Gold Bounces Around
For the last 24 hours, gold has bounced between a low of about 711.25 to a high of about 721.10. Thus, it has again threatened the 2006 high of 728.18. It has had every opportunity to exceed that high, but is yet to accomplish the climb fully. Once it does, we can expect it to go higher. Today, it could be waiting for the decision on interest rates. Meanwhile, let's look at different areas.
October crude was up 1.47 to a new all time high of 80.57 yesterday. Goldman Sachs predicts it will be 85 this year. That should put a further damper on consumer spending. More expense at the pumps and for heating will give less spending dollars in the hands of consumers. Retail sales should suffer as a result, because many consumers are maxed out on credit.
Speaking of consumers, how about the run by consumers (depositors) on London's Northern Rock! It is reported that police were called in to keep peace as the mobs stormed the bank to redraw their sterling cash. This should remind one of the history of the "great depression" here in the 1929-1930 era. Why does this happen?
It's due to the fractional banking system which allows banks to create currency out of thin air. They are required to hold only a small portion of deposited cash to cover the required reserve percentage. The rest can be loaned out. Thus, they have more currency to lend than actually on hand. They succeed at this until there is a run on the bank and depositors discover that there is not enough paper currency to pay off ALL depositors. First come, first serve. To save the banks, more of the currency is pumped in by the central bank, the amount of withdrawal is limited for the depositors, or withdrawals are only allowed over time. Any such "remedy" penalizes those with deposits in the bank. Those early to the bank at the first hint of problems, get their full deposited cash back. The later folks do not. I pray that this does not happen here.
Most Americans depend upon the Federal Deposit Insurance Corporation program to cover their deposits. Believe me, there are many more dollars on in depositors' accounts than can be covered by the FDIC. Last I heard, it was about $0.05 on the $1. It is likely much less now.
Of course, the bank run in London is fall out of the serious housing bubble collapse in Britain. It is apparently worse than here for the time being. Ours in not over either, though!
The mining stocks are slow to catch up with the price of gold. We should also notice that silver is lagging behind the run up in gold, as well. Gold is down to 713.70 as this is written. It seems to be in a consolidation period which is likely to be followed by another upward surge. The question is when? Our patience is once again being tested.
Remember that all is in the hands of THE Lord of all. His are really the good hands protecting and giving peace to His people.
Best to each, Doug
October crude was up 1.47 to a new all time high of 80.57 yesterday. Goldman Sachs predicts it will be 85 this year. That should put a further damper on consumer spending. More expense at the pumps and for heating will give less spending dollars in the hands of consumers. Retail sales should suffer as a result, because many consumers are maxed out on credit.
Speaking of consumers, how about the run by consumers (depositors) on London's Northern Rock! It is reported that police were called in to keep peace as the mobs stormed the bank to redraw their sterling cash. This should remind one of the history of the "great depression" here in the 1929-1930 era. Why does this happen?
It's due to the fractional banking system which allows banks to create currency out of thin air. They are required to hold only a small portion of deposited cash to cover the required reserve percentage. The rest can be loaned out. Thus, they have more currency to lend than actually on hand. They succeed at this until there is a run on the bank and depositors discover that there is not enough paper currency to pay off ALL depositors. First come, first serve. To save the banks, more of the currency is pumped in by the central bank, the amount of withdrawal is limited for the depositors, or withdrawals are only allowed over time. Any such "remedy" penalizes those with deposits in the bank. Those early to the bank at the first hint of problems, get their full deposited cash back. The later folks do not. I pray that this does not happen here.
Most Americans depend upon the Federal Deposit Insurance Corporation program to cover their deposits. Believe me, there are many more dollars on in depositors' accounts than can be covered by the FDIC. Last I heard, it was about $0.05 on the $1. It is likely much less now.
Of course, the bank run in London is fall out of the serious housing bubble collapse in Britain. It is apparently worse than here for the time being. Ours in not over either, though!
The mining stocks are slow to catch up with the price of gold. We should also notice that silver is lagging behind the run up in gold, as well. Gold is down to 713.70 as this is written. It seems to be in a consolidation period which is likely to be followed by another upward surge. The question is when? Our patience is once again being tested.
Remember that all is in the hands of THE Lord of all. His are really the good hands protecting and giving peace to His people.
Best to each, Doug
posted by Doug @ 10:46 AM
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