Central Banks "Sell" Gold

The following is another example of Central Banks intervention in the gold market to depress the price of gold. Most often the sale is from one bank to another, but the action does keep a cap on the price of gold. We may have to wait until after the election and on into December before the cap is released.

"Resource Investor: Central banks quicken pace of gold sales

Submitted by cpowell on 09:55PM ET Wednesday, September 20, 2006. Section: Daily Dispatches

By Jon A. Nones
Resource Investor
Thursday, September 20, 2006

ST. LOUIS -- The European Central Bank reported yesterday that three central banks in the European Gold Agreement (EGA) decreased holdings by EURÂ 499 million ($633 million) in the week ending September 15. At today's gold prices, this totals 33 tonnes and puts Septembers gold sales at 40 tonnes so far.

"It's becoming clear that my suspicion of central bank selling is indeed a major factor behind the recent gold decline," said Peter Grandich, editor of The Grandich Letter in a note today.

.... For the full story:

http://www.resourceinvestor.com/pebble.asp?relid=24013"

In the meantime, DROOY is below 1.30 this morning. That to me is a good time to buy. I did buy more yesterday at 1.28. It is up to you as to your need for more mining stock investment.

Gold is trading at 578.60 now. Silver at 10.68.

It is always an interesting time in the markets. Some day the market forces will again take charge, but for the time being, intervention is the major influence on the market.

Oil prices are down and look to stay down for a time. Exploration has increased and the new deep well in the Gulf looks add substantial supply. Without interruption of delivery, we will likely be in for a time a lower prices. Some are predicting $30 oil. Possibly?????????

Put your trust in the Lord, not in man. Keep looking upward for security.

Best to each, Doug

Gold on Hold Until After the Election?

This is an election year. As we all know, everything possible is being done to aid those in office to hold their positions of power. After all, is that not the reason they ran and continue to cling to office? Power does corrupt!

The price of gold seems to be "on hold" until after the election. As we consider the loss of purchasing power of the dollar, it is apparent that gold should be somewhere around $800-$900 per ounce. Why isn't it up there now? Perhaps, the following from GATA will give some insight.

ROB-TV sponsors 'The Great Gold Debate'

"For an hour Tuesday Canada's Report on Business Television sponsored "The Great Gold Debate" between our hero, John Embry, chief investment strategist for Sprott Asset Management in Toronto; Paul van Eeden, the well-known gold market analyst and president of Cranberry Capital; and Stephen Hochberg, chief market analyst for Elliot Wave International.

The most telling parts of the program may have been when Embry read one of the several official confessions of the gold price suppression scheme, the speech of William R. White of the Bank for International Settlements, delivered to a BIS conference in June 2005, wherein White identified suppressing the price of gold as one of the five primary purposes of international central bank cooperation:

http://www.gata.org/node/4279

Whereupon van Eeden and Hochberg insisted again that there is no evidence of central bank intervention against gold. . . . Anyway, you can watch "The Great Gold Debate" for a week at the ROB-TV archive here:"

http://www.robtv.com/shows/past_archive.tv

I suggest you check out the web sites and see for yourself. Now let's look at gold over the last 24 hours. The high of $583 was reached yesterday morning at 10:07 and the low of $571.60 later yesterday at 5:39. It is now at $581.40. Silver over the same period hits its high of $11.11 at 10:16 yesterday and the low of $10.67 early this morning at 6:41. It is now at $11.08. A year ago today, gold was at about $470 and silver was at about $7.50. Even with the recent set back, that is not too shabby an increase.

My two favorite silver stocks are Silver Standard (SSRI) and Pan American Silver (PAAS). I prefer SSRI, but have December Call options on PAAS. Current prices on mining stocks are as follows: BGO 4.63, CBJ 3.66, CDY 1.34, CEF (bullion) 8.06, DROOY 1.29 (Remember, I bought more of this the other day at 1.30 and I have a buy in now at 1.28), EGO 4.13, GSS 2.69, HMY 12.11, IAG 8.88, KRY 2.91, MRB 2.97, NEM 43.96, NTO 3.77, PAAS 18.59, QEE 0.30, RNO 2.10, SSRI 21.40, XVE 8.90.

My plan is to hold all for the long term. After all, the long term trend for the precious metals is upward. Nothing has changed about the shaky fundamentals against the dollar. Thus, the dollar remains on the downward path with some upward spurts along the way. Even the manipulated and massaged economic reports from government will not prevent the fall of the dollar. As the dollar loses purchasing power, it will take more dollars to buy the precious metals and mining stocks. At some point in time, the manipulators will run out of steam and the market will take over. Anyway, where else can one find safety for his investments?

Richard Russell suggests holding some Treasury Bills as protection against the early phase of a potential recession. This should be a wise move. Remember that governments and central banks abhor recessions or depressions. To them, both are 4-letter words to be avoided at all cost. Thus, both will desire to inflate the supply of unbacked paper currency to prevent either. This action will insure lower purchasing power of; for example, the dollar.

I remain thankful that the sovereign Ruler of all is firmly in control, and rest in the fact that He works all things together for the eventual good of His people. What a blessing it is to belong to the family of God and to serve the Lord Jesus Christ.

Best to each, Doug

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

Happy days are here again!

Wow! DROOY at 1.30. That is a buy in my book, so I put in the order and made the purchase.

Yes, gold is off to $577, and it could go lower. Will it? I don't know, but I do know that it will go upward long term and I like it at this price.

There is news on another merger. IAMGold and another, but I forgot the other's name. More will come as the gold industry consolidates; that is, the larger ones want to get larger and the smaller ones enjoy the opportunity for better financing.

The dollar is due to continue its decline. All are hoping for a slow decent, but at some point in time it could be a fall. Interest rates have been raised in some Asian and European countries which will put more downward pressure on the dollar. To preserve wealth in this environment, the precious metals are the safer way to go. In event of a recession or depression, dollars will be important until the Fed opens the spigots and lets the dollars flow as water. Then the precious metals and mining stocks will move upward. It will happen! When is the big question.

Best to each, Doug

Happy Days are Here

Confusion Everywhere

Folks this is a nasty market. Gold has done us in the last few days. For the last 24 hours, it has been as low as $582.70 about noon today from a high of $598.90 yesterday at about 11:50 last night. Silver went from a high of $11.35 yesterday afternoon to a low of $10.93 this evening at 8:16. We have really taken a hit on both precious metals. That is never fun! Today gold broke below its 40 day moving average which is more bad news. Will it go lower?

I don't know, and as the other commodities are also dropping, we may be headed into a recession/depression. In that case, even the paper dollar could fare better in the short run.



The 1-Year Gold Chart still shows the gold bull market intact, but it has taken a real blow. Long term, I am not concerned, but it is nasty now for the near term. Of course, we are looking forward to a typical surge in prices in the fall and winter. It maybe a bit later this year. Hopefully, this will materialize.

The reports on our economy are not good either. Optimisticly, many are looking for a "soft landing" of the housing market which has been the source of much of our consumer spending. It is expected that the FOMC will leave interest rates alone in September.

Speaking of the FED, there is a bias in the FED and the USG toward inflation rather than suffering recession or depression. In fact, these are both four letter words to those in "power" and they will take whatever means they see as necessary to delay either of these. That means as the economy slows more, there will be another expansion of the unbacked dollar.

It may be a good time to think of money market funds which are readily accessible for the immediate future. Even at 4+ %, these returns are better than twiddling the thumbs.

By the way, I am not selling gold or mining stocks. My friend, Kenneth Coleman (The-investmenttracker.com), sold Bema Gold (BGO) with the dropping prices. I did not and do not intend to do so even though I am more of a trader than he.

The Lord knows the future and we can only use "educated" guesses about it. Rest in Him and trust in Him. He will always care for His people. Be sure you are His!

Best, Doug

Gold Below $600!

Gold this morning is currently at $593.70. Has the bull market in gold ended? I believe that it HAS NOT! However, the precious metal is providing yet another opportunity to add to our portfolios. The fall/winter upward trend seems to be a bit delayed, but I believe it will kick in shortly.

This bull market in gold is very young at about five or six years. Therefore, I will be looking to buy in this price range. The mining stocks may open lower providing the opportunity to add to our holdings. The opening should be watched with eagerness.

Silver at $11 may allow more additions to our silver stocks (PAAS & SSRI). Both have been holding well above $20 for a while.

Long term, as we should think, the dollar will continue downward and the price of precious metals and likely, all commodities will move higher in terms of dollar cost. If/When the Chinese establish the Asian currency, the dollar will take another big blow.

Last week, the dollar gained some strength. However, I believe this will be short lived. Expect the CPI this week. Remember though, it is highly mis-managed and manipulated to give a favorable impression. In fact, it is nonsense even though the market reacts to it.

Carefully search and look for opportunities to add to your holdings. Study and make your own decisions. Commit them to the Lord, move out prayerfully, and wait for Him to provide the success.

Best to each, Doug