Feb 15, 2012

1. "I thought oil was going to a billion dollars a barrel while the US dollar would go to zero in 6 months, so I bought extra-large in the $100-$150 zone, before it got away, then I sold at monster losses in the $28-$80 zone in 2008." - Average oil investor, Feb 15, 2012.

2. From a totally hypothetical perspective, let's pretend that some tiny part of the above statement applies to...you. How you do get back into oil as a player, without blowing up, or without coming back in at even higher prices of maybe $200-500 a barrel while proclaiming,

3. "This time it really super-duper really is here to stay, so now I truly do have to pay $400 a barrel, before it really and truly totally hyper-inflates to tens of thousands of dollars a barrel!"

4. The answer to most market questions is to trade smaller than you know is rational, and that's the answer in this case. Find the amount of oil or oils stocks you can buy, that if it all melted to $1 tomorrow, you could laugh, and buy that amount on the next visible decline on the chart, to start an oil pgen. What's visible on the chart? A $5 to $10 decline.

5. You are free to demand more visible decline, but make sure it is visible, rather than trading at a price that analysis promises you is about to get away.

6. You don't necessarily have to buy any asset in size, regardless of the "getting away" stories told to you by those who mean well. To get a toe back in the water, use paper trading or what I call "almost paper trading".

7. With "almost paper trading", you use real risk capital, but only the tiniest amount of it. If Jim Sinclair and Harry Schultz, the two largest gold stock traders in the last gold bull market... if they can do full and meticulous paper trading, the question is, can YOU do "almost paper trading", to restore your confidence in the oil market?

8. The stupidest investors I knew as a broker hated paper trading. They were "too big" in their mini-minds to waste time, while Jim Sinclair and Harry Schultz put in hour after meticulous hour doing it.

9. As always, the champions are shown to have done the uncomfortable work that needed to be done, while the market losers sat on the golf course telling their other supposedly successful price chasing pals how smart they were to load up their accounts with Nortel at $90, because it was $120 earlier.

10. Then they sold at $1 and bought real estate at the top of that market. Brilliant. Now they are grovelling on the floor in front of the Gman waiting to get their 1% a year fixed income handout. It is a handout. The average investor is on financial welfare, but does anyone understand?

11. Screaming that markets are manipulated isn't the road to personal victory. I probably dislike the dollar more than most of the gold bugs, but in a war you need to kill your opponent with professional action, not by rant-chanting him to death.

12. Holding dollars, and growing your pile of them, is a necessary evil, as gold goes into the whipsaw zone. If you're in a war, you're going to bleed, and you want to be looking at what kind of win/victory you can book on those dollars and get more gold on sale, when others around you are booking losses and disintegrating mentally.

13. The thought of being net short an asset like gold because "it might fall down" is abhorrent to me. But the thought of being deep on the receiving end of severe enemy fire at the many points that will happen, with no ability to book a win, is equally abhorrent. Carrying short positions or dollars is how to win in the coming surprise zones of this super-crisis.

14. Speaking of surprise, GoldLion, whose VTR.to super-stock just jumped 50% in 24 hours, thinks the gold community could soon be in for a brand new surprise zone.

15. He thinks gold could fall to as low as $1500 while GDX and GDXJ begin to skyrocket, in a sort of repeat of the 1980 scenario, when the dollar soared against gold, but crashed against gold stocks. Gold stocks went ballistic, but most investors missed the ride.

16. Ironically, a huge parade of gold community investors are now lined up selling their gold stocks, convinced that the gulag, not higher gold stock prices, is "here to stay". That's ok. More gold stock for me, bought at prices and emotional zones where the banksters don't consider me a mark.

17. You've seen the highly concerning liquidity flows in three major stock market indexes, with the banksters piling on shorts while telling Joe Blow business owner to get back into the market.

18. Mr. Macro, whose largest holding is of course the astro-blasting apple stock, is becoming a little concerned about the market, and retaining his mighty gains. He notes that many Asian markets are jamming into sizable HSR, here and now.

19. GoldLion, incredibly, thinks that GDX/GDXJ could blast higher, even while the both the Dow and gold tank! Can you imagine having no gold stock, and then watching gold and the Dow start tanking, and the only thing in astro-blast mode is GDX and GDXJ?

20. I'm fully prepared for that scenario, and you and I might have to join the banksters in "laugh-o-rama" mode, if it happens, as we watch all the gold stock haters get blown off the financial map!

21. Joe Blow gold analyst notes that gold is up $10 this morning, so he knows GoldLion's scenario, which I'll term the "Super Surprise", can never happen. I'm less sure about what I know....

22. A moment of silence, please, for team Dow shorty pants, as the Dow blasts another 100 points higher. While the Dow could tank, your strategy is "buy if it does". Let's not have another charge of the photocopied light brigade.... Get the Dow. Get it... on sale.

23. My GDX position is 15-20% of the size of my gold bullion position, and I'm pretty happy with that allocation. Price tiptoed into my $53.70 HSR buy zone yesterday, then "shockingly" went below there! Oh no, I might have to get more, at greater price sale! Your next buy HSR sits at $52.

24. If gold and silver did blow out the $1525 and $26 lows, while the Dow tanked, the dollar soared, and GDX and GDXJ super-soared.... How is that even possible? Well, it's not actually possible, for you, if you own no gold stock or dollars, is it?

Gridtime! What happens if Alf Field's "gold bullion to the Elliot wave sky" car gets a flat tire, deep inside GoldLion's GDX/GDXJ super surprise zone? Perhaps before you click the sell button on your gold stock holdings and celebrate your gold bullion excellence, you should...

CLICK HERE NOW !!!

Team bullion needs to look in the rear view mirror... before they become gold stock dinner....

Thanks!

Cheers

St