Market Rebounds in Spite of Dismal News

From Casey's Daily Resource Plus, "The National Association of Realtors said sales of existing homes fell for the eighth straight month in October, even as more homes came on the market, driving the supply of homes to the highest level in 22 years. Sales dropped 1.2% to a 4.97 million annualized pace in October. That was weak, but slightly stronger than the 4.85 million pace expected by economists." www.caseyresearch.com.

In the face of dismal reports, as that above, the Dow is up over 500 in the last two days. Gold on the other hand is down a good bit during its "correction." This is a run from the security and safety of precious metals to take advantage of what is perceived as a profit from a raging bull market in general stocks. Is the recent gain of the Dow a return of the general bull or simply a bounce upward in a bear market? The market will give us the answer in the next few weeks.

There is another factor upon which investors appear to be depending. That is, the perception that the Fed will lower the interest rates again. This is a likely prospect as the Fed has been pumping liquidity into the financial arena recently. The Fed is interested in heading off a recession and has lost any concern over price inflation. Certainly, the FOMC realizes that increases in the supply of unbacked currencies by printing dollars or lowering interest rates results in price inflation.

The use of unbacked paper currencies is a violation of the Law of God against the use of unequal weights. The weight or value of the currencies is arbitrarily controlled by central banks and governments to deprive the markets of a stable currency. The control will cause businesses and citizens to make unsound economic decisions and deprive them of wealth. It is in reality a form of theft which against the Commandment, "Thou shalt not steal." Thus, banks and governments are in violation of God's Law and will suffer the consequences thereof.

There is a factor which is often ignored when assessing future price inflation. That is, the deflation of the currency due to bankruptcies, foreclosures and bank write-offs of loan balances. Remember that dollars were created out of thin air by computer blips as the original loans were made. When the mortgages, credit card debt, etc. disappear, those created dollars vanish back into the thin air from where they came.

However, increasing the money supply in the end is nothing more than pushing on a string. Banks and governments push all the harder as the economy slows and the fear of recession grows. That is, they put ever more unbacked paper currency into the financial markets in hopes of avoiding the "R" or "D" words. Price inflation is preferable to either of these "disasters."

The present depression of the price of gold is a result of intervention by cartels which have a vested interest in manipulation of prices to their advantage. By going long (buying in) the market on the way upwards, they can make considerable profit. By shorting (selling) when the price is high, they can profit by lowing the price. They do this using futures contracts, options, or other hedges and seem to have a perpetual ability to run this game over and over again. Their ability seems to be greater than the nine lives attributed to cats.

For the last 24 hours, gold has bounced between $807 and about $795. Silver has bounced between $14.50 and $14.15. Gold is now at $797.20 and silver $14.22. Both are giving us another opportunity to add cautiously, slowly add to our holdings of the metals and mining stocks. The prices will not forever be manipulated down. The time will come when control will no longer be possible. "When?" is the question! We are not privy to this information about the future, but we can define and ride the upward trend.

Our Sovereign God of All, King Jesus is a patient God, but will not forever withhold His wrath against the sins of people and nations. The nations which are blessed are those who God is the Sovereign King Jesus. Those people and nations are blessed while other fall under the curse of God.

Best to each, Doug

Abu Dhabi to the Rescue

Yes, the government investment fund of Abu Dhabi (One of the United Arab Emirates) came to the rescue of Citi Group. You will remember that Citi Group was hit hard from sub prime exposure. The Arab Emirate bought into Citi Group equity to the tune of some $7.5 Billion. This is likely to cause an upward bounce on the financials and, in particular, the financial ETF XLF.

Consumer confidence for November was reported yesterday at 87.3 which is down from 95.2 and much lower than expected. The shopping on Friday was high in volume, but shoppers were picking the greatly discounted items. Thus, profits in the retail sector are likely to be lower than anticipated.

Prices of homes were down in the latest reports in 20 major cities here. We are seeing a leveling off and decline in San Antonio now. There are many "For Sale" signs throughout the city. This indicates an increase in the inventory of homes for sale.

The ailing dollar still has great problems. Though the problems seem overwhelming, I do not believe we will see a total collapse of the dollar. It is likely to go much lower and I believe we will see it lose another 30-45% of purchasing power. Thus, our prices are bound to go upward across the board.

The recent injection of liquidity by the Federal Reserve and European Banks is not having the "planned" impact of greater borrowing. Consumers and businesses are taking a more conservative approach to credit. Perhaps, both are maxed out or at least concerned about debt.

The cartel still has a great influence over the price of precious metals: gold and silver. Asians, particularly in India and China, began buying in volume over the last days. This ran the prices upward over night while the US markets were closed. Then as the US markets opened, the price of gold was pushed down. Gold was up to about $815 over night and now has been pushed down to $802.50. Silver is at $14.38.

There appears to be little interest in gold and silver here in America. However, in India, it is extremely sought after for the wedding season and in China for retention of value. Many of our citizens are totally unaware of what is happening to the dollar and the security offered by the precious metals. There will come a time, as in late 1979 and early 1980 when one will here talk of gold everywhere. Then will come the parabolic rise in price as the lemmings, late comers, jump on board.

These times of lower prices are the times that we should bite the bullet and add to our portfolios. Gold at or below $800 an ounce is a bargain when the true value of gold should be well above that were it not manipulated. The trend of gold price remains solidly upward, just as the direction of the dollar is downward.

Timing in investment is critical to success. However, we are not privileged to know timing. However, we can distinguish trends as the Lord gives us wisdom. Practical wisdom, as well as, the bible tells us "the trend is our friend." We can observe the trend, but it takes courage to follow it in spite of what the world says. However, we have a God in Jesus Christ Who freely gives wisdom to all who seek it in His word and follow it to Him. Plan wisely, commit your plans to Him, move out to implement the plans, and leave the results to Him. He will show you the way either by giving you success or by failure directing you down another path.

Best to each, Doug

Thanksgiving - We thank Thee all our God

It was a wonderful time of thanking and praising our God. He has been so gracious to us and will be in the future to all of His people. He deserves our thanks minute by minute. Let each of us develop a heart full of gratitude to King Jesus!

The GLD chart above is for the ETF in gold. It is a good proxy for the metal gold. It is at 82.05 as this is written. Notice that the correction of the last two weeks failed to go below even the 50 day moving average (the blue curve on the graph). Corrections or sandy spots on the way upward in a bull market can be real threatening, but should be seen as just that. The bull market in precious metals continues with gold up over the week end and now at 826.50. That is not bad at all and should provide assurance that once again we are on the way up.

The minng stocks are following gold, but are mixed. Here are the ones which are presently up: DROOY 8.74; EGO 6.2401; GDX (Miner's index) 48.90; GSS 3.901;NEM 52.31; PAAS 34.77; SSRI 40.62; XRA 4.71. More will follow as gold price goes upward.

We would always like to know the future, but our finite minds can only follow trends. The timing is hidden from us to a great extent. We must learn all we can about long term trends and follow them. Thus, we should take every correction in a bull trend as an opportunity to add to our participation in the trend and hang tough. However, we should cautiously add to our holdings and not sink all our reserve cash in at one time. It is apparent that the long term trend of precious metals is up. Depend upon it, in spite of even drastic corrections. Play it that way!

Both Fannie Mae and Freddie Mac (the federal backers of mortgages) are in deep trouble with the melt down in sub prime and even prime mortgages. Together, they guarantee some $4.7 TRILLION. They cannot cover that without a federal bailout. A bailout of such magnitude would require the creation out of nothing many more dollars. Such inflation will result in higher price inflation than we are now experiencing.

The Sovereign Wealth Funds of governments control some $2.5 TRILLION which is about half of the dollar reserves around the world. This represents a redirection of the dollar reserves into businesses, stock, natural resources, real estate, and anything rather than dollars. The exodus from dollars appears to be in full swing.

There is much talk of the mid-east oil countries removing the peg of their currencies from the dollar to a basket of currencies. How long will the dollar serve as the reserve currency for the world?

There is much downward pressure on the dollar. This has a side effect of improving our exports by making them less expensive to the rest of the world. There has been a definite increase in our exports. The damage to the dollar will impact upon our economy and the prices we pay for necessary goods and services.

This from the Privateer (www.theprivateer.com) Number 579: "The US government stands or falls on the reliability and acceptability of the US dollar." If this is true, should not the dollar be protected rather than crucified? Rhetoric, alone, without positive action will not protect the dollar over time.

Let us earnestly pray that God will raise up statesmen to hold key positions in our government to replace the inept incumbents now serving at all levels. We need men of conviction in office who recognize that they hold positions by the will of God and are bound to follow His law in the exercise of the powers of office. Such men must not seek and relish selfish fame, power, and wealth, but follow the will of God. Without such MEN in office, our nation will perish as the further judgment of God falls upon us.

Best to each, Doug

DJI and TRANS both have closes below August Low

In Dow Theory, the confirmation of the TRANS low earlier was given yesterday by the DJI yielding a primary bear market trend. There was no confirmation by either the S&P 500 nor the Wilshire 5000. This gives a lot of questions about the direction of the general market. What does this mean? It means that we will have to wait and see what happens.

The volume was low yesterday as many traders were off for travel or shopping to get ready to celebrate Thanksgiving today. This raises another question about the validity of the Dow Theory confirmation yesterday.
This means that we must use extreme caution regarding investments. Several advisers closely follow Dow Theory and recommend their subscribers do the same. Thus, we are likely to see some selling across the board in reaction to the Dow confirmation. This is also the time of tax selling when many investors will be dumping losses to reduce their capital gain taxes. By the way, it is a generally a good idea to prune the dogs out of your portfolio for tax purposes.

Once again, it is wise to use trailing stops on the stocks you plan to keep. These will protect some of the profit or prevent extreme losses. This is an once of protection which costs nothing.

Since there was a significant drop of the DJI for the week and 200+ on Wednesday, we could see an upward jump on Friday or next week. Friday is very likely to be another very light volume day with folks still enjoying the Thanksgiving holiday or shopping until they drop the day after. That could provide for lightening of our market portfolio. Historically, December has been a good month for the stock market. However, we are in somewhat uncharted market waters these days. As mentioned, above, questions remain to be answered.

Only our Sovereign God knows the future completely and He is working all things for His glory and for the ultimate benefit of His people. If you are one of His, you can rest in the assurance of His promises. How often, He has shown His mercy and grace to His people. We must always rejoice in Him and thank Him for all. Live a life of gratitude to the Creator and Sustainer of all, even Jesus Christ, the Lord.

Best to each, Doug

Run from Dollar to Precious Metals

The EURO is pushing toward $1.50, now 1.4833; Swiss Franc $0.9062 and Canadian Dollar $1.0124. Our dollar received more pressure from the OPEC nations where there is much talk of removing the peg of their currencies from the dollar to a "basket of currencies." Such talk will turn to action in the near future as more nations and banks run from the dollar. The hand writing is brilliantly in view now. This is in addition to the Sovereign Wealth Funds of countries around the world which are used to replace dollars with businesses, real estate, precious metals, natural resources, stocks, and anything seen as having more lasting value than our fading dollar. The exodus is gathering steam. Of course, there will be upward bounces of the dollar from time to time, but the trend is decidedly DOWN.

Gold is up some $45.50 (6.07%) from thirty days ago, and up some $170.30 (27.11%) from last year. This is a good return and there is more to come. We had best be on board and take advantage of any bargain days provided by temporary dips in the price of both gold and silver.

Gold was up over $800 earlier today, but is now slightly down at $796.90. Silver is behind for the time being at only $14.40. I have bought some more call options on Pan American Silver, specifically, the April 08 Calls @ $30 at a cost of $6. I still hold without cost a residue of Jan 25 Calls on PAAS. I believe that silver will begin to catch up with gold soon.

The Dow Jones Industrials touched below its August 16th low of 12845.78 today, but is slightly above that now at 12887.64. Were it to close below the August low, this would be a confirmation of the Transportations recent low indicating under Dow Theory the start of a bear change. This is an exciting time as we watch to see what the market will do. If the DJI closes above the August low, we will still have a non-confirmation of the Transports, and will have to hang on longer to see what will happen.

It is wonderful to rest with trust in the Sovereign Lord Jesus Christ, Who always has the best interest of His people in mind. He ever intercedes on our behalf before His Father. What a joy it is to rest in Him.

As we celebrate Thanksgiving, remember to give his grateful hearts and praise His name forever.

Best to each, Doug

Gold Bull Trend Continues - Hang Tough

Today, I have included both the 1 Year and 5 Year www.Kitco.com graphs on gold to illustrate the point that the bull market in gold is firmly intact. The past and current corrections are a mere blip on the longer term graphs. This is very comforting and gives assurance that gold looks great as a store of value versus the dollar and other unbacked paper currencies.

Meanwhile, gold is in a consolidation phase in preparation for the next upward move. It is now at $784.60 which is up some $22+ or about 2.95% over the last 30 days and up $164+ over the last year. This is far from negative performance.

As always, we must have a long term view on preserving wealth via the precious metals. Further, it is very important that we take advantage of dips in the prices to add to our portfolio of physical precious metals, ITFs which hold bullion (CEF and GLD), perhaps in www.goldmoney.com or www.everbank.com metal select accounts, mining stocks, mutual funds in mining stocks, and in the Gold Miner's Index fund (GDX). Selection of the specific target for new dollars should be tailored to provide a balance of investment media which is in tune with your individual risk tolerance.

While the precious metals remain in a strong upward long trend, the dollar is locked in a downward trend which may be accelerating in the near future. Even the foreign central banks and individual investors are beginning to shun the dollar or, at the very least, are losing their love affair with the dollar as a trustworthy store of value. In fact, there is so much negative sentiment toward the dollar now, that one would suspect that it might be in for a short term upward bounce.

The world about us proclaims the philosophy of "Live for today, for tomorrow we die!" or "Eat drink and be merry, for tomorrow we die!" Both of these ideas give one a short term view of life and encourage each one of us to continuously party up and seek immediate fun or relief from any problems which come to us. Most of us want instant relief from the slightest head ache or other ailment. We are encouraged to live for the moment which shortens our view of life. On the other hand, Christians have a different view of life.

We know Who is in control of all that takes place and He has given us His word in the Bible. This word of the Creator of all that was, is, and shall be has given us instruction for all of life. This even applies to investments. Don't get me wrong on this, He does not say "Invest in gold today." And I have never heard Him speak directly to me, but throughout the Bible, we see examples of gold and silver by weight used to make purchases. That is sufficient for me to know that He intended the precious metals to be real money. For centuries nations used silver and gold coinage as the only money. Our forefathers knew this and put in the Constitution (Article 1, Section 8) the power "To coin Money." They were explicit about this and certainly wanted to insure that These United States would have sound money.


It is only in recent history that nations have violated the principle of sound money. From a pragmatic perspective, paper and ink are very cheap. On the other hand, precious metals are very dear. Thus, it is easy to print paper currencies and declare them as "Legal Tender for all debts public and private." So, using the printing press and now blips on the computers banks and governments can deceive the citizens and create out of nothing all the paper "money" they want. Therein lies the problem. This paper currency is used to deprive the citizens of wealth through inflation: Inflation is the increase of unbacked currency in circulation which results in price inflation in virtually all products and services.

I continue to be thankful that Jesus Christ is the reigning Sovereign over every thing, every institution of man, and every body on the earth and heaven. He is working through His people to bring all into submission to Him. This He accomplishes through His church. Resting in Him gives peace and comfort while facing the challenges of each day. May each of you enjoy this lasting peace.

Best to each, Doug

Gold Trading a Good Bit Higher

As you can see from the www.Kitco.com graph, gold is performing much better during the last 24 hours. It is now at $812.40 and moving upward at this moment. Perhaps, most of the manipulation for the time being has subsided. Time will give us the true short term direction, but long term, it is still upward.

The mining stocks are responding to the halting of the downward spiral of the precious metals in this correction. Almost all are up: AGXM 1.20; CDY 1.91; CEF 10.75 (invested in bullion); DROOY 9.19; EGO 5.86; GDX 49.17 (ETF in miners); GFI 18.62; GSS 3.35; HMY 10.86; IAG 9.30; KGC 18.35; KRY 2.98; MRB 5.32; NEM 52.07; PAAS 35.28; SSRI 41.60; XRA 5.00.

I bought IAGLU (Call options on IAG for Dec 07 @ 7.50) for $1.80; GRXCU (Call options on GDX (ETF on major minors) for Dec 07 @ 47) for $5.75. Remember options are a bit more risky than the action shares, but do offer leverage (the ability to control a valuable asset with minimum cash investment).

Gold has a long way to go to best the previous high of 1980. It must break through and hold for a period above $850. Perhaps, this will be the next record broken on the coming upward surge. Again, we must wait and see what the Lord Jesus has in mind for the markets. He really moved the general market up yesterday.

Trusting in Him, I am content to wait for the results He has planned.

Best to each, Doug

Shopping 'til we drop - Charge it!

The following is from the Daily Pfennig (www.everbank.com)

"US Treasury Secretary Henry Paulson is heading over to Africa to meet counterparts representing the world's biggest economies.  But according to what his counterparts have been saying, Hank shouldn't be looking for a warm greeting.  European finance ministers have been working overtime complaining about the weakness of both the US$ and the Chinese Renminbi.  Paulson, like his four predecessors, has stuck with former Treasury chief Robert E. Rubin's phrase that a 'strong' dollar is in the US interest.  Officials have repeated the phrase regardless of whether the dollar was rising or falling.  But talk is cheap, and officials have done nothing to try and stem the fall of the US$.  In fact, they have been piling on with the rest of the world complaining about the weak Renminbi.

But, you may ask yourself, what can we really do about the falling dollar.  For one, we could tighten the purse strings a little.  This administration has run up more deficits than the last two combined.  As announced by Paulson's US Treasury department, US debt topped $9 Trillion (yes that is a T not a B) for the first time ever.  And there doesn't seem to be any urgency by our congress to reduce these debts as Congress raised the statutory borrowing limit again about a month ago.  Deficit spending and promised benefits for federal entitlement programs have put every man, woman, and child in the United States on the hook for $175,000, says a new report by David Walker, comptroller general of the US.

And can we really complain about all of the deficit spending by the US Congress when we don't seem to be able to curb our own personal consumption?  Credit card debt owed by Americans in now a record $915 billion.  This is debt owed on credit cards, backed by nothing but disposable assets."

We are living for today and not planing for tomorrow. Remember savings is foregone consumption. It is not the time to be spending beyond our means of paying cash. As long as we and our governments at all levels remain on the current spending binge, there will be no change. The dollar will lose value resulting in higher prices for everything we need and want. This is the escalating whirlpool which has our nation completely under its power. Perhaps, this is simply another example of the judgment of King Jesus upon us for our manifold sins. His patience with sinners does not last forever. There comes a time when He balances the books!

Gold dropped down to about $794 over night. It is at $804 now and has spent most of the last 24 hours above $800. Perhaps, $800 will be established as a support level. The cartel is still in control of the prices of precious metals. It is a manipulated market which is far from free. There will come a time when it is too large for their control, but for the time being, we must endure with patience these set backs. It may be that gold will regroup for a successful run above $850 as the dust from the present correction subsides.

Silver has been hammered, as well. It hit a low of about $14.37 over night and is now at $14.74. Silver traded most of the last 24 hours above $14.50. The cartel is effective in manipulating silver prices to the extreme.

On the currency front: The Canadian Dollar (the Loonie) surpassed par with our dollar a couple of weeks ago and it, now, seems that the Swiss Franc is headed that direction, as well.

All of the mid-East is threatening to remove the remaining currency pegs to the dollar and to diversify more out of dollar reserves. This is coming as the dollar loses value. It is the only rational decision under the present circumstances. We will see much more of this world wide in the near future, perhaps even by the end of this year. Certainly, there will be more in 2008, because the financial situation will not see improvement.

With precious metals at these lower prices, we must see this as an opportune time to make additional purchases. However, we must be cautious. It does not seem to me to be the time to "sell the farm" for funds to buy now. On the other hand, we could be at that time and not know it. I am buying slowly at this time. Plan well, execute your plans after committing them to the Lord and praise Him for the results. There is NO OTHER WAY!

By the way, on the political front, it seems that the present administration is doing everything in its power to convince the us to vote against the Republicans. Perhaps, this is the insiders' plans to put their selected person into the national offices of our land. This has happened over and over again in our political history. Then we, the voters, are offered only a choice between their two picks.

Best to each, Doug

Gold in a Correction - I am buying!

Gold traded as low as about 802 and change. It is now at 806.50 and still under some downward pressure. Guess the banks and governments were scared. They and the cartel have, in my opinion caused this correction. It give us opportunity to add to our portfolios. At any rate, I am seizing the moment.

I like GDX (The ETF in major miners.). Last trade was at 48.16. This is a bit pricey for many folks. I have purchased the (GDXCU) Mar Call options with a strike price of 47 at a cost of 5.80. Have more orders in to buy additional options.

Gold has dropped again to 804.

Hang on, because I believe this will be a short term sandy spot in the climb which will follow taking gold much higher.

Best to each, Doug

Gold Is Correcting Some Over Night

This www.StockCharts.com graph is for GDX which is the Exchange Traded Fund (ETF) covering many of the major mining companies. It provides participation in the precious metals mining business for the larger well known companies.

Owning it, is similar to owning shares in a closed in mutual fund in that the shares are traded on the American Stock Exchange (AMEX). It enables one to participate in potential growth of the mining industry without directly purchasing shares of the major companies; such as, Newmont and Barrack.

By the way, for those of you with higher risk tolerance, options are offered on this particular ETF. I plan to purchase Call options on GDX for the first quarter of 2008, so I am letting you know in advance of my orders.

Gold over night is selling in the price range around $825, so we may be in for a correction on M0nday which will offer us another buying opportunity. For the last several days, it appeared that we would see gold trading between $830 and $845, but it has broken below the $830 support level. We saw it attempt a run at $850 twice only to fall back below about $845.

I will be making more purchases at these lower prices, but will be slow to commit a large amount of funds. It seems better for me to ease in over the next few days or weeks if the lower prices continue.

Be assured, this is in no way a break in the bull trend of gold. It will go higher. There is too much downward pressure on the dollar. Further, there seems to be a building exit from dollar holdings as banks, funds, and individuals seek protection from dollar losses. They are seeking a safer commodity than the paper currencies.

We must continually rejoice in the wisdom or our Sovereign God. While He is sovereign over everything and every body, He has given us brains to use. We are not to be blind and oblivious to the situations He brings upon us. We must prayerfully act in accordance with His word and trust in Him for success or new direction. Our plans are fallible, but His are not. Often it is His plan to redirect our plans through the failures He gives us. Praise King Jesus for each of His acts on our behalf.

Best to each, Doug

Gold Must Decisively Pass $850

For gold to continue on its current upward thrust, it must pass $850. It has made three good spikes to about $840 in the last 36-48 hours during which time, it has stayed mostly above $830. The $850 presents a near term resistance level. This is certainly a psychological barrier which must be broken. At this time, gold is at $837.

Silver is lagging behind gold, due to the very strong cartel involvement in silver. The shorts on silver are extremely numerous, much more so than those on gold. This is a drag on silver. However, silver is at $15.57 as this is written. At some time, silver will lash out at the short positions and crucify the holders thereof. It is only a matter of time for this to happen.

I have recently bought speculative mining stocks >> Brett Resources (BBRRF) and Jinshan Gold (JINFF). Both are plays on China's gold mines. While I am not overly bullish on China, because of the totalitarian government, there should be no real danger until after the 2008 Olympics. That is, if there is really any danger. By the way, the government is allowing a good deal of economic freedom for businesses. Perhaps, laying fewer regulations and less taxes on them than we experience here in America.

The Chinese Yuan is at an all time high against the dollar. It, too, is a paper currency, but has much more upward potential than the ailing dollar at this time. The Euro is much stronger. Even the Canadian Dollar has surpassed our dollar for the first time in history. For the dollar, it is look out below! We must find better assets to preserve whatever wealth we currently have. As mentioned yesterday, I am moving funds out of dollar denominated money market funds to brokers, so they may be used for mining stocks and ETFs in precious metals.

Tomorrow is Friday and we will see how the traders react in anticipation of the week end away from markets. Friday may well be a day of decision on the direction of the markets, as well as precious metals. We will have to wait and see what the markets reveal to us.

Review your portfolios on a continuous basis. It is not the time to buy and hold, except for the precious metal investments. Continue to commit your plans to the Lord Jesus Christ and depend upon Him for the results >> whatever they may be.

Best to each, Doug

Gold to 845 & Silver to 16

Gold broke through $845 and silver through $16 overnight. Both are off a bit, but still well up for the day (It is early): Gold $835.90 and Silver $15.54 with both operating on an up tick.

From today's Daily Pfennig (Free from www.everbank.com World Markets)"How about the Commodity Currencies? WOW! What a super ball bounce! Initially, the Asians bought the Commodity Currencies of Aussie, New Zealand, Canada, South Africa, Norway, the U.K., But then it spread, like wildfire after comments by Cheng Siwei, vice chairman of China's National People's Congress. Cheng was originally quoted as saying China should diversify its reserves by buying more "strong currencies" such as euros.  Although Cheng, who a history of making slightly maverick comments, later retracted the remark on euros, the dollar managed only a marginal rebound and sentiment clearly remains very sour.  Very sour indeed! This is HUGE! The dollar has literally fallen out of bed overnight... And the European traders are adding insult to injury! Go ahead and skip down to the currency roundup and take a peek at those currency levels... This is a day to remember, folks... And it's not just the high yielders plus euros that have gained VS the dollar... Shoot Rudy, even Japanese yen, and Swiss francs have joined the party!"

What a party for the currencies, precious metals, and oil (to over $98). Is this it? Is this the final demise of the dollar with precious metals and everything we buy escalating in price? I do not think so, but am pleased to wait and see what each day brings forth. Long term, the dollar seems to be destined to lose purchasing power. King Jesus is the one in control and the one who has the knowledge of the future. We can only examine what we see to attempt to find the trend in markets. It is wise to stay with the prevailing trends which at present are dollar down and precious metals and commodities up. Remember the trend always continues until it ends. The masses have yet to join in on the party. That comes later. Until then, I am riding the upward trend in precious metal prices as the dollar moves down.
International central banks realize this without a doubt. Many are diversifying out of dollar reserve and replacing the dollars with other currencies and precious metals. Many investors are beginning to wise up and begin a flight from the failing dollar. The loss of wealth by those continuing to hold dollars will be very great.

I am buying cautiously into mining stocks and call options on some of the better ones. I am also moving out of dollar denominated money market funds. You must make up your own mind in consideration of your risk tolerance and the present state of your portfolio.

Some of us have an early start in this bull market while many more folks are oblivious to what is happening. Will the price of gold go up for the foreseeable future? I doubt that it will continue upward without a correction along the way. However, the upward trend is very strong, at present. The dollar is under extreme present pressure as banks are moving away from it. Were it to lose its world reserve status, the downward drop of the dollar would be significant and virtually instantaneous. At that time, it would be a bit late to be joining on the precious metals bandwagon as there would be a mass exodus with the late comers jumping in with both feet. That is the time to be unloading your mining stocks.

Rest in the comfort and knowledge that King Jesus is in control of this and that there is nothing in Heaven or on earth that can separate His people from His love.

Let's Move Out of Dollars

The U. S. government and the Federal Reserve is definitely on a course to significantly lower the purchasing power of the dollar. The collapse in sub-prime mortgages and the domino effect on major banks and mortgage lenders has placed both agencies on the horns of a terrible deli ma. Either the raise interest rates and bolster the dollar while murdering the economy or the lower rates and pump counterfeit, oops, paper dollars into the markets and kill the dollar. Neither solution will give the desired results. And each will bring a great deal of pain and suffering which elected and appointed officials earnestly desire to avoid.

I am reminded of Psalm 2:1-5: "Why are the nations in an uproar, and the people devising a vain thing? The kings of the earth take their stand, and the rulers take counsel together against the Lord and against His Anointed; "Let us tear their fetters apart, and cast away their cords from us!" He who sits in the heavens laughs, the Lord scoffs at them. Then He will speak to them in His anger and terrify them in His fury."

Their folly will not work! The path chosen will eventually destroy the dollar. A nation's prestige to a great extent is based upon the value of its currency and the integrity of its international actions. We appear to be failing in both and it is beginning to show in our loss of friends in the rest of the world. We are being more isolated daily.

I am always optimistic, because God is in absolute control of everything. There is a time and a season for everything. What many do not understand is that it is God's determined time for every event in our lives. God gives us His word as a guide for all of life. He gives us wisdom to see storms ahead and wisdom to often avoid disaster. I believe we are approaching a time of real substantial loss in the value of the dollar.

Today, I have begun to purchase more mining stocks (DROOY and a speculation BBRRF) and believe that I will continue to move out of dollars over time. It will be a slow and steady approach to these purchases and I will proceed cautiously.

Gold moved above $800 and has stayed there since November 2nd. It has bounced around between about $800 and $810+ on the bid side during this period and closed a $8.06 today. This is a 27 year high range for the metal. While it is discouraging for the dollar, it is encouraging for gold and the mining stocks.

Silver has begun to move, as well, and has stayed above $14 since about October 29th. It has trade between $14 and about $14.80 since then, closing today at $14.67. I believe that silver has some catching up ahead.

My priority schedule still stands, as follows: Precious Metals, ETFs in the metals, Mining Stocks, Natural Resource Stocks, and a small amount in stronger currencies. The defense stocks still look inviting, but I am more interested in preserving value away from dollars.

My plan may not be suitable for everyone. You must assess your risk tolerance, review your portfolio in view thereof. I am convinced that the dollar will continue to decline. If you agree, then it is important that you begin to act accordingly.

Gold is now up to $808 over night.

Remember to make your plans, commit them to Jesus Christ, implement the plans to the best of your ability and leave the results up to Him.

Best to each, Doug

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