Dangerous Markets
Last week the Mr. Market strutted his confusion. He was severely down several times and then recovered some. The DJI seems to be struggling back a bit, but is now at 13287.91 up almost 47.
On the precious metals, we see gold at 669.30 down 1.18 and silver at 12.74 down 0.05. That is not too bad all things considered. I saw Harmony Gold (HMY) at 9.88 (down from recent 13-14), so I scarfed up a few shares. I continue to like Harmony even with the threat of South African miners strikes. Some of the strikes have been averted for the time being.
There seems to be a growing liquidity problem in the world markets over the last few days. The central banks have increased the interest on loans between banks. This is likely to spill over into lending across the board.
Several investment funds here and worldwide have stopped allowing clients to sell their shares. This is due, in the most part, to the funds exposure to the sub-prime mortgage fiasco. The resulting damage of the housing debacle is spreading across our globe putting pressure on all debt. Here in America foreclosures are accelerating at an alarming rate. Any increase in interest rates would worsen this situation. I believe the results will be far reaching and will be felt for many months, if not years into the future.
The pressure on the dollar is growing, as well. Russia and several other central banks have reduced their dependence upon dollars by lowering the percentage of dollars held in reserve. As more join in this trend, the supply of dollars in the world will increase causing further loss in purchasing power. As each bank evaluates its position, several could consider it is time to quit the dollar. No central bank wants to be left holding a vast amount of dollars after the bail out. The result will be higher prices across the board here at home. It is wise to lower our personal and public debt before this happens.
On the political scene, we are seeing our great liberal elected officials threatening China with sanctions and quotas on exports to the United States. Remember, China holds almost 1 trillion dollar instruments. Should these be dropped on the open market, the dollar would crash over night. Of course, this would not be to the interest of China as their dollars would be losing value as well. Thus, we would hope for a long term slow dumping of dollars.
However, it is not to our interest to antagonize the Chinese and force them to retaliate by dumping a large sum of dollars. Our politicians, in their ignorance, seem determined to play with fire in this situation.
I am so thankful that we all have a God who is in absolute control of everything. It is He who made us and sustains us and the rest of creation by the power of His Son >> who is LORD over all whether one believes it or not. He is King of everything and what a great king He is. I daily praise Him that I am not in control, else all would be lost.
Best to each, Doug
On the precious metals, we see gold at 669.30 down 1.18 and silver at 12.74 down 0.05. That is not too bad all things considered. I saw Harmony Gold (HMY) at 9.88 (down from recent 13-14), so I scarfed up a few shares. I continue to like Harmony even with the threat of South African miners strikes. Some of the strikes have been averted for the time being.
There seems to be a growing liquidity problem in the world markets over the last few days. The central banks have increased the interest on loans between banks. This is likely to spill over into lending across the board.
Several investment funds here and worldwide have stopped allowing clients to sell their shares. This is due, in the most part, to the funds exposure to the sub-prime mortgage fiasco. The resulting damage of the housing debacle is spreading across our globe putting pressure on all debt. Here in America foreclosures are accelerating at an alarming rate. Any increase in interest rates would worsen this situation. I believe the results will be far reaching and will be felt for many months, if not years into the future.
The pressure on the dollar is growing, as well. Russia and several other central banks have reduced their dependence upon dollars by lowering the percentage of dollars held in reserve. As more join in this trend, the supply of dollars in the world will increase causing further loss in purchasing power. As each bank evaluates its position, several could consider it is time to quit the dollar. No central bank wants to be left holding a vast amount of dollars after the bail out. The result will be higher prices across the board here at home. It is wise to lower our personal and public debt before this happens.
On the political scene, we are seeing our great liberal elected officials threatening China with sanctions and quotas on exports to the United States. Remember, China holds almost 1 trillion dollar instruments. Should these be dropped on the open market, the dollar would crash over night. Of course, this would not be to the interest of China as their dollars would be losing value as well. Thus, we would hope for a long term slow dumping of dollars.
However, it is not to our interest to antagonize the Chinese and force them to retaliate by dumping a large sum of dollars. Our politicians, in their ignorance, seem determined to play with fire in this situation.
I am so thankful that we all have a God who is in absolute control of everything. It is He who made us and sustains us and the rest of creation by the power of His Son >> who is LORD over all whether one believes it or not. He is King of everything and what a great king He is. I daily praise Him that I am not in control, else all would be lost.
Best to each, Doug
posted by Doug @ 10:12 AM
0 Comments:
Post a Comment
<< Home