For those with paper silver profits that are concerned about an intermediate top in silver, Stewart Thomson has excellent professional advice: book your profits into physical gold! Booking profits into fiat US dollars, immediately prior to the dollar rolling off the cliff into hyperinflation is a “lifetime error from which there is no recovery.”
From Stewart Thomson of Graceland Updates:
1. There are many indications that America sits on the cusp of hyperinflation. Normal inflation is related to rising demand for goods and services. Hyperinflation, unfortunately for those who don’t understand it, is not a function of demand. It is created by increasing the supply of dollars.
2. During demand-related inflation, increases (or decreases) in your wealth are well measured with dollars. Gold is an asset to be bought and held, and the changes in value are well measured with government currency. This has been the case throughout history, with all government currencies.
3. During periods of hyperinflation, gold itself becomes a major currency in play. Citizens begin valuing items they need in terms of the weight of gold required to buy or sell those items.
4. In the 1970s demand-related gold bull market, interest rates worked as a tool to lower prices of goods against the dollar and end that mini-crisis. Unfortunately, interest rates are generally useless as a tool to stop the mass exodus from a hyper-inflating currency.
5. The risk of hyperinflation in the 1970s was miniscule. Now, the risk is astronomical. Public panic occurs in a major crisis like this one when people understand there is no government solution to the crisis.
6. In a crisis, do you want to focus on profit, survival, or both? Personally, I’m in the “both please!” camp, as perhaps you should be! Gold is the currency of survival and profit. The best of both worlds. As the crisis accelerates, you must accelerate your focus on increasing the amount of ounces you own, to survive and profit.
7. Use the dollar as a unit of account to measure gains in stocks, silver, oil, sugar, bonds, the stock market. I’m 100% in favour of you booking profits. Start going to at least some gold when you book profits on other items.
8. Let’s say you own a juicy gold junior, and it just leaped 40%. Your charts and discussions with the company tell you it is time to book profits. Put some of those dollar profits you make in the markets into gold bullion.
9. No daddy lawyer or mommy secret agent is going to save you from the banksters. Those with the gold make the rules. The central banksters control the most gold so they make the rules. Until the gold community starts buying more gold with profits you make in the market, you will make no rules, not even for yourself.
10. The dollar valuation of all you own is meaningless during a hyperinflation of the world’s reserve currency. If you get caught in dollars when such an event occurs, that is a lifetime error from which there is no recovery.
11. It is “beyond critical” to understand that when a currency hyper-inflates, no technical analysis works. There are no buy or sell signals. There is only total destruction of the currency.
12. Click here now to view the monthly crude oil chart. You can see support and resistance highlighted by the red horizontal lines (HSR lines). Oil has had a great move. From the lows near $30, oil has rallied to about $115. If you are in oil, but getting nervous, there is only one course of professional action, and that is, go for the gold! The risks of hyperinflation/collapse/general bad news make going to gold with some profits, rather than just 100% to dollars, a very prudent course of action. Oil is likely going to $200, but not in a straight line. Some oscillators suggest oil could move a bit lower, and some suggest it could go much higher. Going to gold provides you with the most solid course of action to manage yourself in oil when you think it is high. As you will see, it is the same for all commodities and even all stocks.
13. The risks are greater now that by selling oil for dollars you miss out another leg up to $147. If oil goes to $147, do you think gold is going higher, too? Let’s say oil gets to $147. Most energy investors lost a lot of money after oil fell to $30 from $147. That $147 number is ingrained in the financial heart of investors.
14. The problem for you is that oil could gyrate around $147 and then blast towards $200 without you on board in any way, shape, or form. If you sell oil and buy gold near $147, you can probably rebuy more oil as it gyrates lower briefly, but if instead it rockets higher, your gold almost certainly will rocket higher too. If you buy dollars at $147 and oil rockets higher, or worse, if the dollar collapses, do you really think you can handle that level of demoralization? I don’t believe you can.
15. Dollars are becoming a Model T car on an Indy500 gold currency track. This is 2011, not 1911. Are you aware?
16. Click here now to view the monthly silver chart. Look at the four red circles on the RSI indicator. This is the fourth major overbought situation for silver during the course of the bull market and it is spending more time in an overbought state than at any other point during the history of this bull market.
17. Fact: There is not a single person in the gold community who can look me in the eye and tell me that going to gold when silver has been high has been a bad strategy. I hate losing wealth. So I don’t. Do the same. If you think silver is high, go for the gold.
18. Some of you are operating trading programs on silver. There are two approaches you can take in a situation like this. First, you could simply cut the amount of dollars you have in the program. Second, you could switch to some gold trading.
19. I like the switch to gold. I believe the $1400 price on gold bullion marked the knocking on the hyperinflationary door by the grim reaper, for the dollar. Just as the drastically overbought situation on the Dow charts in 1995 marked the beginning of institutional investment into the general stock market on a massive scale, it is very possible that we are seeing the same thing in the gold market now.
20. Gyration of price will replace correction of price. I expect gold’s average true range (price range) to increase to $100 a day, making the gold price totally unpredictable. Only those who can respond professionally to gyration will survive, and prosper!
21. Click here now to view the gold explorers ETF chart.
22. The gold explorers fund is very good because it has a limited number of holdings compared to other funds, and the stocks tend to be closer to juniors than intermediates. Some holdings in other “juniors” funds are almost senior, and are certainly intermediates.
23. Note the blue horizontal line on the chart. I believe the GLDX is preparing to make a move much like you just saw in silver from $20 to almost $50.
24. Your key to non-stop profits from here on in for GLDX, and for everything traded in any market, is going to be acceptance of the new hyper-inflationary possibilities that require you to book profits, then put some of those profits into gold bullion. In terms of strategies, I’ll dare to suggest, you’ve tried the rest, now try the best. Go gold!