Shopping Days Continue with DJI Off some 34+

Can you imagine gold below 660? It is at 659.70 now! DROOD is at 6.55 which is 0.40 below my last buy. HMY is at 13.61. Others are low, as well.

Yesterday, I bought Jinshan Gold Mines (JINNF) at 2.075, PHO (the water index) at 20.43; SRAGF (Geothermal Play) at 0.4521, and recently, ELNOF (Geothermal) at 0.84; UGTH (Geothermal) at2.68, and WGPWF (Geothermal) at 0.33. If interested, you might check today's prices on these.

By the way, the DJI is struggling to cut today's loss as it is now down only 9+. Gold has moved to 660.60. It is too early to tell predict today's action, but there is still downward pressure.

With the weekend here, it is time to prepare for corporate worship. This is a vital part of the Christian life. We meet together on the Lord's Day to worship and praise our God. Do not deny yourself this duty and enjoy the fellowship and support of other believers.

Best to each, Doug

WOW! Bargain sale time is here!

Gold at 667.50 and may go even lower. The end of summer sale time is here! I will be adding to my mining stocks holdings before the expected fall/winter rally.

Here are some of the stock prices. AGXM 1.42; CDY 1.85; CEF 9.34; DROOD 6.53 (I bought some at 6.95); EGO 4.539; GFI 4.54; GSS 3.75; HMY 13.99; IAG 8.37; KGC 13.42; KRY 3.52; MRB 4.64; NEM 42.30; NTO 5.60; PAAS 28.39; RNO 5.23; SSRI 35.44; XRA 3.60. If you own any, check your entry price and compare. I believe most of these will be much higher later this year.

Governments and central banks hate the thought of gold in the hands of citizens, because of the independence it provides from the depreciating paper currencies. They seem to be exerting pressure to keep gold below 680. This may be nothing but conspiracy theory, but we should ask ourselves why gold is not much higher already. At some time the negative pressure will run out of steam.

Silver appears to me to be a special bargain at 12.82. It seems to me to be a screaming buy. You might want to investigate the www.Everbank.com metals select funds or their silver CD. Check them out, but make your own decisions.

Back to the general market. The DJI is currently at 13702.24 down 83+ on the day. The sub prime lending fiasco has yet to play out despite statements to the contrary. One has but to follow the HGX (housing index) to see that it is not over yet. My HGXXT Dec puts @200 have gone from 8.99 to 15.30 at the last trade. The HGXUD Sep @220 went from 12.40 and were sold this week for 24.20. I expect the HGXXT puts will exceed that before December. If you have risk tolerance, you might check into future puts on the HGX.

In options, I like the puts on the energy index (XLE), and in particular those for January 2008. You might look into those as well.

Remember in options, you know your exact risk to be the cost of the option. But they are for those with greater tolerance for risk and for funds you wish to use for speculation.

Study, prepare yourself, make your plans, commit them to the Lord, move out to put your plans into action, and leave the results to the Lord. Praise Him for the results He provides. As Solomon wrote, "The horse is prepared for the day of battle, but victory is of the Lord."

Best to each, Doug

This is Likely a Good Shopping Season

With gold today at 671.60 down about 12.80, it may be a good time for shopping in the precious metal and the mining stocks. Silver is down 0.26 at 13.09 which is a good price. Remember that we have about six more weeks until the fall when the precious metals are historically expected to rise in price.

Speaking of shopping, I just bought some more of the new (DROOY) DROOD at 6.95 which is down a good bit from its 7.95 high of this week. It may be time for you to look at the price of gold, silver, and mining stocks with an eye toward picking up some. Risk only that with which you will be comfortable. It is not wise to go beyond your comfort level. Worry is the road to all sorts of illnesses.

The dollar has continued to take a beating this week with the EURO at 1.376 dollars pushing toward 1.40. It is likely to go to 1.40 this year.


The dollar index is at historic lows. This will be uncharted territory should it break through and remain below 80. The movement from there will be a new experience should it happen. If it does, I would expect the dollar to move much lower, but that is only speculation. In my opinion there is just too much against the dollar.

A lower dollar should have the benefit of increasing our international exports by lowering the price of our goods and services in relation the value of other currencies. We must always keep in mind that the currencies of the world have value only in relation to other currencies since none are backed by anything substantial. Ours is backed by the faith and credit of the U.S. government which has a debt in excess of the sum of the debt of most of the governments of the world combined. In other words, we are bankrupt. We stay afloat only by the desire of other governments and central banks to lend to us to fuel our spending binge.

Meanwhile, we are told that price inflation is being well controlled. Without food and energy, this may well be true. However, you and I know as we buy or groceries and feed our hungry autos, prices are rising quite rapidly. In fact, it is becoming more difficult to keep our tummies and fuel tanks full. The impact is spilling over into our heating and cooling requirements, as well. So the true price inflation brought on by the increase in dollars and debt is much higher than reported.

Thank goodness, that our Sovereign God is in control of everything. Further, He works all things for the eventual good of His people. Let us continue to praise Him in all situations.

Best to each, Doug

Gold Takes a Breather & News on DROOY

Gold has slipped a bit today. Likely the banks are at it again >> fighting their most feared enemy: the freedom offered to individuals by the precious metals. It is now trading for 681 which is above the low for the day near 680.75.

The news on DROOD (was DROOY). There was a consolidation of the number of shares represented by each ADR of DROOY. It is similar to a reverse split of about 8 to 1. This has no lasting economic impact on the actual value of your shares, because a new share of DROOD will have about 8 times the value of the old share of DROOY. The company announced that the move was made, because the ADRs were valued below their target. The immediate impact will likely be that the shares will lose a bit of value until investors learn of the change. There is no impact on the company, itself.

The dollar continues to have lower purchase power, so the precious metals should continue to increase in relative value. The mining stocks are taking a hit today, but that should not last long. August is almost here and the fall rally is not far away.

The mid east situation does not show any signs of improvement and the pressure for withdrawal of our military is increasing. Withdrawal will not be easy. An attack upon Iran is still not out of the military play book. We should pray that it not happen!

Keep your eyes upon Jesus through His word under the power of the Holy Spirit for peace of mind in "interesting" times. I trust that each of you had a great time of worship and fellowship with the people of the faith of Abraham yesterday. If you did not, you missed the blessing of corporate worship which is a great gift of our Sovereign God.

Best to each, Doug

Dollar Continues on the Downward Path

Virtually all currencies (paper, that is) are increasing in value relative to the dollar. Remember they are all unbacked paper without any real value except for the acquiescence of people to use them and the power of governments to force their use for all debts public and private.

Paper currencies were invented to allow banks and governments to print or create them at will. Inflation is an increase in the supply of paper currency which lowers the purchasing power and robs the citizens of real value.

Inflation, also, results in citizens giving in to the inflation psychology. This reveals to most citizens that prices are increasing and urges them to buy now before prices increase further. Then they go on spending binges poorly or even well intentioned to save by buying today. When their available cash runs low, they increase borrowing to further the spending. The result is a spiral of debt beyond imagination. That is where we are as American citizens. Our governments at all levels are doing the same. Don't worry about the debt, just get out there and shop 'til you drop. Spend! Spend! Spend!

If you have been reading this blog, you already know these facts, but it is well to remind ourselves from time to time of the dangers of inflation.

The commodity currencies of Australia, Canada, and New Zealand are booming. Both the Pound Sterling and the EURO have reached multi-year highs. This, of course, is only relative value. However, the price of gold is growing in terms of most of the paper currencies.

The mining stocks are rising, as well. The general stock market remains high, but the buying seems to be slowing. Will it be followed by selling increase? Yes! Without a doubt selling will begin and accelerate. "When?", is the real question. I do not know, but am taking steps by using trailing stops on general stocks, doing very little new buying, and selling the under-performers in the portfolio.

Today is Friday and it could be a day of big changes in the market. We will have to wait and see. Gold is strong at $679 as of now. That is showing a positive upward move possibly making an assault upon $700. And note that it is early in the year for an upward surge.

Speaking of surges, it seems that the pressure for withdrawal of our troops from the Mid-East is growing. A withdrawal will be a tricky and dangerous maneuver as the land route back to Kuwait is under insurgent control much of the way. It will be a fighting withdrawal. The troops will have to fight their way and be on guard for hit and run attacks and mines along the way. Not a very nice situation at all.

Will Iran be attacked? The naval battle groups are in and near the Persian Gulf, and likely ready, but will the trigger be pulled? That is another unknown. Should it happen, watch the price of fuel for the autos skyrocket into space. And the dollar would drop like a rock taking with it the general stock market while the precious metals would jump upward overnight.

We always live in interesting times. Today is no exception. Hang in there. Trust in the Lord. And know, for certain, that He works all things for the good of His people. That is a fact upon which we can rest with great assurance even when things about us look dark.

Best to each, Doug

Subprime Securities Take a Bath While the Precious Metals Are Stronger

This graph is from Agora Financial http://www.agorafinancial.com/ this morning. We may well be in for another wave of pressure from the debacle of the sub-prime asset loans failures and bankruptcies. Certainly, the event has yet to play out fully.

The event is putting pressure on even the more secure mortgage lenders. It is spilling over as never thought possible. All are under pressure and the pressure appears to be building.

Therefore, the puts on the housing builders index HGX are likely to continue to increase in value. I like the September and December puts in particular.

Gold this morning is at $666.50 and Silver is $12.90. Both are holding higher. The mining stocks are moving upward, as well. Examples: AGXM 1.44; CDY 1.78; CEF 9.27; DROOY 0.7388; EGO 4.59; GFI 17.45; GSS 4; HMY 14.73; IAG 8.32; KGC 13.35; KRY 3.90; MRB 4.68; NEM 41.40; NTO 5.91; PAAS 29.68; RNO 5.24; SSRI 36.69; XRA 3.43.

Make your day great by trusting in the Lord by obeying Him and getting your joy from Him.

Best to each, Doug

Commodities, Including Gold & Oil Back in Business

That is, the business of mountain climbing. Oil is well above $70 and gold is currently at $666 indicates higher prices maybe even before the fall. The options on XLE (energy index) continue to increase in value. I believe they will go higher, particular those with December and January expiration dates. Mine are performing nicely for which I daily thank the Lord.

Gold must rush above $670++ to be well on its way higher. The mining stocks are riding this wave, too. I like the US Global Investors World Precious Metals mutual fund for those not interested in individual stock investing. Their World Natural Resources mutual fund seems to be good for commodities.

You are the one most interested in your investment success. Therefore, prepare yourself and make your own decisions.

On the currencies, the Pound Sterling hit a 26 year high at 2.0445 dollars to the Sterling. The Euro now commands 1.3768 dollars. Certainly, the dollar is under pressure as it continues its decline in purchasing power. By the way, in case you missed it, Iran has asked Japan to use yen, rather than dollars, to purchase its oil. Though the impact here is small, it is evidence of a trend away from the dollar. The commodity currencies of Canada, Australia, and New Zealand look quite attractive as the commodities climb the mountain of price.

China is rapidly growing in economic power. Their inflation seems to be somewhat under control as the Yuan slowly appreciates in value.

Richard Russell of the Dow Theory Letter believes that we may be in the early stages of the 3rd phase of the general market. This is the heating of the air in the balloon followed by the eventual bursting. He has been in the business a long, long time and could be correct. I would use caution and use close trailing stops on general stocks to protect profit and/or limit losses if he is correct. On the other hand, there is a lot of liquidity out there and it seems to continue its flow into the general stocks.

There was news that some central banks and governments could be investing in ETFs or mutual funds concentrating upon the "best" and "safest" larger blue blood stocks. Most of these are well situated internationally across most boundaries. If true, this could be a source of continued flow of the current excess liquidity into the general markets of the world. Thus, extending the upward life of these markets. Be careful if you intend to ride the wave. Remember, trends continue until they end.

Trust in the Lord always and give Him the thanks and glory for everything that is and that comes into your lives. Obey Him and rejoice in Him always.

Best to each, Doug

Let's Take a Look at Energy

Traded on the AMEX is the Select Energy Sector SPDR with a symbol of XLE. It is currently trading at $69.54. That, to many people, represents a lot of dollars per share and when one purchases 100 shares, it comes to $6,954 plus commission. There is an alternative way to invest in securities other than directly in the traded shares.

The alternative of options provides a leverage. Leverage, as many of you know, is the ability to have control over a valuable asset using only a small investment of dollars in comparison to the market value of the asset. Thus, using an option, one can purchase the opportunity to buy 100 shares of XLE at $70 until September 22, 2007, today for only $320. This would be a "Call Option." It gives the opportunity, not the requirement, for a person to purchase (exercise the option) to purchase shares.

Note that in the example, there are features of the option which impact upon its value. The first is the market price of the underlying security. In this case, today's market price of XLE. The second is the length of time that the option has left to be executed. In this case September 22, 2007. In dealing with options, one must always realize that the time value decreases as the execution date nears. So in our case, the September options on XLE will have less time value remaining as each day and week go by.

In option terminology, there is the expiration date (September 22) and the exercise price ($70 per share). Options are written in contracts for 100 shares. In our example, one would purchase our specific option (XBTIR) @ $3.20 X 100 = $320.

One does not have to exercise the option to purchase the underlying security to make a profit. Often, as the market price of the underlying security increase, the market value of the option will increase, as well. If the purchaser of the option sees this increase in value and wants to sell and take the profit without exercising the option, he can do this.

As with other securities, the option can lose value if the underlying security drops in price. Options also have the additional risk of loss of time value as the expiration date approaches. This we find that options have an additional risk that many people are not willing to take. Beware of these facts!

Also, trading in options requires special arrangements with the broker. One must have a margin account and must complete special forms for trading in options. It is not for everyone, but can be an advantage for those with risk tolerance. There is in addition to the advantage of leverage the advantage of knowing precisely the amount of dollar risk one is taking. That is, the only risk is the purchase price of the option + the commission. Options can become worthless as time expires and the price of the underlying security does not rise.

Before leaving the subject of options, there is another type of option which is traded. The preceding discussed only the Call option; that is the opportunity to buy the underlying security at an exercise price until the expiration date. Think of a Call option being the opportunity to call for a stock. Call options are purchased only when one believes the underlying security will increase in value within the time allowed. On the other hand, if one believes the stock will decrease in value, he uses another type.

This type is the Put option which conveys the opportunity to sell the underlying security at the exercise price until the expiration date. Thus, one can put (sell) the stock until the option expires. This option would not be exercised unless you owned sufficient shares to sell. However, if the stock price decreased, the option would increase in value and could be sold for a profit.

Trading in options is considered to be with greater risk than buying and selling shares of securities. So Buyer Beware!

This has been presented to introduce you to options, but also, I wanted to share with you some of my thoughts on energy and specifically the XLE. It is my belief that the middle east situation is not going to cool very soon. Were it to expand in any way, petroleum delivery from the area would be reduced. Maybe it would be reduced greatly. In this case, the price of all natural energy resources would escalate drastically. The resultant impact on XLE would be a substantial increase in market value. We could also see gasoline at the pumps exceed $4 per gallon. Not good, but a possible opportunity to profit from the situation.

I have bought and am seriously considering buying more Call Options on XLE. You might want to just add to your holdings, if any, of XLE. I prefer the Call Options for the leverage advantage. Here are some of the options under consideration by me. September $70 (XBTIR) @ $3.20; $71 (XBTIS) @ $2.65 and December $70 (XBTLR) @ $4.90; $71 (XBTLS) @ $4.40. Maybe the market price of each will go down. I have not issued the order/orders yet. I always use a Limit order for options when buying or selling.

Gold is up to $657.40 and silver to $12.56. Both are up on dollar weakness. Study to make sound decisions and know that success is totally up to the Sovereign God of All >> King Jesus Christ.

Best to each, Doug