Thoughts on Markets

Friday, February 03, 2006

Gold Coasting at Higher Level

Gold posted a new 25 year high in Asia at over $575. Then, according to Kitco.com, it hit a high of $574.90 on February 2nd at 10:37 a.m. NY time. The low for the last 24 hours was $567.60 at 8:43 a.m. today. For this period it has traded above $570 except for three short dips below. It now looks to be going a bit lower, but still well above $560. Silver is down some for the day at $9.66.

There is an ongoing gun battle between the German Finance Minister and the Bundesbank about the sale of some of the bank's gold reserve. The minister wants some gold sold and the funds invested to bring the interest into the government coffers. The bank does not want to sell and seems inclined to take the matter to the EURO central authority. We will have to watch this situation and see who wins. The outcome may temporarily impact upon the price of gold.

Our DRDgold (DROOY) continues to trade around $1.70. To me that is not a bad buying range, particularly for those without mining stocks. The mining stocks are not yet jumping up in concert with gold, but seem to be holding at higher levels this year.

The Central Fund of Canada LTD. (CEF) is trading around $7.60. It more closely tracks with the price of precious metals. This is because it is invested primarily in bullion gold. I like this fund and hold some shares. It is more conservative than the mining shares, but will not give the leverage of the mining shares as gold continues to rise in price.

This report is always written to report what I am doing in the markets and to encourage you to educate yourself and make your own decisions. As always Buyer Beware.

There is not much news for the currencies. The EURO has returned above $1.20, but is not moving up much higher at present. The dollar is holding in spite of the government pushing for the Chinese to let the Renminbi float. The rhetoric from our government supports a stronger dollar, but the pressure on the Chinese is for a lower dollar. Perhaps, we would have a better understanding were the politicians to speak the same from both sides of their mouths. Of course, that is wishful thinking. They never do!

Once again, we are headed into a weekend. I pray that each of you will joyfully attend corporate worship of the Lord Jesus Christ. Fellowship with Christians, particularly, in worship is a foretaste of the heaven we will enjoy when the Lord calls us home.

Best to each, Doug

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