Gold Nuggets for Stock & Commodity Traders - G.bayer

7/25/2019 Gold Nuggets for Stock & Commodity Traders - G.bayer

1/36

GOLD NUGGETS

f o r

STOCK ND

COMMODITY

TR DERS

by

GEORGE B YER

I i HOUSE\\ I I ;E goes

lo

the

s to re t o l ~ u y ai-ious kind

of n e c e s s i t i e s su ch as

me al s, silgal-, bread. In

otliei- typ es of s tor es she will

b u y

otlier Itinds

of

necessities such as

clothes and shoes.

T h e \~ e n d e r s

of

tliese goods on

t h e otller

h nd

have to p~ l rchase

them from wholesalers i n a

w a y to

talte car-e of th e demands ant1

wishes of the con~ mu ni t yn which

th ?y o p e ra t e . F a r ~ n c r s n the sta te

of Maine probably have dif ferent

tastes than those of Texas : thus

niany ai.ticles i n great demand in

one

Texas s to re ,

f o r

example ,

shoulii pi-crve to

I

shelf-warmers

n

Vermont or Maine stores.


2/36

The wholesalers, from whom

nierchants b u y their goods fo r local

distribution, a lso have to bu y them

from large factories

or

f rom big

mi l l s , s l a ~ ~ gh t e rouses or flour

mills, shoe factories

01

arger grow-

ers. T h e actual raw products such

3s gl-ains, raw cotton, raw hides,

etc., are usually first assembled

through growers selling them by

way

of

an Exchange, called the

Market. Ttiese markets are located

in major cities. Througli their

as-

sistance sellers and buyers are

brcught together to effect national

I-e-distribut~on. n the very same

way Stock Exchanges operate, only

i n this case it is a cluestion of hand-

ling corporate values.

I r

is

l


3/36

have been lost. Either the modern

grew du mbe r by the h our or- else

they just simply shy a way fr-om the

truth, not even wanting to ltnow

of i t

Th er e ar-e certai n ty pes of people

who a t tempt to prof i t

by

tliose

price changes. The y at ternpt t o buy

when prices seem low to them and

sell wlien :hey had th eir rise. Such

things a re easier said than done,

any on e but tile most inexperienced

trader knows that . Some secret

must be i~-ivolvetl n those o pera-

tions which none

of

the scientists

have been able t o re-discover. Thu s,

they leave i t go at that and mess

arou nd wit11 crud e instru ments, tlle

same \vay as the aborigins fash-

ioned Irn d:iy to iia y anti ntte rnpl to

make deductions about what the

next price tick should be, whether

LIP or down. Some dare even to

prognosticate long term trends of

tile price chan ges with mor e o r less

success, depending on how good

their instruments are that should

show such things. The more we

clelve into the secrets as to tile

cause

of

such movements, the more

we must admit , they are just invis-

ible and incon~prehensible o. us,

because e cono ~nis ts nd forecasters

tr y to use visible factors which con-

sist of cl-op outlook reports, statis-

tics, rainfalls, i n case of cornmodi-

ties. I n the case o stocks they

use

ear-ning statemen ts of corporations,

the number of blast furnaces in op-

eration throughout th e countr y, the

dividends paid

by

corporations, eic.

Each and ever-y such supposed in-

clicatos is b sed upon the immecli-

ate presence, t he- clo ser to it, the

t ~ e t t e r .Tliey should tell t h em the

future pr-ice levels R u t checlting

their rriiahility with tile I-esultsob-


4/36

tained from such deductions, we

find niucli to be desired.

W h a t

I am

explaining in this

short

Man ual should be just a

1'4ltian-well , tr yi ng

to

lead you

over to something niuch rnor~ede-

si rable and usef~i l . i le way is hard,

f ~ i l l f th orn s ancl sticlters, but wh at

rose is not

witliour tliol-ns? Tlie lit-

tle apliis tha t climbs arouild the

rose b u s h often linies will race out

tcwal-ds t h e end of a thor-n but has

to ret i -act i ts s teps , t rying to f ind

the x v y up, that leads to\.vards tlie

real juice

of

the rose bush.

Some of the coi i i l~arisons tha t

11ad

lo

be introducecl for be~ter

111

t iers tanding are somewhat rough,

some of them m ay seern to hurt

sciences of various ltiiitls and tl~eir

stiit i?nls. Howeve r, wllen tlie tru th

is involved only we don't have t o

worry . doctor who tells this pati-

ciils f r;inltly that his t~iinor

m u s t

be cut ou t, will 11i1l-t his patient.

\\ ,l lo ilon' t \~ 1 ;1 n t o be cut,

b u t

is it

no

t i

i s lolid?

Now let us go over into the big

fieid and see wh at c an be handily

seen without u psetting th e apple-

Call too

I l l l 1 ~ l l

\Vherever

we

loolc in th e econoni-

ic cycles, be I T in inclustries or in

mel-cliantlising, in real e sta te or in

stoilc anti cornmoclities mai-ke ts, we

finci ~ i l t r eriods

of

t ime we

have clefiniie trencls that lead from

: low level to a hi gh level ant1 hac k

to tlie low level again. On top we

have the saturatioii point while on

the ho t~ on l e have the desparat ion

point. C n eitller side we f i n d there-

~ t o ~ eha t we shall call an ex-

t i x~ n e . ~ i s t ike one sa lami is con-

nected with a nothe r, only separated

b y

a stri ng, so tlie cycles of prospe r-

ity a nd depl-essions iollow by i m -

mutable precision one to ihe other.

A t periotis of high prosperity

i

never has failed iliat tlie news tells

11so new era , while ; i t tlie bot-

tom o cIcsj)rl-ation everyone sees

tire illiisory big

byss

I-iglrt ~ r I-ont.

I n h : l i i i l e ive can irc;rti

i h a t

ever1


5/36

in those times they were not im-

mune of famines and of periods of

great prosperity in form of herds

and tents. I-low can we expect

somethi ng different froin this old

wcr~ld?Tlies e Aricients liad ntigllty

roitgh trea tme nts theri, are we an y

be t ter no w?

I n order

t

discover the low era

of prices i n cotiimodities or sloclts,

we have not f ar to go to recognize

tha t . I t is a t a time when stocks

sell for one eighth , not one or two,

hilt l~i lnd reds f theni . T he bet ter

situated stoclts of lar-ger coinpaiiies

whcse "outlooli" is very bright,

[nay a t such tirrles sell for three ,

foul-

01

ive dollars, those who did

parac'e between

100

a n d

200

not

many years befor-e. Flowever, why

we, the public do not buy them

tilere, is caused fit-st of all by Inclc

of ready casli. If cash

i

available

or on hanil, tiieii we are all afraid

i~

[ni ght still go lower than :lie

eighth, to notlritig.

u t

sucli is not

ca r t .

since w e milst irecognize

once and for all the idea that a

stock is just like

a

perennial plant

(flowe r) which is different froin an

arinual plant. Th e latter grows but

once

anc l

dies out completely, re-

quiring a riew seeding to g~- ow

new crop. But, wit11 perennials, we

Iiave a death of the complete plant,

except of tile root system which is

undergr-ound. And ~niild ou, such

cleatlis r perennials back to the

rooL sysleni occul-s not only on ac-

colrnt of frost s as it hap pens in the

East or- ~ni d-W est , ut those deaths

also occur w i t h those perennials

out West in California, where we

are supposed t o h a v e e t e r n a l

Spr ing. In case f r o s t s do occur

ther:, th ey al e of sliol-t duration

ancl clo not cause any deep freezes.

Consequently, heat or cold are not

the clriving force that brings cleath

to the pel-ennials Apply the same

itlea t o stoclts and co m~no diti es.

This tliouglit alone,

i f

properly

~~ntlers toocl, ust 1~lalieyou buy

wlirn 1,uncIi of s t o c l ~ell at 1/8


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Thel-e will be a tim e when we shall

see the stocks at such levels again.

By all means we must discard the

idea of new el-as of th e half-wit s.

N c w the period o f satul-at ion

i e. th e lo p levels in sroclts as well

as in commodities are not any too

Iharcl to find either, when we rnalte

pt-oper comparisons of other kinds

of l i \~es.A n outg rown tr ee can live

for a long whilt,

bul

it surely can-

not get any taller.

The same with

an outgrown man.

A

violet will

never be taller than a few inches.

A ired hot poker will nevet- be taller

than t wo feet at the mosr. Those of

2 1/2 feet ar e us ef~ ll for flower

siiows. Th us, each slack has a cer-

tain extreme height , which, when

I-eached 01- even appt-oached is a

s a f e place to cash in on and let th e

olliet-s have t he e xtr a gr avy, in case

there should be sorne. If you c a n

carry a stock frorn one eighth t o

one hundred or even only up to

f i l l y , i c i w milch profit is

lier re

in

I

C I COLII-se,am n o t sl~ealting o

hogs who are

never

satisfied with

anything and never will be Jus t for

curiosity's salte go to some library

and see that back in 1932 you could

have bought half th e stocks listed

on the exchange for one eighth

each, the same as in 1921 or 1907

01 1893 More abo ut recognizing

tops will be said furt he r on, when

I

explain about th e perfume thrown

out

of

the flowers t o a t t ract the

bees, even the bumble bees.


7/36

PART

One of th e gravest errors of busi-

ness people, of trade rs in stoclts or

con~modit ies, s the p rel~al ent dea

that an y old tim e is good enougli to

begin something, be it a business,

a

profession, or t rading, e tc . They

are of the opinion Chat as long as

they are I-eady to sta i-t , Natur e of

necessirv n-iust also be ~.eatl y o fol-

low their i wn instinct.

Nothing could be niore erroneous

t h a n t l ia t . When things go their

way the y are of ti lt opinion tliat it

u as thri r intelligence and gilts that

macle e\/erytl-iing go Iiu~il{y-do ry;

\ vI~ en l ~ i r~ g so awl-y, the y ascl-ibe

it to anything but to then~se lves :

to the weat her , the neigIi11o1-,com-

petition, pool- visibility, anything

that sountls plausible to ta ke care

of th eir h aughtin ess, ignol-ance or

other sI?or-tcomings.

I n

the very saiile way many a

prc~ ress ional har-iciles his clients.

T h ey reiiiiiitl nie very mucii of the

so-called market ietter writers

or

siinilar writers w ho hav e the ability

to appear a s if they were the only

ones upon whom the welfare of

evel-ything rests. Th ey can be as

wrong as possible, yet, the way they

write things away o r the way they

give their clien ts lozenges and pills,

plastel-s and smears, whether they

clo them a ny good or i~ot-the doc-

unientary papel-s s ay : they know

about i t If th e account get s weak-

er ancl weaker , what s the differ-

ence; there al-e plen ty of o t he r s . .

They all say: there is only one

salvation. But wIlicl1 is i t? Wh o

finds it without being first stung

by

th at fa mo us viper of tile Bible

and dies a prematul-e death him-

selT?

Itnow

of

on e of th e cleverest of

niarltrt letter writers w ho operates

for years on the same principle as

follows:

H i s

yearly earnings, as

sonleone informecl me tile other

clay, is 3 liousaiiti clollars plus. I-le

om e

i - e g~ ~ l a r l yo a certa in br-olter.


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What do you think the marl te t

will do ? he asks of the customers'

man who is merely an instrument

to fill orders. Then he consults a

certa in fun ny stri p of t he news-

paper t o see what the picture rep-

resents. If the picture shows a sor-

did face, he writes in his nest mar-

Iter analysis: the niarltet will de-

cline and builds a story around it.

Sihould the .fellow, whoever maltes

the picture, put a laughing face on

or even a Sun shine, besides, lie is

sure to write: niarltet ivi l l ~ na l t e

ga p up and will go very, vel-y fa r

u p , ecc.

B I I ~

e won'z ritlicule just one

of

those specialists; let us show

sornething a bou t the othel-s, here

ancl ihel- e. Some use trencl lines of

char t s . f the price crosses upwar ds,

they become bullish,

i f

it drops be-

low such a line, they get bearish.

Usually, Nature makes prices just

cross f ar enough L O lnalte them get

haywire . Of cour-se, ther e al-e rimes,

\vhen even tlhe d~ im be st rad er will

hit it right for once. Immediately

they

pu t

on their heacis a wr eat h of

ivy or rhododenrlron leaves. Man's

fancy goes a long way into all sorts

of bizarre ideas as to what it is that

moves the brains of the public to

want stocks or grains

or

not t o want

them. Many of them go fo r astl-ol-

o g ~nd break their brains t o malte

planets run around the Zodiac for

better or for worse just because the

Ancients have spolten about it so

much. I-lowever, they do not even

thinlc that those .4ncients were not

c l~~i i ibells .ivlio carefiilly omitted

the most important phases, upon

wliicl~ everyt hing is b ased. When

one has studied carefully some

50

or 60 texl s on as trolo gy of all

pei-iods, he g ra di~ all y ets th e idea

that something vt.1-y impel-tant is

missing. What it is can only be

gathered through stu dy of texts

which on t he silr-face have n ot t he

sliglitest llling to

lo

will1 markets

nor- with astrology ilor with anp-

thing tangible. Of su c l ~ ual i ty a re


9/36

old I'oetry, stra nge Prose work s,

Fables, Fairy Tales, and rela ted

worlts. Th e stu dy of such boolts

gives one ideas, strange feelings of

~vlr at t is a ll about , and only years

of deep study, and fol lowing out

all tlie various performances con-

tained in those stories, will gradual-

ly lead one to a path t hat is not

troclden by tlie public at all. They

do not \vant to g o sucl i ways.

t som e oth er place spealc of

letter-shifting in \vords, with out

which nothing wliatevel- can be

ac

cornplishecl in the way of foi-ecast-

ing any thin g. \L1e just take the two

words above and show what mean

by shift ing le t ters:

F a l ~ l e swe must cal l Tables;

Fail-.y -1'aIes we must call "Very

Tales" 1.e II-ue.

f

we call tables

or

fab es tlevils, we ai-e not far wl-ong

e i t l~e r .

o~ . t lc~-o explain the si tuat ion

cleal-er-, et us talte any

of

tlie Fables

of Aesop or of 1.a Fo nt ai ne. Usual-

ly

tiicy

ate anirnal stories. \Ve have

to put

a

lot of imagination to use

and express everything that is said

and done in the story into move-

ments of lines in a chart just the

way stocits o r grains produce when

we plot their price movements on

chart paper. Som e of the excited

actions, such as xvhen the great big

wolf does some naug hty work,

would be shown in our own produc-

tion as a big strong upmove in

stoclts or grains, that takes all the

little traders by surprise, who are

silting and waiting in the brolter's

offices for a reaction. Uefor-e they

realize what that wolf is

u p

to, lie

has eaten everything up (prices

went sudtlenly sky-Iligli). Before

the trader s have a chance to even

thiiilt, it's all ovel-.

In

lliat way ail

the various fables can be worked

tlirough w hich get s us t o realize

that the old Greek Aesop wasn't so

dunih after a ll and what w e so fa r

col~s ide~-eds chi ldrens s tor ies ,

have quite a ciiffel-ent meaning

a n d wi l l p rove va l ua b l e, whe n


10/36

p l o t t e d o u t i n f o r m o f l i n e s a n d a p -

p l i ed t o n i a r l ie t s

T h e n a m e d e v i l i s h e re n o t t o b e

unc l e rs t ood i n an ev i l wa y , b u t i n

a w a y w h i c h m a k e s t h e a c t o r s i n

t h e f a b l e a l w a y s d o t h i n g s w h i ch

n o r m a l l y a r e n o t e x p e c t e d .

I -le re a r e s o m e s e c r e t s a b o u t s h o r t

s w i ng t r a d i n g b y u s i n g n u m b e r s a n d

s h i f t i n g l e t te r s a c c o r d i n g l y . B u t , i t

i s ne c e ss a ry t h a t w e u se t h e G e r m a n

l a n g u ag e w h e n o p e r a t i n g a n d n o t

E ng li sl l w o r ds . I t s h o u l d b e

c o m p a r a t i v e l y e a s y f ol - y o u t o g e t

a G e r m a n g r a m m a r a n d a l s o le a rn

t h e n u m b e r s f l- o m t o 1 0 0 t h e w a y

t h e y a r e p r o n o u n c e d . M i n d y o u , i t

i s r - i i os t l y t he r i gh t p ronounc i a t i on

t h a t g i v e s t h e c u e t o w h a t i s g o i ng

t o h a p p e n . F u r e x a m p l e , w e m u s t

l tn o w t h a t t h e e n d i n g s o f t h e t e n

u n i t s , s u c h a s 20

30, 40,

50, e t c . ,

w h i c h w e a l w a y s p r o n o u n c e a s - y

a s t w e n t - y , t h i r t - y , m e a n i n G e r -

m a n

z ig .

T h u s z w a n z i g , i lr e is s ig ,

viel -z ig, e tc . No w co me s t i re secl -el :

t h i s e n d i n g z ig m e a n s i n t h e c o v -

ered Ial igu age s ic l ; . old Ger-

m a n i t w a s s i e c h , i . e , n o t w e ll .

F o r a s t o c k w h i c h s e ll s a t 37, w e

w o u ld m a k e t h e d e d u c t io n a s :

s i eben un d t l r- e i j si g . No w, i n o rde r

t o a r r i v e a t o u r f i n a l p a r t , w e al s o

m u s t m a k e a s h i f t i n t h e w o r d

s ie b en a n d t u r n i t i n t o s ie d en

w h i c h in G e r m a n m e a n s t o b oi l.

T h u s w e h a v e t h e s o l u ti o n , pr o v id -

ed w e c h a n g e t h e m e a n i n g of drei

i n t o o ul- E n g l is h t o try. Sieben

u ii d d r e i ss i g l i i e a n s t h u s : S u p p o s -

in g a s t o ~ l i e l ls a t 37 , t l i en we can,

p r o v i d e d

i t

boi l s t he r e , expec t

3

m o r e

&

t r y t h e n t h e s ic lt s i d e.

W h a t we ur iclers tani l as boi l

i n

n ~ a r - l t e t e r m s ,

we

a ll k n o w : g r e a t

a c t i v i t y , w i t h o u t g e t t i n g a n y w h e r e .

Lxt LIS t a li e a n o t h e r e x a n i p l e :

4 7 ; 40

w o ~ ~ l de p r e s e n t w i t h s o m e i m a g i -

r ia t io n t h e w o r d w u e r z i g , o r s t r o n g ;

s t r o n g w h i c h m e a n s s p ic y . T h u s ,

i t c o n t a i n s t h e i d e a o f : i f i t a c t s

sp i cy

;111il

;it

t he s ; rn i e

l i ~ i i c

f

i t

boi l s , then at l i i 1 o th al Llie s i tu a-

t ion I)econ?es sicl t ly al

5

ancl


11/36

s ickly has t l ~ eGerman meaning

,,

slch legen which means to lie

down. In case no spicy move

shows up or if it does not bail at

47,

then we h ave t o expect higher

automatically. The word fuenzig

50 ) the idea of nifty (winding i t-

self) , the word twenty contains

tlie idea of a swan wh o proud ly

sails thr ough th e poncl. 60 contains

t h e idea of sawing with a sa w set-

ting ;

thus,

61

would call for a set-

ting

a n

egg ( a gap up) and then a

sett ing itself, l'herefore, a stoclc

which inaltes sixty, and then a gap

up over

G I

which represents its egg,

is ready to sit down; i.e. close the

gap again.

T h e wor-cl two

z\vo

or zwei) I-e-

lates to the Ger man \voril Geweili

\vIiich are antl ers; thel-efore we

must expect double tops at

72

pro-

vided it maltes top; thus, a stop

\voi~Iti be rrequir-ed at 73, becaus e

Gold Nuggets for Stock & Commodity Traders - G.bayer

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Transcript of Gold Nuggets for Stock & Commodity Traders - G.bayer