Thoughts on Markets

Monday, October 29, 2007

Gold Pushing 1980 Highs!

Gold bid 785.70, asked 787.20. That is up 42.60 over last 30 days, and up 187.70 over 1 year. That is a wow! It is likely to break through 850 this year.

Remember, that is not good for the dollar which remains below 80 as it has for about a month. This will translate into higher prices in virtually everything. Central banks and other foreigners sold $29.7 billion of Treasuries during August. We still require $2.1 billion per day to finance our spending binge. These folks may not provide this much longer. If not, the dollar will really take big hits. There will be times of small upward moves over time, but the major trend of the dollar is down. In fact, it looks a lot as though the dollar is nearing a collapse. It could happen. Don't believe it to be impossible.

These are very dangerous times in the markets. I am sticking with commodity currencies; such as, Canada, Australia, and New Zealand. I also like the Swiss Franc and the Euro. By the way, the Euro block has surpassed the US in consumption. China continues to keep its currency below market value, and it will get stronger only when it decides that it is to their advantage regardless of international pressure. Hollow threats continue, but that will never help. Perhaps, after the Olympics, there will be a change, but don't expect much until then.

The mining stocks are faring well with the higher gold prices in relation to the dollar. DROOY is .42; GSS 3.65; HMY 10.64; IAG 8.66; KGC 19.15; KRY 3.34; MRB 5.55; NEM 47.22; PAAS 31.53 SSRI 41.03; XRA 4.47. CEF is 10.44. These are all doing very well and will go much higher with the price of gold. Stick with the mining, other natural resource, and defense stocks for the time being as they are the most likely to move upward.

I trust that you attended corporate worship service yesterday. That is a very important part of holy life. All of life is to be lived in worship of the Sovereign God of the Universe. He is the God of love, but a God whose patience with men and nations will not last forever. When people nations shake their fists in His face by violating His word, His judgement will come. Maybe not soon, but He always balances the books in the end. Do not be deceived His word does not return void.

Best to each, Doug

Friday, October 26, 2007

Gold Hitting 28 Year Highs

Spot price of gold closed today at bid 783.50 asked 785.00. $800 looks very likely in the near future. Possibly some more bouncing around before that, but certainly possible by year end.

The DJI are at 13775.16 up some 103 +.

Most of the mining stocks are up following gold prices. They will be much higher before long.

I'm still traveling, but should be home next week.

Once again the week end is very near and I am looking forward to joining in corporate worship with a body of the people of God. It is a wonderful experience to fellowship with those of the faith of Abraham and to celebrate the sacraments. I urge you to find a sound church with whom you can unite. The Lord's Day is a day of rest in hope of the final rest which is promised all believers.

Best to each, Doug

Friday, October 19, 2007

Gold Hits $770 and Euro $1.43

What a move gold has made in the last few days. It hit about 770 for a short time last night and is now manipulated down to 761.40 giving some a buying opportunity. Of course, there needs to be some correction at this point, since it has moved up so rapidly.

By the way, I am a buyer of Harmony Gold (HMY) at the present range below 10.00. It is trading about 9.52 - 9.58. It gapped down from about 14 a few weeks ago due to the mine disaster (no fatalities). It has yet to cover the gap, and I believe it will in the near future as the price of gold rises which seems certain long term.

We often forget that gold has never really traded in a free market. I would estimate that gold in a free market would be selling today at somewhere between 1000 and 1500. This is a rough estimate and not exact by any means. Once the cartel and banks lose control, it will sky rocket. As I suspected, this was not the time for the third wave blow off. That will come! When? That is anyone's guess. I do not know.

Oil hit 90/barrel over night. It is off a bit now, but is yet to be reflected at the pumps. We are still a lull in the pump price of gasoline for our gas guzzlers. Be sure to keep the tank full at these "low" prices. They are sure to be higher very soon.

The G-7 meeting begins today and China should get some heat for the low value of the Renmimbi, but of course, China will ignore the call. China has begun and will continue on their own schedule. No outside pressure will get anything, but contempt. They intend to do it their way.

The decreasing value of the dollar pushed the Euro to 1.43, but it has backed off a bit to 1.4251. While many thought that 1.45 was out of question a few weeks back, it seems as though perhaps 1.45 will be exceeded in a relatively short time.

While the announced selling of dollar instruments from abroad and, recently, Asia, I would suggest that there is stealth selling by several central banks. After all, no bank wants to see a massive wave of selling. The would prefer for it to be slow and steady over time. However, there may come a time of bail our or lose all. The dollar is still low and in rather uncharted territory. What happens will be shown over time.

I am likely to be off the air for a while, but will try to update when I can. In the meantime, I will be using corrections to add to the mining stock portfolio. Most of them are down some today.

Study and meditate upon the Word of God. Ask Him for wisdom in investments and every area of life. He will generously supply wisdom to all of His people. We must also seek understanding to know King Jesus better and to better apply His word to our lives.

Best to each, Doug

Thursday, October 18, 2007

Japan, China, and Taiwan Selling Dollars

This event was reported in Newsmax.com and the following is from the DailyPfennig.com:

"Japan cut its holdings by 4% to $586 Billion, China cut its holdings 2.2% to $400 Billion, and Taiwan's holdings slid 8.9% to $52 Billion... Japan's selling was at the fastest pace since 2000, China's since 2002, and Taiwan's since 2000"

I do not believe this is the massive leap from dollars by the central banks which is in the future, but it does show more concern on the part of the Asian holders of our debt. This is an preview of what will happen as more leave the dollar Titanic for the life boats. Of course, many are going to other paper currencies, but it seems that many are beginning to view the precious metals as a better life boat.

The other currencies are climbing as the dollar goes down today. Gold is now at 763 and silver at 12.72. Perhaps, gold has moved to a grander plateau for the time being. This is only natural as the dollar continues to lose purchasing power. Virtually all of the mining stocks are rebounding with some vigor.

We must look for dips to add to our portfolios. Keep some cash on hand for that purpose. Our silver stocks: PAAS at 30.22 up 0.52 and SSRI at 38.57 up .89. Both showing much improved life. HMY is only at 9.57 down 0.05 still under mine safety pressure.

It will be interesting to see the action on Friday.Gold is still at 762.60 with the last tic upward as this closes.

Keep you eyes and faith in King Jesus and depend upon Him.

Best to each, Doug


Tuesday, October 16, 2007

Precious Metals Trading in a Higher Range for Now

Each time that gold moves to a higher level, I wonder if this is it. Then, as is almost always the case, it drops back a bit. At times it drops back precipitously which is scary. It moved to around 566 early today, but is back to 757.80 as this is started. Silver is at a nice 13.59 now.

Perhaps, the banks and cartel are allowing gold, in particular, to trade at this increased level to put in more shorts. Then looking to drop it again. One of these times, the ploy will fail to work. They will lose control, but when is the unanswered question. The game will work until then and we will see ups and downs. Business as usual, but it is nice to have gold at a higher plateau. Maybe it will stay there for a while.

The mining stocks are responding pretty well. Most are off today, but still trading at a higher level than before. HMY (9.92 Up 0.01, but down from 10+ days ago) is still suffering the after effects of the mine problem from which all miners were rescued. However, a detractor is the fact that future mining will be more costly. Even DROOY (7.95 Off 0.10) is suffering some as it, too, is likely facing higher mining costs. Even giant Newmont is trading at 47.36 Off 0.26.

The Canadian Dollar (Loonie) is worth $1.0208 today. It is worth more than our dollar. Wow! The Swiss Franc is worth $0.8454 and the Euro is worth $1.4155. The dollar is showing a little strength, but is far from kicking fanny in the currency markets. Long term, it is still spiraling downward.

The general market in terms of the DJI is down come 82+ to 13900+. It is staying below the lofty 14000 level. With all the liquidity sloshing about in the markets, the DJI should be moving much higher.

More reports are telling us that the housing - sub-prime mortgage fiasco is far from over. Even Bernanke admitted that in a speech this week. There are warnings out to avoid the big U.S. banks, because of their exposure to sub-prime loans. Some are saying that we will see a break in commercial real estate here following the housing. Could well be! Suffice it to say, we are not out of the woods yet. Likely, still deep in the forest.

The big 3 banks: Citibank, Bank of America, and JP Morgan Chase are putting billions together to "save" the commercial paper market. It is some sort of investment fund which may attract investors who are not aware of the situation. Maybe, even, the banks are starting this to save themselves. Do you think they would do that? In a New York second! Banks are not content to create "money" out of nothing, loan it out, and collect interest on it. No, they want everything.

The good news of this and every other day is that the Sovereign Ruler of all, Jesus Christ, is still in control and moving all in accordance with His will. Remember, nothing can separate His people from His love. What peace that brings to us in times which challenge.

Best to each, Doug

Friday, October 12, 2007

So Much Action, So Little Time to Write!

Wow, the markets are frothy these days. In energy, crude for stretched to 83.32 during yesterday and closed at 83.08 up again. The demand for crude is very high world wide. America's reserves were lowered again dropping supply. All the more for pressure on the price.

There was much, short lived, rejoicing on the narrowing of the trade deficit, but soon it was realized that we would be well above 700 billion for the year. This does not bode well for the dollar which is sliding down the slope again. The Euro seems destined to reach 1.45 in the very near future given that the situation does not change. In fact, it is looking more and more like it will exceed that figure as the dollar continues its drop.

The mining stocks are picking up steam as the demand for gold increases world wide. With the advent of the Sovereign Wealth Funds of several nations flush with dollars, some of these seem to be flowing into the precious metals. The Exchange Traded Funds in precious metals have certainly added to the demand. The U. S. fund GLD and the Canadian CEF are big consumers of the metals. Several similar funds in other nations compound the demand. Demand is growing in China and India, as well. Thus, we will see higher prices on both gold and silver. By the way, silver is beginning to show signs of a big move to catch up with gold and platinum.

Gold is currently 747.50 and silver 13.763 Both are down a bit today. The cartel is at it again shorting gold. This was explained in prior posts. One of these days, they will get caught when they lose control.

The mining stocks for the most part are up again today. Our silver stocks are performing rather nicely >> PAAS @ 30.41 and SSRI @ 38.18. Those of you with higher risk tolerance might consider January or farther out call options on PAAS. You might even risk out of the money calls to add purchasing power. PAAS hit 32.46 earlier this year and should break that high in the not too distant future.

The DJI is up 79+ to 14065+ now. It is benefiting from the slush of liquidity. The SPX is up almost 6 to 1560+. The earnings reports coming in have not been as good as was anticipated. If you are still interested in the general market, other than, energy, natural resources, and defense stocks, it seems wise to consider those corporations with extensive international income. This will provide the potential of profit for the fall of the dollar as well as from earnings. Select those with consistent dividend experience over time. I would suggest that you buy in on dips, if you are bound and determined to buy.

My father used to quote from I think, Ben Franklin, "Neither borrower, nor lender be." He had been through the depression and never forgot the lessons learned from it. He avoided debt whenever possible. He was frugal and saved to make the necessary larger purchases with cash. Thus, he avoided the burden and additional cost of debt.

In contrast to today, it seems that we are borrowing to keep consuming. We fall into the trap of impulse buying on credit, because we are fascinated with the shinny object of our desire or to keep up with the Jones next door. Where is the frugality in this? It is a foolish and deadly financial trap into which we are placing ourselves. Keep track of your spending for one month and see where your dollars are going. You will be surprised and see a number of ways to cut spending without depriving yourself of necessary items and services.

We are approaching the Lord's Day which is a day of worship and rest for the people of God. A very important part of that day is to join in corporate worship of King Jesus. He requires it and it is up to each of us to join in the worship and fellowship of the household of God. How often, Jesus said while He was on the earth as one of us, "If you love me, keep my commandments." We must remember that He is the author of the whole bible, not just the text in red.

Best to each of you, Doug

Thursday, October 11, 2007

Gold at $751.20 on a Tear!

Well, we did not do enough buying of the mining stocks during the correction. Gold is spanking us now and has begun the next upward move. How high will it go this time before the next correction. One of these times there will be no correction and it will blow out all previous record highs. That is the move which will attract all the late coming lemmings.

The dollar has gotten on the down elevator again. It is down against almost all other currencies, as well as the natural resources. I believe the government officials have backed off from their proclamations of how they are working toward a strong dollar. Even the rhetoric has been absent of late. The Federal Reserve and the Federal Government have decided to sacrifice the dollar to salvage what can be gained from the housing bust and the resulting impact upon the financial industry. There is much more of this to come before it settles down with business back to normal. Whatever normal is!

The British pound sterling is suffering from the housing bubble burst, too. The pound is not enjoying the extensive runup in value it has recently had. It is just over $2 now. Conversely, the Australian dollar is approaching parity with the U. S. dollar. It is about $0.90+ now. The Euro is about $1.422 and feeling its oats today.

The financial stocks of banks and mortgage companies are falling as the DJI increases. The continuing reports of layoffs of employees and write off of bad loans are flowing daily in the media. When will it end?

Both the Swiss Franc and the Japanese Yen are supporting the carry trade with very low interest rates. The carry trade involves the big boys borrowing currency from these low interest banks and then trade in terms of higher interest instruments which provide a profit differential. They then collect the difference to pay off the low interest lows again, again, and again. UNTIL, at some time in the future, when they are caught as the low interest sources dry up completely. The day will come and that is the risk they take. What a neat game as long as it lasts.

The mining stocks are on a roll. AGXM 1.16; CDY 1.88; DROOY 8.3399; EGO 6.92; GFI 18.90; GSS 4.33; HMY 10.40 (still suffering from the mine cave in); IAG 8.81; KGC 16.55; KRY 3.00; MRB 5.27; MRB 5.27; NEM 47.63; NTO 7.38; PAAS 31.29; SSRI 39.78; and XRA 4.1001. The bullion investment CEF is 9.95. The day has started well for this area of investment.

We will have to see what Friday has in store for us. Until tomorrow keep your focus on Jesus Christ who is our Lord and Savior.

Best to each, Doug

Wednesday, October 10, 2007

China Continues to Shop America!

"In a trendsetting deal that gives U.S. investors a direct play on mainland China's fast-growing financial muscle, China Minsheng Banking Corp. Ltd. will acquire a 9.9% stake in San Francisco's UCBH Holdings Inc. (UCBH), making this the first Chinese investment in a U.S. bank." from Monday Morning http://www.moneymorning.com

Since China is sloshing about with a great supply of U. S. Dollar instruments, it is no wonder that she wants to spend some here.

The dollar rally lasted only one day and the down trend resumed sending gold over 740 and crude above 80. The Euro is back above 1.41.

The mining stocks have responded quite well. Harmony is still being punished for the miners who were trapped and then saved. There seem to be some questions on safety in the very deep South African mines. The gold and other minerals must be mined deeply, because the mine have been worked over so long a period of time that the shallow minerals have been depleted. Also, note that it is much more expensive in labor, machines, and safety to be so deep under the earth's surface.

Newmont (NEM) has shrewdly made a 1.5+ billion offer for Miramar (MNG). Newmont wants to secure additional gold in the ground and will do so with this deal. Both are up today.

The DJI has hit a sandy spot for the time being and is down 140+ to about 14023+ now. With all the liquidity in the market, it must flow somewhere and the broad market seems to be the recipient of a good bit.

Keep your eyes upon King Jesus and follow His way, which is the only way to live both here and hereafter. He will return to the Great White Throne to judge all. I pray that you are among the sheep and not the goats.

Best to each, Doug






Tuesday, October 09, 2007

Gold Up $175 From a Year Ago!

Yes, gold is in a very strong bull market and will continue to be for some time. There will always be sandy spots along the way. For example: Gold was down $8.70 to 732.80 yesterday. "No worry, Mate!" It is at 735.40 as I begin to write today. Gold reaching $800 seems to be in the near future. It is not as unreasonable goal as one was led to believe earlier in the year. After all, gold was at only 648.75 three months ago. Keep the longer trend in mind.

The dollar was stronger yesterday and overnight. The Euro was down to $1.4043 from $1.4137. By the way, how unreasonable does a $1.45 Euro look today? Certainly, a possibility. It is likely to be a certainty if the Fed lowers interest rates again.

Crude oil was down $2.20 to $79.02 per barrel yesterday. Sounds encouraging, but don't believe it will stay down forever. If we were using Euros, the cost would be $56.27 per barrel. Wow! That is why the Europeans see bargains all over America. Their currency rocks!

A fall out benefit of the lower value of the dollar is the attractiveness of our products, services, and tourist attractions to foreigners with higher value currencies. Have you noticed the increased number of tourists from Asian nations? They see bargains all over America.

China continues to court Africa with multiple investments in natural resources and infrastructure. This is not wasted effort. As the standard of living increases in nations all over Africa, there will be markets for Chinese goods. China continues to court Europe and Canada to establish more Walmarts, oops, that is, "China Malls" in other countries. These efforts are tending to reduce the Chinese dependence upon the American market. We should also focus on the vast increase in consumerism in China, itself. After all, there are a few Chinese people there. Remember our population is measured in millions, theirs in billions. Additionally, the same demand for products is growing in India. The Chinese business men are not stupid.

America's business is still war, so we should be investing in defense and aerospace stocks which will benefit from rebuilding and upgrading our military. Also, gold and silver will be needed to offset the loss in purchasing power of the dollar. Additionally, mining stocks will bust upward as we enter the third phase (blow off) of these markets. The DJI seems destined to continue upward toward its third phase, as well.

We need to hang tough with our investments and keep funds available to take advantage of corrections along the way for additional purchases.

All is in the hands of our Great Heavenly Father and Sovereign, King Jesus. Study His word, apply it in all of life, and rest comfortably in the assurance of His promises to His people. Seek Him in His word and you will find Him.

Best to each, Doug

Thursday, October 04, 2007

Ho Hum Market this week.

Stunning fund-raising success for Paul's presidential campaign

Section:

By Jim Kuhnhenn
Associated Press
via Yahoo News
Wednesday, October 3, 2007

http://news.yahoo.com/s/ap/20071003/ap_po/campaign_fundraising;_ylt=Ajdj...

WASHINGTON -- Long-shot Republican presidential candidate Ron Paul raised a surprising $5 million during the past three months, capitalizing on his stance as the only anti-war contender in the GOP field.

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The above was on the internet this morning, and I thought it of interest. On to the markets.

This was a lazy day in the markets. Gold has been in a consolidation period trading between about 724 and 733. However, today it showed a little more life by moving to 737.30. The dollar index is still hovering around (mostly just below) 80. It will go lower, because all of the factors which placed it in a bear market are still in place and getting worse.

All eyes are on the false unemployment/employment report tomorrow. It should not be good, but the way it is manipulated one never knows for certain. Of course, that is true even when the report is out and read.

Copper and other base metals were in a narrow range as well yesterday as copper barely tagged on a cent. The Euro was up on Tuesday, but ended yesterday at 1.4085 which is still hovering around the recent highs.

I see these times when gold is depressed from a recent run up as a time to add to our portfolio. This is particularly true when stops are high and some of our stocks have turned to dollars in the accounts. Look for times to jump back in. Gold is going higher. Maybe not this week, but it is definitely in a bull market and the third phase has yet to show itself.

Look, also to defense, aerospace, and natural resources, too. America is at war and in need of replacing military hardware worn down, worn out, and lost in battles. Thus, there will be continued federal spending for weapons and supplies for war into the foreseeable future. This is a good bet!

We will have to see what Friday brings forth for us. It is well to pay attention to the markets near the week end.

Also, prepare to and go to worship King Jesus on His day. It is our duty as Christians.

Best to each, Doug