Housing Report Worse than Expected

"The bad news today: New home sales fall more than expected, head of IMF gives shock fiscal warning, European banks could face greater disclosure of their derivative contracts, 10 European hedge funds halt redemptions...The manager of one of Britain's biggest hedge funds said: "It's been an extraordinary week. Even in the crash of 1987 I don't remember so much carnage." And lastly, the ECB has secretly rescued the Spanish banking system." (From Casey's Resource Plus)

More bad news yesterday sent both gold and silver higher. Platinum was the big winner pushing to about 1735 before slowing and dropping a bit. Silver has remained strong and is now at 16.61 while gold is at 923.30. All three precious metals have dropped some, but are still on higher plateaus.

The www.kitco.com graph, above, shows that gold continues on its upward movement. We will have to wait and see if it goes parabolic. The run upward has been swift and may take a breather for consolidation before moving forward and upward again.

The mining stocks are recovering, but not to the same extent as the metals, themselves. This is typical, but it is also typical for the mining stocks to sprint forward in the latter stages of the precious metals bull market. By the way, the news on the precious metals is becoming a bit more evident today.

The incapacity of the South African electrical supply has virtually shut down all the mines in the country. The concern is that the power is insufficient for the safety of the miners who work some 2 miles into the earth. The government is doing what it can to restore the power, but the forecast for a complete fix is a decade away. Meanwhile, Harmony and other South African mining stock prices are suffering. Harmony, as well as others are at very tempting levels now, but I have not jumped on board, because of the power loss.


The Powershares DB Agriculture Fund (DBA), an ETF, looks good to me and I have purchased call options DBAGE (July Call @31). The prices of virtually all agricultural products are rising as we all know from shopping at the super markets these days. It is very likely that this situation will continue as ever more liquidity is pumped into the financial arena. This is a sector likely to grow as the "profits" for the Asian tigers increases giving rise to demand for products which we enjoy for food. A swing toward our food by the Asians has been reported and this will increase demand.

Closed-in mutual funds differ from the normal (Open ended) mutual funds in that they are issued in a limited number of shares and trade on the stock exchanges as other types of investments. The trading is among the investors on the exchanges. Open ended mutual funds have a varying number of shares which grow as investors purchase and decrease as investors sell. At times, one may find among the closed-in mutual funds opportunities to buy below asset value and at good dividend rates. There are two which were set up and managed by PIMCO which may appeal to some of you. PIMCO Corporate Opportunity Fund (PTY) trading at about 15.35 with an annual dividend of 1.38 or 9% and PIMCO Corporate Income Fund (PCN) trading at about 15.35 with an annual dividend of 1.28 or 8.34%. Both invest in high grade debt instruments of corporations worldwide. Check them out for yourself. I have not invested in them, but believe they could be good for IRAs where most dividends are not taxed.

I am becoming more interested in silver mining companies; such as, Coeur D'Alene Mines (CDE) 4.64; Pan American Silver Corp. (PAAS) 36.16; Silver Standard Resources Inc (SSRI) 15.16, Note that PAAS has passed SSRI is price again; and Silver Wheaton Corporation (SLW) 16.37. I have been trading call options on PAAS and SLW.

Remember options have expiration dates about which investors should be aware. After that date, they have NO VALUE.

Keep looking toward the written word in the Bible which is all about the living Word: King Jesus. He is the only way to eternal life and the abundant life on earth.

Best to each, Doug