Federal Reserve Delivers Another Blow to Dollar
Well, regardless of the strong dollar rhetoric from Washington, the U. S. Federal Government is on a binge to insure the dollar remains weak. This time, as you have likely heard, the interest rates reduction was 1/4%. That is a bit more conservative than the panic 1/2% cut the last time the FOMC struck the dollar downward. This will not correct the sub-prime and other mortgage problems.
Gold hit $800 an ounce for the first time since 1980. The hidden fact is that gold, as reported in the Houston Chronicle today, adjusted for inflation since 1980 should be in the $2000 range at present. Without the manipulation of the price by the cartel and other interested parties, it would be approaching that now.
Even at $800, gold is attracting more attention. It may be soon that the lemmings begin to climb aboard. With all the access to news on the Internet, one would think that more people would be interested in the precious metals. However, the general public continues to ignore both the pitiful plight of the dollar and the rise in precious metals. Even the Exchange Traded Funds for precious metals which have sprung up over the last two or so years has not brought the general public to awareness. It will come though!
Silver is gaining, too. I saw it last week at about 14.55. It is now at 14.16 and gold is 791.60. These are overnight trading prices. Gold closed in New York today about 788. Even that is not too shabby considering that it was bouncing around 750-760 a couple of weeks ago. As www.kitco.com reports gold is up 62.60 8.58% over 30 days ago and up 175.50 28.48% over a year ago. That is a significant increase. Would that we could continually make those percentages on all our investments.
The mining stocks are responding nicely. However, we must always remember that this is the result of the debasing of the dollar. This time around, there is the factor of increased demand from China and India. It is not unlikely that gold will top $1000 late this year or early in 2008.
Oil is steadily climbing, closing today about 95 per barrel. This will be reflected in the pumps before long. I do not understand why gasoline remains mostly less than $3. I found the pump prices in Alabama and Florida around 2.77-2.82; Mississippi about 2.76-2.79; Louisiana 2.72-2.76; and Texas as low as 2.65. Perhaps, the supply on hand was purchased at the lower prices of a few weeks ago. Beware that any interruption of supply in the mid East will drive the pump prices to above $4 or $5 overnight. Keep you tanks full at the current low prices.
The DJI industrials took a real heavy hit today dropping over 300. the general market is a dangerous place. Stick with mining, defense, and natural resource stocks. Water is becoming more dear. You might consider the PHO which is an ETF concentrating in water suppliers.
The Euro has broken the 1.45 barrier and seems destined to reach 1.50 as the dollar declines. Foreigners are shying away from dollars. The movement is small at present, but it seems to be building. Therefore, it will be more difficult to continue our spending binge without further paper printing or electronic creation of more dollars out of thin air. All such increase in supply of dollars is true inflation which will result in greater increases in price inflation.
Talk about being nestled on the horns of a dilemma. The Fed can take a strong policy of lower inflation and higher interest rates to shore up the dollar and kill the moderate growth in the economy forcing at minimum a recession or can continue the course of easing while destroying the dollar. Either course has dire consequences.
Well, I am home from travels for a while and glad to be here. It is amazing how nice it is to leave on a trip, specially when visiting family, but it is equally nice to return home. Both ways are a joy and blessing of the Lord our God.
Speaking of the Lord, I trust that you attended corporate worship on the Lord's Day. If not, you missed on a foretaste of the fellowship all believers will share in Heaven. Of course, unbelievers will not be privileged to the great blessing of being with the Lord forever. Our time on earth is but short. The Bible says that we are like the grass that grows for a time and then wilts and dies. This is so true! What is life on earth, compared with eternity in Heaven with the Lord. It is nothing to be grasped. Consider this, and look to the Lord through His written word for us.
Best to each, Doug
Gold hit $800 an ounce for the first time since 1980. The hidden fact is that gold, as reported in the Houston Chronicle today, adjusted for inflation since 1980 should be in the $2000 range at present. Without the manipulation of the price by the cartel and other interested parties, it would be approaching that now.
Even at $800, gold is attracting more attention. It may be soon that the lemmings begin to climb aboard. With all the access to news on the Internet, one would think that more people would be interested in the precious metals. However, the general public continues to ignore both the pitiful plight of the dollar and the rise in precious metals. Even the Exchange Traded Funds for precious metals which have sprung up over the last two or so years has not brought the general public to awareness. It will come though!
Silver is gaining, too. I saw it last week at about 14.55. It is now at 14.16 and gold is 791.60. These are overnight trading prices. Gold closed in New York today about 788. Even that is not too shabby considering that it was bouncing around 750-760 a couple of weeks ago. As www.kitco.com reports gold is up 62.60 8.58% over 30 days ago and up 175.50 28.48% over a year ago. That is a significant increase. Would that we could continually make those percentages on all our investments.
The mining stocks are responding nicely. However, we must always remember that this is the result of the debasing of the dollar. This time around, there is the factor of increased demand from China and India. It is not unlikely that gold will top $1000 late this year or early in 2008.
Oil is steadily climbing, closing today about 95 per barrel. This will be reflected in the pumps before long. I do not understand why gasoline remains mostly less than $3. I found the pump prices in Alabama and Florida around 2.77-2.82; Mississippi about 2.76-2.79; Louisiana 2.72-2.76; and Texas as low as 2.65. Perhaps, the supply on hand was purchased at the lower prices of a few weeks ago. Beware that any interruption of supply in the mid East will drive the pump prices to above $4 or $5 overnight. Keep you tanks full at the current low prices.
The DJI industrials took a real heavy hit today dropping over 300. the general market is a dangerous place. Stick with mining, defense, and natural resource stocks. Water is becoming more dear. You might consider the PHO which is an ETF concentrating in water suppliers.
The Euro has broken the 1.45 barrier and seems destined to reach 1.50 as the dollar declines. Foreigners are shying away from dollars. The movement is small at present, but it seems to be building. Therefore, it will be more difficult to continue our spending binge without further paper printing or electronic creation of more dollars out of thin air. All such increase in supply of dollars is true inflation which will result in greater increases in price inflation.
Talk about being nestled on the horns of a dilemma. The Fed can take a strong policy of lower inflation and higher interest rates to shore up the dollar and kill the moderate growth in the economy forcing at minimum a recession or can continue the course of easing while destroying the dollar. Either course has dire consequences.
Well, I am home from travels for a while and glad to be here. It is amazing how nice it is to leave on a trip, specially when visiting family, but it is equally nice to return home. Both ways are a joy and blessing of the Lord our God.
Speaking of the Lord, I trust that you attended corporate worship on the Lord's Day. If not, you missed on a foretaste of the fellowship all believers will share in Heaven. Of course, unbelievers will not be privileged to the great blessing of being with the Lord forever. Our time on earth is but short. The Bible says that we are like the grass that grows for a time and then wilts and dies. This is so true! What is life on earth, compared with eternity in Heaven with the Lord. It is nothing to be grasped. Consider this, and look to the Lord through His written word for us.
Best to each, Doug
posted by Doug @ 7:50 PM
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