Cash Galore to Buy America

This graph (http://ww1.dowtheoryletters.com/) of gold clearly shows the formation of a triangle pattern. These patterns are moderately bullish and could become a longer term pattern of consolidation or of a break out either upward or downward. It is wise to follow the graphs and patiently wait for the decision to be made.

Gold is beginning to show some signs of strength by staying above the $800 level. The mining stocks are reluctantly following the increase in price of the precious metals. "Da-boyz" are still at work and jump in to sock gold and silver when it shows strength above the $800 level. We are amazed at the power that they wield over these markets. Some day, their influence will lessen.

Remember that we are in precious metals and the leverage provided by mining stocks for the long haul. Gold remains in a bull market. We should expect bumps in the road to higher prices and see these as buying opportunities. Mining stocks are mixed today.
The graph (www.agorafinancial.com) above shows an estimate of the foreign government Sovereign Wealth Funds (SWFs). The foreign governments with virtually unlimited funds in the currently billions of dollar equivalent are out shopping. These funds are destined to be in the trillions over time. Rather than purchase low interest T-Bills and other interest bearing financial assets, the SWFs are now purchasing American companies. Recent buys have been in financial entities. these could be bargains as many have been devastated by the bursting housing bubble. On the other hand, the purchasers have taken over investments in questionable mortgages.

New housing starts have dropped substantially. Foreclosures are growing with every passing day. Therefore, we have yet to see the end of the housing bubble problems.

Meanwhile, prices at super markets for food, clothing, and other necessities are increasing as the world have been flooded with paper currencies. The increase in prices we pay has been somewhat masked by the drop in gasoline prices and the substantial discounting by retailers during this heavy shopping season.

The price inflation remains higher than the wage inflation. Therefore, it is an early taste of the Stagflation ahead. We must keep cash readily available for continuing expenses and for unseen contingencies with which we may experience. It is also wise to lower our debt load, as servicing of debt can easily become more of a burden.

Rest in the assurance of a gracious God who gave us His Son to take the punishment that we are due. The Child of Bethlehem was sent to earth by His Father for the express purpose of dying for us. As the wonderful Christmas season continues, let each of us show our gratitude by living lives of worship of King Jesus and by working to bring ourselves, our families, our churches, and our local communities into the Kingdom of God.

Best to each, Doug