012jan31si1.png
[8] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[9] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
[10] http://www.gracelandupdates.com/
[11] http://www.gracelandupdates.com/
[12] mailto: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.