1. When price moves strongly in one direction, the emotions take over. If the direction is up, the "I gotta buy and buy now!" feeling takes over. When the direction is down, the "I gotta sell and sell everything now!" emotion takes over.



2. The stronger the move, the stronger the emotions that envelop the investor in that emotional fog. Sometimes, a $50 gold price move triggers stronger emotions than a $100 move. In a general sense, a $100 move in one direction in gold is an intermediate move, as it usually takes longer than 3 weeks to occur. Such a move brings a substantial wave of emotion to the trading table.



3. One way to build and manage a market position is to engage in what I term "hourglassing". This is where you actually shape your market orders in the shape of hourglasses stacked on top of each other. The sell orders get larger as price moves, but then you take a "break" and restart the orders again.



4. When price is moving against you (as it is for many Dow and gold shorts right now), hourglassing can give you a big mental edge. It's critical that you don't allow large price airpockets to develop between your last buy point and the current market price of your item. If that happens, you a have a problem trade on your hands. Getting OUT of a problem trade is a process. Not an event. Don't compound one tactical error with another. To fix the problem, turn the quote machine off and focus on tactics. Let's say you are short 10 big gold contracts into $905. As price rises, you add mini gold short contracts or even small gold ETF positions, while adding long positions in another account on every $10 weakness in the gold price.



5. Focus on the long side in any major market with the bulk of your risk capital. Never focus only on the short side. Even in a nightmare situation like the Japan stock mkt from 1989 to present, (the greatest stk mkt disaster in the Industrialized world), using the proper tactics with a focus on the long side would see you in a decent position now. With a 70% long to 30% short risk capital allocation since 1989, you would be in the black now, using proper tactics and without using a single stoploss. You can layer one hourglass on top of another.



6. In the gold market, there isn't that much to fear, really, except fear itself! Gold is the world's lowest risk investment. Don't be afraid, nor should you think too much about where the gold price might go, up or down. Simply focus on buying and selling. At a profit. Open your wallet. Take out some money. Do you think, "Oh, I better get rid of this money, I'm losing on it." No. Well, look at your gold. Don't get rid of your gold when it goes down in price, never do that. You are throwing money in the garbage. Gold is money. It's an ASSET. You want MORE gold, not less. Look at the Relative Strength here. I've highlighted it at 4 points with 4 red elipses. This is near-IDEAL for an attack on the gold 1030 level. Gold must attack the 1030 level from a position of POWER. While anything can go wrong, and I'm prepared for that with an massive army of buy orders at lower prices extending hundreds of dollars lower, THIS is a truly SPECTACULAR technical situation. In my mind this gold head and shoulder continuation rivals both the Dow head and shoulders bottom of 2002-2003 and the bond market h&s of the early 80s, for sheer magnificence. It looks like Michaelangelo made it! And I am a HUGE believer that the more perfect a pattern appears, the higher the odds of it doing ALL that it hints at….and much more!!!






7. For those of you who are considering using leveraged bear ETF's to book profit against your physical gold position during a move towards $1200: be very careful. I've mentioned using non-leveraged ETFS at the start of a price move, and leveraged ones later on, for two reasons: A. If gold rises say 20% with a series of zig zag moves, your leveraged bear ETF could fall 70% or more. B. None of us are as smart as we think we are. Assume you are going to get it wrong out of the starting gate. Risk the least capital on your first action in any market move. If you use leveraged ETF's out of the gate to book profit on your physical, you MUST use a pyramid formation of buy orders on them, or you have a high (I would say near-certain) risk of failure.



8. It's going to be a tremendous profit booking opportunity on the road to gold $1200, but in the end, the move from $1000 to $1200 is simply a 20% move. A $200 move. The move from $680 to $1000 was a $300 move of 40%! Gold has to rise to $1300-1400 to give you the same profits… profits that buyers into gold $700 have already booked. This is a very key point: In any market, the gravy money is always made when nobody is paying attention. A few writers said buy the Dow around 6500. I bought the Dow from 8000-6500 with dozens of buys. I didn't know that 6500 was the bottom. I wondered if my items might go off the board as I bought. Those who claim "there was no risk to the system at Dow 6500" are foolish. The financial system is dead. If the market price (zero to 10% with most having zero bid) of the otc derivatives was revealed tomorrow morning, JP Morgan would close it's doors, never mind the rest of the bankrupt banks. They ARE bankrupt. But the fake accounting keeps them alive. They bought themselves TIME. In a crisis, time is a critical ally.



9. The bankers want hyperinflation. Does anyone understand this? The reason they want hyperinflation, or at least a quasi-hyperinflation, is to boost the price of the now-worthless otc derivatives. The big win is if they can re-inflate the housing mkt. I think they will, but it may be years away. Then the Fed can claim they really did make a profit on the stacks of the OTC Trash they hold in their locked garbage cans, and the banks can say, "See, our capital ratios are fine!", and mkt value accounting will return.



10. I had no idea whether the bank game would work, or whether the Dow itself would blow up. The fraud worked, and up went the market. Again, you have to separate your actions in the market, your tactical actions, from your fundamental THOUGHTS. Picture a fighter in the ring. Somebody could shoot him while the fight is going on. But he fights anyway, accepting the risk. It is the same in the market. Every DAY there is a reason why the mkt could blow up. New York is the prime terrorist target in the world. But millions of people live in the city, accepting the risk. They aren't ignoring it, they accept it. Insure yourself against risk, possibility, but don't INVEST based on 100% odds of Armageddon. You won't make any money, not consistently. Consistent winning tactics is the only way to make consistent money from the mkt.



11. The few online traders who yelled "buy now, there's nothing wrong!" at Dow 6500, were ignoring the broken system. Or didn't understand it. That's not smart either. When the Dow turned, they were lucky, not smart. On every price move, there are "lotto winners" and professionals. Strive to be a professional in the market, not the winner of the Russian Roulette market lotto. Unlike the Lotto winners, the bankers and insiders who bought the Dow into 6500, with monster money, did understand that the system was completely broken, but they accepted the risks.



12. Of course they understood it was broken. They broke it deliberately so a new and bigger system could be created. With them in control.



13. Picture yourself looking at your brokerage account statements. It shows you holding a leveraged OTC derivative contract with another party. It involves a bond on a company in bad trouble. You get out your calculator. The market price of the OTC derivative is $20,000, but you put in $200,000.



14. Many of you have bought penny stocks and experienced at 70-90% meltdown last year. That shows in your account. If you had 200k in penny mining stocks in Feb 2008, by October your brokerage account showed an account value of around $20-60k. Now imagine you write a letter to your broker. You say, "listen, I want to buy $200,000 of gold. I want you to show my account statement at my projected model price for those stocks in Dec 2011."



15. Your broker says, "Sure, we'll have it ready tomorrow". The next day you check your statement and sure enough, it now shows the account value at $200,000, under the "current model value" summary, which is now the bottom line on the statement. You place an order to buy $200,000 in gold right away and you are filled. THAT is the picture of what the banks have done with OTC derivatives. Legally. If you tried your plan with the brokerage, they would just laugh. They might not laugh so hard if you had a margin account and you went $100 billion underwater on a trade before they could liquidate it.



16. Then they might be VERY open to your "suggestion" of: "Doctor the books or I take your whole show down. And throw in a couple of billion into my Swiss bank account while you're at it. Thanks. I like the service here."



17. The bankers said to the govt, "Doctor the books, hand us trillions, or we shut it ALL down. You decide. We own a monster pile of physical gold, so if the show shuts down, we couldn't care less, how about you Mr. Gman, I wonder what the general population will say when ALL the banks are closed tomorrow morning and ALL the money in them is GONE when we announce hundreds of trillions in losses. YOU will be target number one. Not us." The Gman knew the bankers weren't bluffing. So he handed over the first of many blackmail payments. These payments will go on for many years. The bankers then told the Gman to get ready to start printing money so the market price of the otc derivatives starts to rise.



18. The idea that the Chinese Govt dictates anything to the bankers, including their own bankers, is: Nonsense. The bankers couldn't care less about the $800 billion t-bond peanut held by the Chinese Govt. Nor does the US Govt, and nor does the Chinese Communist govt. Ben Bernanke could buy the entire Chinese t-bond holdings tomorrow morning and announce he's increasing the T-Bond buy program to $5 trillion. Bonds would end the day limit UP. The US dollar would tank, gold would likely skyrocket. And the gold community would scratch their heads.



19. The bankers have a real "problem" and that is one thousand times bigger than the Chinese T-bond smokescreen.



20. A quadrillion dollars of worthless OTC derivatives.



21. I don't know whether President Obama is on the inside, or the outside, as far as what the bankers have planned. If he's on the outside, then he's really going to go after the bankers. If so, the OTC derivatives skeletons will start cascading out of the closet. Stock and commodity prices could have a nasty setback, and more money will be printed to keep the system alive. I do find it very strange that the man who is arguably the most socialist congressman in America just "happened" to get elected as President, just in time for the greatest money printing show in America's history.



22. There is no solution to the Quadrillion dollar problem except quasi-hyperinflation. The bankers have everyone in a trap. Quasi-hyperinflation will allow the derivatives to be raised in price, so the margin calls end. But inflation causes a lower standard of living for the general population. Much lower.



23. The solution to high inflation is: Gold. Gold is the tool the bankers will use to end the inflation they create. A quasi-gold standard, which is the Gold Certificate Ratio that Jim Sinclair has detailed, is the only solution. High interest rates would likely cause a massive depression. Market valuation of OTC derivatives would cause a complete wipeout. Neither are planned by the bankers. The plan to revalue gold upwards against the US dollar, print massive amounts of dollars, and then lock the dollar in price against gold.



24. Focus on the fact that gold had a 30% move from 700 to 1000. This is only a 20% move, if it happens. Not a 2 billion percent move. I made 20% on Alcoa in one day. The oil market jumped 10% in one DAY as it came out of the hole at $30 while most just stood and stared waiting for some wet noodle "setup" to buy. For many of you who bought between 900-1000 a year ago, a move towards 1200 represents your first "in the black" experience in the gold market. Whether that move happens or not is totally unknown. The otc derivatives superskeleton could crush the gold head and shoulders pattern like a popsicle stick.



25. The mental FEELING you get on the road towards 1200, IF it happens, is something you want to KEEP. The bankers are fully aware of how you will be feeling as price moves towards 1200, and how those short are going to feel as it goes there too. To keep that POSITIVE and WINNING mental state is going to require a lot more than, "I'm in the money now, all is fine". Stay focused on booking profit into strength, holding your core, and being prepared for both MUCH higher and lower prices than you can logically understand. Do NOT repeat with gold what many of you have done with the Dow on the shortside for the past 1000 Dow points (or more).



26. My guess is we have 1 more minor reaction (1 to 3 week decline in price) before we launch the attack on the gold 1030 neckline. Whether that reaction starts today or at gold 990 or gold 1010, or wherever, I don't know. I don't care. For me, price rules all. Price rules all chart patterns, technical indicators, fundamentals, cycles, everything. Most importantly, it rules ME. Which is why if price rises, I say, "Yes Sir, I'll sell some, and I'll do it right away Sir". Price falls, I buy. King Price's wish is my command. I suggest you address King Price as "Sir" or "Your Highness". I wouldn't suggest you chase him. He doesn't like that and tends to severely punish those who engage in such behaviour. Sometimes, he hands out the financial DEATH PENALTY. Those of you who naked shorted gold around 960 (never mind 905…) with a "price plop" based on "maybe this is the last reaction from 960, so I'll short it now with a bunch of futures contracts, then I'll go long big in week or so", well, I don't think that was a tactic created with the sharpest tool in the shed, if you know what I'm saying.



27. This is a time for VERY LIGHT gold profit booking. Gold has rallied $65. Not $650! No buying because you "know" the h&s pattern will blast gold to 1200. And no bailing because you "know" the head and shoulders will fail. We don't know anything…except that price will move! When it does, then act, but only with your pre-set buy and sell points. Those should be set now. There's a reason why Houston calls it Gold Mission Control, and not Mission out of control… Are You In Control Of Your Gold Rocket?

Special Offer for Gold-Eagle readers: Send me an Email and I'll rush you my new Gold Hour-Glassing Report! (GHG) Learn powerful profit booking tactics for every dollar move of a possible upside gold super spike to $1200! I'll also include video on Hour-glassing your buy and sell orders for The Rogers Commodity Index ETF. Cheers!

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Stewart Thomson
Graceland Updates

Stewart Thomson / 1276 Lakeview Drive / Oakville, Ontario L6H 2M8 Canada

Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.

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 qualified 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?