Thoughts on Markets

Wednesday, April 09, 2008

Bull Trends in Place - Metals Up Today!


Above, we have the 24 hour silver and gold graphs from Kitco.com. Notice how similar the green (today) curves are. That is amazing! One could overlay one on the other and there would be very minor variation. Another exciting over night trip for both. This time, the prices really escalated at the New York opening.

Yesterday, there was little volatility in the prices. The volume of trading seems low, as well, so we could have increasing volatility. Both are still on a long term bull run. At times it will seem as a walk or crawl, but upward is the trend. Expect corrections along the way.

Meanwhile, our economy is not expanding as many have told us. See the following from the DailyPfennig.com newsletter:

"Unfortunately, I don't think anyone would use 'strong and stable' to describe the US economy right now.  Even the FOMC seems to have finally come to the realization that we are in a recession!  Yes, the minutes of the last FOMC meeting was released yesterday afternoon, and they showed the Federal Reserve officials are now anticipating that the economy would shrink in the first half of the year.  Some were even concerned about "a prolonged and severe economic downturn."  Finally!!  I guess they are just a little slow on the uptake, they had to wait until the data hit them like a 2 x 4 upside their heads.

Policy members said they saw little sign that housing markets have reached a bottom and 'some believed that a prolonged and severe economic downturn could not be ruled out' according to the minutes. Even Big Ben had to admit last week that the US economic expansion is coming to an end. So now, over a full year after Chuck warned of the coming downturn, the Fed agrees that we are in a recession. I guess sometime next year, when inflation hits double digits, we will hear them start worrying about rising prices.

The results of a survey by Bloomberg news showed that economists now predict the US economy will not expand at all from January through June of 2008. A majority of these economists now project the US is, or will soon be, in a recession. We believe we have been in a recession since the beginning of the year, and we've got more than a few more months before we get clear of the downturn. Meanwhile, the dollar will continue to slide vs. the currencies of those economies who are more stable."

Things are not any better in London, either. The housing bubble has burst there, as well, and prices are dropping.

Looking at the precious metals today, we find gold at 928.80 and silver 18.15. These are comfortable prices. Gold must hold above 900 to show signs of moving to new highs. They will be reached, but we will have to be patient for a time. Meanwhile, look for opportunities to add to your portfolio.

The mining stocks are holding firm. Most are up today. Here are some prices: AGXM 1.49; CDY 1.19; CDE 3.63; DROOY 9.75 (That is a potential buy); GDX 49.22; GFI 14.22; GSS 3.45; HMY 11.49; IAG 7.45; KGC 23.54; KRY 2.06; MRD 6.48; NEM 47.26; PAAS 39.57; SLW 16.39; SSRI 30.79; VGZ 4.38, AND XRA 4.43. All in all, not back considering the bouncing of the prices of the metals, themselves.

Wonderful weather here in Texas. A bit dry, but cool nights and not too hot during the day. The Lord is blessing us in so many ways. Weather is only one of His blessings. We must always count our blessings and praise Him for each.

Best to each, Doug


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