When the "GOLD"  "MAN" comes knocking...Watch out he wants your Gold.

Golden Fortunes.
Aug 21, 2011. 

This is finally it, with gold moving to all time highs this week, the fundamentals for gold have only improved and it has only 1 direction to move and that is much higher.  It’s kind of ironic that Monday Aug 15 marks the 40 th anniversary of Nixon closing the gold window, thus taking away other central banks right to convert US dollars for gold, and now 40 years later we are making all time highs in Gold.  Back then, he closed the gold window at a price of $35/ounce and today it trades at all time highs of $1820.  That is a gain of $1785 or 5100% over 40 years, which works out to 127.5%/year.   Who says gold is a bad investment?  It’s probably the same guys who says speculators are pushing up the price of gold.

By holding gold and not paper money as a form of savings, you would have earned a 127% a year, not a bad return for a speculator.  Sadly enough, by holding paper dollars as “money”, your investment has lost the same percentage amount of money on an average yearly basis when compared to gold.   Throughout history Gold was the only honest true from of money and it has always retained its value.  The fact is, paper money increases or decreases in value against gold.  If the past 40 years are any indication of how well you are doing with your investment in dollars, I would reconsider your investment strategy and start speculating, it sure has paid off for the speculators.  Holding paper dollars really hasn’t worked out for the average person over the last 40 years, what makes you think holding it now is going to be any better moving forward?

This past Thursday, I heard what I thought was some ground breaking news on BNN (Canada’s financial news network).  Goldman Sacs (GS) is opening a dark pool fund in Canada to “speculate” in our favorable growth potential.  I think the commodities sector/mining companies are now going to be funded by GS, one of the biggest financial institutions in the world,   so the amounts of paper currencies these bankers have to invest in Canada is limitless.  Working with the FED who has an endless printing press, they have created and will continue to expand the boom in commodities and everything will  go much higher including the mining stocks.  I wouldn’t doubt that they first lean on the sector to bring prices down, so they can steal shares from weak handed people. Then they will start to speculate even more in the commodities sector and be the silent ring leader on buying shares, doing PPs and in M&A. 

As gold continues higher, I believe were are closer to moving the world back on to a  gold standard and the US will be taking full advantage of it.  The treasury still claims to have all the of gold in their vaults and there is a strong military to defend it.  There will always be questions about who owns that gold, but like the saying goes “procession is 9/10 of the law”.  So the masters of the universe and the powers that be,  may actually be OK with gold continuing its move higher since they are have procession of the worlds gold (so they say) and that is something they won’t give up easily.  Once bank nationalization is done (which has been going on for years), there will be only a few financial institutions left standing and the ring leader will be Goldman Sacs.   They will be fully invested in gold and may be one of a few financial institutions left standing after the financial meltdown is finished.  Remember they will always be backed up big brother “The Treasury” and their chest full of GOLD.   No wonder they are called “Gold”  “Man” Sacs, they will be the only bank “Man” left with any money “Gold”.    Anyone who follows the precious metals sector knows JPM is short physical, but what if they decide to go long the mining sector, they could create a hedge and may not go bust.

This is all speculation right now on my part, but it makes total sense to me.  Of course the main media and sheep have no clue what GS is planning.  All the talking Heads will talk down Gold, much like I heard the head of Wells Fargo say gold could become a bubble,  Ya a bubble at much higher multiples from here. It’s funny someone can quickly change their tune when fear hits, the “GOLD” “MAN” needs to collect taxes and pay the bills and he now want your gold.  Even he knows your paper “investment” in dollars is worthless and he is now “speculating” on commodities.

The precious metals sector is a buy right now and hold if you already have a positioned, you may want to add to your position on any dips in price.  The next few months may still bring lots of volatility, but if you have cash and want to put it to work, now is the time and during the fall, especially in the gold mining companies which have strong earnings and growth.  I see them moving up strongly over the next 6 months and this will be easier than “Stealing Candy From A Baby”.  Shorting Financials may not be the best strategy long term.  I believe there is more bad news coming and if we get a crash bottom in the fall, I would get out of your shorts and  possibly start going long, something we can evaluate at the time.

If you have not already taken a  position in my favorite gold stocks, I would buy them on price dips and keep a low ball bid in just in case some guy panic sells.  Keep 50% of your cash ready for the fall time and hopefully we get a healthy correction in Oct/Nov and can buy some more.  If you have a trading position, we may consider lightening up in early September if the shares start getting over bought.  This is a game of holding your chips right to the very end, when you have accumulated the most chips “Gold” you will walk away from the game as a winner.

Back in the middle of June, I sent a news letter stating that the TTGD index (S&P/TSX Global Gold) was coming to close to a bottom. I was off by 2 days, but it bottomed around 350 and today it’s at 413, so it’s already up 18% in 2 months.  See the technical chart below, I believe we are currently on a possible breakout of the mining shares.  Notice circle A back in August 05, once that downtrend line was broken to the upside in August,  the index rallied about 100% over the next 9 months.  Over the last 2 week, the index went above the downward trend line that has been in place since Dec and is hovering above the overhead resistance line and the 50 DMA at about 390.   The next hurdle is to top 420 and the 435 peak made back in December , so if the sector can hold these levels for the next  few days and  trend higher over the coming weeks, this would be very bullish considering all the indicators are lined up to move higher.  Once the 435 level get taken out on strong volume,  it will be game on and you may have to start chasing the mining company shares in a runway market.

Here is a quick review of a couple of top picks we made in the last few months.

Recommended price, today’s current price (Aug 18 2011) and percentage gain.

June 16                 SSL         $1.15     $1.37     + 19%
July 21                   GWY      $1.00     $1.42     + 42%

For anyone familiar with option trading, we notified a few subscribers about the AEM call option.   I bought 20 contracts on July29 for $1000 and sold the call option on Aug10 for $10,300.  So in 12 days, I made a 930% return on my speculation “investment”.  If you have any experience trading options and are interested in our option trades, please let us know.   We will soon be providing an update on Golden Fortunes current portfolio holdings, many of the names you probably already own and hold if you decided to listen to our  “Speculative” recommendation over the last 6 years.

If you have not yet developed a GOLD Accumulation and Speculation strategy yet, I would highly suggest you do so sooner than later.  If the “GOLD” “MAN” want to “speculate” in the Canadian sector, you may want to consider Investing in it too.

Happy Speculating

Vin,
The, Golden Speculator – GS 
(no not GS the “GOLD” “MAN”)