More Trouble for Dollar - Precious Metals Languish
The following is Tuesday's report on Monday's official statistics from Daily Pfennig (pfennig@everbank.com), a free newsletter.
"Existing home sales dropped .3% during the month of May, to 5.99M, the lowest level since June 2003. Inventory of homes for sale rose 5% to 4.43M which is 8.9 months of supply - the highest level since June 1992. More importantly, prices dropped another 2.1% year on year which doesn't bode well for homeowners who need to refinance. The data released today will be more bad news for the housing markets. New Home sales are expected to be down 6% after last months surprising 16.2% gain. As Chuck pointed out in May, last month's data was just a one hit wonder and now the markets can move back into the realistic assumption that the housing slump will last into next year."
These statistics should impact negatively on the dollar and positive on precious metals. Funding of the deficit and borrowed funds will be made with an paper increase in the supply of the unbacked dollars, if ever. Of course, we could renege our federal debt or devalue the dollar.
It is strange that the dollar is preferred over the precious metals in the market place. It had been the ONLY reserve currency for many years and people remain comfortable with it. In the currency markets, the Canadian Dollar, Swiss Franc, Euro, Chinese Yuan, and several other paper currencies have increased in value against our dollar. Thus, internationally the dollar has lost purchasing power, but remains a preferred currency.
On the inflation front, it seems that the statistics from the government continue to understate the price inflation. This is obvious to me when I price airline tickets (weeks ago my tickets were running around $200 and now they can be up to $300), gasoline remains around $3, and food (e.g. good apples were about $0.89-$.99, now often $1.29). These samples fail to reflect the increased cost of home and medical insurance, prices of medications, medical bills, and school tuition and books. Much of this is not included in the government rendition of inflation, but they are expenses we must pay.
I have been buying Exeter Resources (XRA) in the $3.21-$3.25 range. You might want to take a look at it. I believe that we will see much higher prices in the precious metals and mining stocks in the not too distant future. Gold is currently $643.50 down $7+ on the day. To me, it is yet another buying opportunity.
Base your investments on your risk tolerance. Examine fundamentals of the companies and their products or services. Observe technical analysis for timing. To do this, one must study investment techniques diligently. Then make your plans, commit them to the Lord, put the plans into action, trust the Lord for the results and greatly praise Him for each result whether you see it as profitable or not. Learn from mistakes and seek to avoid them in the future.
Best to each, Doug
"Existing home sales dropped .3% during the month of May, to 5.99M, the lowest level since June 2003. Inventory of homes for sale rose 5% to 4.43M which is 8.9 months of supply - the highest level since June 1992. More importantly, prices dropped another 2.1% year on year which doesn't bode well for homeowners who need to refinance. The data released today will be more bad news for the housing markets. New Home sales are expected to be down 6% after last months surprising 16.2% gain. As Chuck pointed out in May, last month's data was just a one hit wonder and now the markets can move back into the realistic assumption that the housing slump will last into next year."
These statistics should impact negatively on the dollar and positive on precious metals. Funding of the deficit and borrowed funds will be made with an paper increase in the supply of the unbacked dollars, if ever. Of course, we could renege our federal debt or devalue the dollar.
It is strange that the dollar is preferred over the precious metals in the market place. It had been the ONLY reserve currency for many years and people remain comfortable with it. In the currency markets, the Canadian Dollar, Swiss Franc, Euro, Chinese Yuan, and several other paper currencies have increased in value against our dollar. Thus, internationally the dollar has lost purchasing power, but remains a preferred currency.
On the inflation front, it seems that the statistics from the government continue to understate the price inflation. This is obvious to me when I price airline tickets (weeks ago my tickets were running around $200 and now they can be up to $300), gasoline remains around $3, and food (e.g. good apples were about $0.89-$.99, now often $1.29). These samples fail to reflect the increased cost of home and medical insurance, prices of medications, medical bills, and school tuition and books. Much of this is not included in the government rendition of inflation, but they are expenses we must pay.
I have been buying Exeter Resources (XRA) in the $3.21-$3.25 range. You might want to take a look at it. I believe that we will see much higher prices in the precious metals and mining stocks in the not too distant future. Gold is currently $643.50 down $7+ on the day. To me, it is yet another buying opportunity.
Base your investments on your risk tolerance. Examine fundamentals of the companies and their products or services. Observe technical analysis for timing. To do this, one must study investment techniques diligently. Then make your plans, commit them to the Lord, put the plans into action, trust the Lord for the results and greatly praise Him for each result whether you see it as profitable or not. Learn from mistakes and seek to avoid them in the future.
Best to each, Doug
posted by Doug @ 9:39 AM
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