European Economy Growing Steadily

From the Daily Pfennig (dpfennig@everbank.com) this morning:

"An article in the Financial Times earlier this week illustrated just how bright the future looks for the Euro zone:

"The euro zone's underlying growth prospects have taken a lasting turn for the better, the International Monetary Fund's chief economist has argued, in comments that could increase the pressure on the European Central Bank to make a similar judgment call.

The strength of the economic upswing in the 13-country region continued to surprise, said Simon Johnson. Current estimates of its "potential" growth rate - the pace at which it can expand without creating excessive inflation - might be too conservative, he added. "My guess is that potential growth is up a bit, and my guess is that it is down a bit in the US." Europe had undergone a long restructuring process, "which is really paying off".""

Europe continues to prosper, particularly in comparison with America. Thus, the Euro is growing while the dollar continues its long term decline in purchasing power. In dollar terms, gold is up $2.50 today at $650.40, and silver is at $12.44.

The mining stocks are recovering, too. Looking at them >> AGXM 1.39;CDY 1.90; CEF 9.15; DROOY 0.7395; EGO 5.97; GFI 15.61; GSS 3.70; HMY 14.36; IAG 7.66; KGC 11.66; KRY 4.20; MRB 4.4095; NEM 38.95; NTO 5.73; PAAS 26.53; RNO 4.95; SSRI 34.6725; XRA 3.83. This week, I bought Exeter Resources (XRA) at 3.22. It was depressed for a while and is still down some from recent high of 4.21 on June 18th. It seems a minor holding of the company was under political pressure.

We may see further corrections along the way, but long term, the precious metals look great to me. In fact, one could consider further purchases.

Keep your eyes upon our Lord and Savior Jesus Christ. Serve Him and be a good witness for Him with all of your being.

Best to each, Doug

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

Precious Metals Looking a Bit Better

Both gold and silver took a big hit on June 7th and recovered some last week. The 30-Day Gold chart is much more positive than the 30-Day Silver chart. As this is written, gold is at 650.30 and silver at 12.88. Neither is showing any substantial upward pressure.

Looking at the mining stocks, we find AGXM @ 1.39; CDY 1.76; CEF 9.166; DROOY 0.744 (up 0.0047); EGO 5.96; GFI 16.35; GSS 3.70; HMY 14.55; IAG 7.66; KGC 12.4125; KRY 4.27; MRB 4.311; NEM 38.95; NTO 5.4575; PAAS 37.32; RNO 4.99; SSRI 35.51; XRA 3.25. All are down a bit with the exception of DROOY which is up only slightly. Most are in a good buying range, if you have the stomach for such. But BUYER BEWARE!

I'm back after a profitable and enjoyable business trip. Summer is travel time for me as I have less obligations here at home.

I trust that you had a great time of worship and fellowship with a Christian body. What a joy it is to worship and fellowship with those of the faith of Abraham! God is gracious and gives us this foretaste of Heaven. It is so great to glorify God and enjoy Him forever.

Best to each for this new week, Doug

Central Banks Begin a Cut Back in U. S. Dollars

Good Lord's Day morning. I trust that each of you is preparing to join in corporate worship. That should be a very important part of your weekly activities. The Lord requires it!

The central banks of the world have cut their holding of the dollar. This first indication is very small in comparison with their total reserve holdings. It is; however, a turn from what has been normal for many months and years.

Also, Mr. Putin is rattling the saber again, since the U. S. is violating the terms of the treaty to reduce placement of troops and strategic weapons closer to Russia. The threat is real, and unless the U. S. backs off, we will be in yet another cold war. That would mean an arms race which we cannot afford. Of course, the U. S. is on a spending binge presently which we cannot afford without creating trillions of dollars out of nothing and destroying the purchasing power of the dollar.

The manipulated consumer price index was published this week showing little to no price inflation. Of course, none of us have noticed any price inflation, have we? Fuel, food, and utilities continue to climb. Added to that is the recent increase in long term interest rates which have put more pressure on the price of houses. Thus, it is taking more dollars to service much of the debt that we are carrying.

Gold has returned a bit this week and closed at $654.50 -- up for the week. Even the mining stocks have responded with higher prices. I reported purchases of DROOY last week. The closing price was above my cost already. I look for opportunities to buy ounces of gold and mining stocks. Silver is looking good, too!

I will be out of pocket for most of the week, but will try to update on Thursday or Friday.

Get on to worship service. Best to each,

Doug

Buying Opportunity? Only maybe!

With the price of precious metals drifting downward, it may be a buying opportunity for some. One can either add to or acquire some mining stocks at prices below those of recent weeks.

I have been adding more shares of DROOY at about $0.71-0.72. My purchases have been for only a few shares to lower my average cost. DROOY is still trading around the same range. It does not appear to be a no holds barred buying opportunity yet. So don't sell the farm to climb on board.

We do have more of the slower summer months ahead. Precious metals usually languish this time of year until the fall. However, many places in the world today are very volatile and could cause sudden fear driving the prices unseasonably high. Just be on guard for this, as well.

The general markets here and abroad are showing signs of weakness this week. While some of the indicators this week and Greenspan's comments restored a bit of strength today, I don't trust the prevailing sentiment that the upward movement of the markets will last forever. While the average individual investors seem to be hesitant to jump in, the funds and "big money" are still fueling the markets. The liquidity abounds.

The abominable immigration legislation has been put off for now in spite of the White House insistence that it pass. It will raise its ugly head again, so beware and watch for it.

Rest in the Lord and His judgment for true peace and security. After all, it is He who has made us and He who rules everyone and everything that happens.

Best to each, Doug

The 60 Day Gold graph from Kitco is a nasty technical picture. The positive "W" at the end of May has detiorated and the lower highs seem to be continuing. Notice, too that there is a series of lower lows, as well.

A look at the 1 Year Gold graph gives a different picture. It clearly shows that the longer term bull trend is still in place. We must always look to the long term trend, else we will make mistakes. Certainly, the 60 Day graph yields a different short term picture and the price of gold may drop farther during the summer. This is a period of time when the price of precious metals goes lower.

Depending upon your reserve cash and the present percentage of precious metals and mining stocks in your portfolio, we could be approaching a time for placing more dollars in these assets.

Gold is currently down to $667.90. However, that is still above the recent lows. But it is not exciting for the time being.

Keep looking up to the Lord and focus on the long term trend which shows the dollar will be lower and the precious metals will be higher in price in terms of the depreciating dollar.

Best to each, Doug

More Pressure on the Dollar

First, China, then Kuwait, and now Syria has unpegged its currency from the dollar to a basket of currencies. Of course, Kuwait and Syria are small players in the currency scheme of the world, but these appear to be the first small steps in what may become significant. The latest news indicates a possibility that the U. A. E. may be the next to jump on the life boat of escape from the sinking dollar.

This bodes well for the precious metals and mining stocks. Gold is currently at $671.30 and silver at $13.74. Both are up considerably from their recent lows. The last trades on some of our mining and precious metals stocks are, as follows: AGXM 1.39; CDY 1.95; CEF 9.28; DROOY 0.8463; ECO 6.08; GPTC 0.05; GSS 4.08; HMY 14.77; IAG 7.64; KGC 13.52; KRY 4.44; MRB 5.02; NEM 41.73; NTO 5.74; PAAS 29.25; QEE 0.1531; RNO 5.28; and SSRI 38.66.

Note that between our two silver miners, SSRI is now priced above PAAS. Though this has been true for some weeks now, it was not true several months ago. Interesting, and I wonder if there was a turn around after SSRI converted some of its cash into silver months ago. Possibly it is a better run company which is more profitable now.

Almost all of the major indexes for the US markets continue to confirm a bull trend. In fact, we are experiencing a bull run in most markets of the world. While all are on the upswing, all are historically over priced in terms of fundamentals and dividend yield. But this does not slow them down. This is very likely a world wide ballooning. It appears very likely to continue for the time being. The exuberance is world wide. Historically, all balloons have burst. The question is always, "When?" Time will tell, but be prepared by using trailing stops on any general market stocks you own.

This does not yet seem to be the third phase of the general market run up. However, there are many hot spots in the world which could trigger an over night plunge. The rhetoric of Putin against the Bush and Blair have heightened the potential of a new cold war. Iran is also saber rattling while the US has moved task forces into the Persian Gulf. Any escalation of these threats could drop the markets over night.

The world in general and the financial world in particular is always interesting. Each generation feels that it has the greatest threats to security or the greatest potential for profit.

We can plan carefully and rest in the Lord for safety and success without the worry of unbelief. I sincerely hope and pray that each of you is a new creature. If not, get on your knees before the Lord Jesus Christ and ask Him to make you a new person. Read the Bible daily to learn more of Him and what He expects of you.

Best to each, Doug

International Markets on a Big Run

The DJI bull market was confirmed yesterday by S&P 500 and the Transportations. Virtually all international general markets are running very hot. Though the markets appear to be overbought by most standards, they continue to achieve loftier heights. There is money to be made, but one must play it very carefully. Beware that though this trend may well continue longer, the third phase; that is, the BLOW OFF, is waiting in the wings for its on stage cue. It is this phase in which one must rapidly sell before the following fall.

The boom in the markets and the renewed weakness in the dollar, has given us a strong up move in the precious metals. We are approaching the summer which historically gives us weakness in the precious metals which often spills over into the mining stocks which is a detraction from the current strength. Even so, mining stocks are moving into nice territory this morning with a substantial recovery from the lower prices of the last several days.

Gold is up to $667.30 and silver is at $13.54. Not the prices we should expect, but nice upward movement. Gold did not test its support at $640 on this last step down. Were it to go below $640, there would be heavy selling and a wonderful buying opportunity for us. I am not a seller of gold, and would enjoy adding on drops. The mining stocks on the other hand, provide an opportunity for trading if one is nimble in the market.

Please, keep trailing stops on a portion of your mining stock portfolio. (You will recall that trailing stop sell orders are those that establish a price gap or percentage of price that the stock must fall before the order is executed. If the stock drops by that amount or percentage, it is sold at the then prevailing market price.) I use the percentage trailing stop sells, but never sell all until the third phase arrives. That's when all the late comers climb on board as if it were the last life boat from a sinking ship. They will pay any price to climb aboard. That is the ideal time to sell and look for other assets to purchase for the dollars.

As always, remember that it is the Lord, Himself, who acts out His Sovereign will is all activities of man. It is He who gives us wealth. It is also He who demands only a tithe (about 10%) which must be returned to Him. He trusts each of us with the wealth suitable for us. The one place in Scripture which encourages us to test the Lord is found in Malachi Chapter 3. After accusing the people of robbing Him, by not paying their tithes and offerings, He says in Verse 10, "Bring ye all the tithe into the storehouse (now, the church), that there may be meat in mine house, and prove me (or test me) now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and poor you out a blessing, that there shall not be room enough to receive it." That is a great promise, but do not expect blessings unless, you follow your part of the test and stop robbing God of His due. Also, the promised blessings may come in many forms; such as, godly children, health, peace, security, and others, besides simply wealth.

He has created us and we are His. He entrusts wealth to those He equips to use it wisely. Whatever wealth, He provides, we must be good stewards thereof. We must be profitable servants of the Sovereign God of all, who loves His people with a perfect love. This love, we are called to reflect to all those with whom we come in contact.

Best to each, Doug