Gold still not back!

The chart is from www.The-Privateer.com. Check out the web site to see what is offered there. I have profited from their newsletter for years.

We are still in a correction in the precious metals and most commodities. Gold will have to disassociate from the base metals and go it alone with other precious metals before there will be any significant upward move. The long term bull market in precious metals remains intact, though somewhat wounded.

Remember, the dollar is without backing except by the full faith and credit of a nation which has debt never before seen on the face of the each. In fact, were the USG a business organization, it would have already been in bankruptcy. The external debt is increasing in excess of $800,000,000,000 this year alone. How long will foreigners continue to support this debt?

More important is the fact that the dollar remains, for the time being, the major reserve currency for the world. We have enjoyed this status since WW II. That is the reason we have been able to live off of the savings and good benevolence of the rest of the world. The EURO has and continues to make some inroads into this status and that trend will continue. We have seen Russia, some of the Asian nations, and others lower their dollar reserves replacing them with EUROs.

China is growing and in the not too distant future may establish their Yaun or an Asian equivalent of the EURO as the reserve currency for Asia. That will deal another big blow to the dollar.

Thus, it becomes more and more important for me, and likely for you, to preserve purchasing power using precious metals and mining stocks. For the time being both gold and silver are lower than they were a few weeks ago. Gold at $580 (up from recent lows below $560) and silver at $10.85 seem quite cheap to me.

The mining stocks are responding to the present upward move of gold. I bought DROOY at $1.30 last week and it is now $1.34, still a nice price, but up a bit. Most of the mining stocks are up this morning. By the way, I did not sell any during this correction. Almost all of mine have been purchased for the long haul.

Were we to have a recession resulting from the deflating housing boom, a few dollars and Treasury Bills would be a wise holding. Of course, if/when the recession comes, the Fed will abhor any down turn and will inflate the dollar supply. Then the inflation will return with a vengeance.

As always, look to the Lord, not man or government, for protection and security. He is in control and moving all things for the eventual good of His people. Be sure you are one of His.

Best to each, Doug