imagesSubmitted by Stewart Thomson

I refer to gold bullion as “Queen Gold”, and the US T-bond as her secret agent James T. Bond.  At some point, Sir James is going to outlive his usefulness to your queen, and a great bear market in bonds will unfold.

Specifically, I believe that the pressure put on all fiat currencies by the global tidal wave of QE, will make it appear that hyperinflation is a “done deal”.  I don’t think you are going to experience full hyperinflation in this crisis, but you’ll get something very close to it.

As that happens, central banks around the world will likely begin raising rates aggressively, to combat the severe institutional loss of confidence in all fiat currencies.  So, should you hold & buy gold now, or wait until 2015?  The answer is that you should buy now.

 

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1.    In this super-crisis, central bank interest rate & quantitative easing (QE) policies have been the main drivers of the gold price.  Many gold analysts and investors thought the bond market would crash, setting off a 1970s-style surge in gold stocks.

2.    That hasn’t happened, because the US central bank is committed to maintaining low interest rates (high bond prices), until 2015.  The financial system would close down if the bank stopped buying bonds now.  If that happened, guns would quickly replace silver, as the poor man’s gold.

3.   The bank has committed itself to continuing QE, until the unemployment rate drops to 6.5%.  The latest jobs report showed that the unemployment rate just rose to 7.9%.  That data is going to make the Fed even more aggressive in its open market operations involving the T-bond.

4.   I refer to gold bullion as “Queen Gold”, and the US T-bond as her secret agent James T. Bond.  At some point, Sir James is going to outlive his usefulness to your queen, and a great bear market in bonds will unfold.

5.    Specifically, I believe that the pressure put on all fiat currencies by the global tidal wave of QE, will make it appear that hyperinflation is a “done deal”.  I don’t think you are going to experience full hyperinflation in this crisis, but you’ll get something very close to it.

6.    As that happens, central banks around the world will likely begin raising rates aggressively, to combat the severe institutional loss of confidence in all fiat currencies.

7.    So, should you hold & buy gold stocks now, or wait until 2015?  The answer is that you should buy now.

8.   Why buy now?  The answer is now, because when gold first traded above $1800, institutional money managers showed strong interest in buying gold stocks.

9.    A lot has changed since 2011, when gold first went over $1800.  Shinzo “Mr. Inflation” Abe has been elected in Japan.  Also, in April a new Japanese “super-dove” is likely to take the helm of their central bank.  Institutional money managers are extremely concerned that Japan’s central bank may literally be on the cusp of a money printing extravaganza.  To see the view point of one very astute money manager, please click here now.

10.              What kind of institutional buying would your gold stocks experience, if gold were to surge, not just above $1800, but above $2000?  I submit that it would be very substantial.

11.              With all due respect to the gold stock bears, I don’t think they really understand the fundamentals of this crisis.  Most of them are pure chartists, obsessed with a head & shoulders top shape that began forming on the HUI & GDX charts back in 2011.

12.              The main driver of your gold stock prices is not the chart shapes flaunted by gold stock haters.  It is the ever-evolving action of central bankers, in the gold bullion and T-bond markets!

13.              Monday Feb 4, 2013 was a particularly painful day for gold stock holders.  Once again, bullion rallied, while junior resource stocks were hit particularly hard.

14.              Regardless, I want you to ignore that pain, and take a close look at the “Sir James T. Bond” and “Queen Gold Bullion” charts.  As you shall see, central bank liquidity flows are the bullish theme in play.  Their actions will fuel institutional buying of your stocks as gold crosses $1800.

15.              Much more institutional buying will follow as gold rises over $2000.  Their buying between $1800 and $2000 will lift you, finally, out of the gold stocks gulag!

16.              Please click here now.  That’s the daily T-bond chart, and you can see that it peaked in the October-November timeframe.  The bond market has been under pressure since then, while the Dow has rallied.

17.              GDP growth has gone negative, and unemployment is suddenly rising.  These are not events that make Mr. Bernanke enthusiastic about reducing his purchases of T-bonds in the open market.  He’s more likely to increase his purchases than reduce them.

18.              Note the 14,7,7 series of Stochastics on that bond chart, and the 4,8,9 MACD series.   The bond has stopped falling, and these indicators are turning up, nicely.

19.              The action on the daily gold chart is very similar to that on the bond chart.  Please click here now.  The 4,8,9 MACD “leader” shows a crisp buy signal.  The 14,7,7 Stochastics series looks like a golden excavator bucket, ready to scoop up your gold, and place it higher on the chart!

20.              Please click here now.  That’s the hourly bars chart of the T-bond.  Note the head & shoulders bottom that may be forming now.  The bond spiked sharply higher yesterday, and so did gold.  With each passing day, these two key assets are tracking each other more closely.

21.              The 144’12 and 146’18 price points are critical numbers, for gold stock investors.   In particular, 146’18 is arguably equivalent to $1700 gold.  The T-bond seems set to spike higher, as does gold.  A move over 144’12 could take gold over the downtrend line on its daily chart, sparking waves of technical buying!

22.              On your own time, please take the time to note the growing synergy of the T-bond and gold market turning points.

23.              Let’s take a quick look at three MACD series on the weekly gold chart.  Please click here now.  Note the crossover buy signal in play on my lead 4,8,9 series.  I expect the other two series to play “follow the leader”.

24.              Please ignore the GDX and HUI charts until the T-bond and bullion charts begin moving higher.  Then re-visit them, and I think you’ll be pleasantly surprised.  The bottom line is that February is shaping up to be a very good month, for gold stock bulls!

 

Special Offer For Website Readers: Please send me an email to freereports4@gracelandupdates.com and I’ll send you my free “Start The Insanity!” gold stocks report.  I cover the entire financial crisis in a series of video reports, showing you the evolution of the crisis, and why gold stocks are in a much stronger position than any chart shows you!

 

Thanks!

Cheers

St

 

Stewart Thomson

Graceland Updates

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  1. We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot. –Henry Morgenthau, Treasury Secretary, 1938

    • Ah, the ignored lessons of history.  :-/
       
      Something like this almost makes one think that the USA is being sabotaged from within on purpose.  How else could all the wrong moves me made at JUST the wrong times?!

  2. @Doc James bond never carried a Gold Gun, being a Scotsman he was a little froogle with his money and his superiors wouldn’t spend money on a gold gun to give to him. LMAO but he would carry something like this as I do. Lol
    As for gold stocks, it’s funny, I just posted in another thread that I just acquired some gold stocks, 2 rolls of AE’s worth. Lol Keep Stacking

    • Marchas – I carry a glock as well. The model 23, .40 cal compact. There’s nothing like reliability when your life is on the line. A word to the wise – pick yourself up some hollow points. They’ve got better stopping power, and greatly decrease the chance of a round traveling through your target and hitting an innocent bystander. Unfortunately, they also decrease the chance of your attacker living, making it less likely for them to sue you in civil court. :( 

    • Nice carry piece.  Reminds me of an upgraded version of the little Ruger LC9 that I carry.
       
      Agree on the hollow-points comment.  I definitely need to get a box or two of those.  They are not great against body armor but work VERY well otherwise.
       
       
       

    • For most of Bond’s fictional life, his officially issued carry weapon was a Walther PPK.

      The Ruger LC9 is a fantastic gun, as are all Glocks.  Looks like that’s a Glock 26, right Marchas?  I’ve shot about 200 rounds out of that model and it’s a great gun.  It can take any of the Glock factory 9mm mags too, including the 33 round mag, with the mag acting a bit like an extended pistol grip and the performance of the little thing akin to a semi-auto UZI.

      If you get a chance, someday shoot the Ruger LCR-38 or LCR-357.  Those revolvers have amazingly smooth trigger pulls as factory issue.  The LCR-38+p is a wonderful gun for women, in particular — better than the common old school choices like Smith & Wesson’s “Lady Smith” line.

  3. Leaving side the charts and comments regarding gold stocks, the key item that gets my interest are the bond bubbles and their effects on gold and silver prices.  Virtually all the big GDP countries are engaged in ZIRP  printing to devalue their currencies, racing to this end to keep the trade engine going. All the major GDPs are showing red arrows in their economic indicators.  For one country to win, others will be hurt.
    Japan, China, the EU and US are all on track to accomplish this rampant devalution business.   Japan is probably on a fast track to the bottom in their current bout of devaluation.  Abe is out for war, FIAT or hot, it does not seem to matter to him   South Korea is being hammered by the Yen but they are unlikely to launch missiles against the Japanese homelands.  China sees these FAIT effects on their exports.  What affects China in that regard is going to have repercussions that could easily go beyond a war of words and money as these two countries face off over the Sendaku Islands. China’s currency reserves are 300% largest than Japan.  That is some serious ammunition to use is trade battles.
    The bond bubble could easily be broken in a currency or a shooting war. Either way, these fragile bubbles could be popped with ease and at the slightest pressure.  Japan’s largest pension fund, with $1.2 trillion in assets, is trying to lightened up on Yen bonds. Other funds are trying to buy gold. They smell a turd in the miso soup.
    A bubble is going to break and it probably won’t be the UST first.  We’re  the world’s safe harbor for excess funds.  It is even more likely that when overseas bond bubble  monies flood to the US, the rates will drop again, like the last time money flowed into the UST. This time the flood could be in the trillions, instead of a few hundred billion.  The Fed does not have tooffer competitive rates when this happen. 10 USTs could drop back to 1.5%. Money market funds are having enough problems funding a home for the money they see coming in so there will be no yield in them. 
    One unintended consequence will be NIRP rates offered by the Fed on short term notes.  Laws are being written that will allow MMAs to break the  buck.   The Fed can keep our bubble intact for quite some time since they buy most of the debt. The wash of foreign capital will probably help sustain our deficits too boot.
    Japan is running out of other people’s money.  Japan  could fail first but Europe is a train wreck moving faster with the Italian bank derivatives losses and Spain’s corruption scandals  building quickly. There’s not a bank in Europe that is worth a hill of beans.  Their leverage is 35 to 1. Greek failure would destroy most of these large Euro banks as $250 billion in bonds vaporize.
     The trade between Japan and Europe or China and Europe will be hit very hard when Europe can’t afford goods from either country.  The east will suffer badly as devaluations can’t overcome the recessions and depressions in Europe.  Consumer sentiments are dropping like rocks and have for months and even years. The Euro GDP is nearly $18 trillion so big declines here are even more powerful in their damage to imports.
     These are real and dangerous tipping points that won’t hold back much longer. The people in Italy, Greece and Spain are near the breaking point. 
    I doubt if the Fed will have enough money to bail out Europe when Benny’s spending all his political capital in  bailing out the US. He doesn’t sleep well.
    I would not be surprised if the Fed doesn’t give it a try, nonetheless.   QEII slipped $600 billion under the ECB mat, not to mention the trillions in reparations sent to Europe for the sub prime loss fiascos.  If the Fed does run to the rescue the amount of currency sloshing around could easily kick off some serious inflation on the continent.  It would certainly see FIAT mal investments in MENA as food shortages this year will bump prices by double digits. QE II was one cause of the Arab Spring.
    This whole region is  exploding with Egypt on edge;  collapse possible in short order.  If we thought 2012 was the year of the epic failure, I think it was just a warmup act to 2013.

    • Great Points, AG.
       
      Possible hot investment tip:  Proshares Trust II (NYSEARCA:YCS),  Double short Japanese Yen fund in US dollars.
       
      Looks as if it might be worth putting a few bucks in this one.  I’m not really a short kind of guy but… do the diligence and see for yourselves whether or not this fits your portfolio.
       

    • Lol I was only joshing with you Ranger, I’m a fairly decent shot my self, always have been and I handle a firearm very well. Military Police and Police Careers.  Hence the .45

  4. Just a little suggestion.  Hornady Critical Duty or Critical Defense have a small polymer plug in the detent of a JHP.  This plug keeps the JHP from opening upon impact with heavy clothing, wood, wallboard or auto glass. It supposedly feeds better since the JHP lips generally won’t hang up on the feed ramp. My old 1911 45 won’t feed JHP period but what the heck.  It’s not my daily carry. Glock 19 with Hornady works for me.  Hornady is expensive so one box is all you  need.

  5. Sounds like a .45 owners club in here.  lol
     
    I have one too… Combat Commander in brushed nickel finish.  Not the most accurate gun I own but I have learned to shoot it reasonably well.  More than good enough for CQB at 10-15 yards, which is about double the range of the average gun-fight.

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