Thoughts on Markets

Friday, April 18, 2008

Cartel Pushes Precious Metals Down

Silver 17.52 and gold 911. What a game the cartel and banks play with our precious metals. There is an end to the game, and our concern is as was David's seeking God's blessing, "How long, O Lord?" The graphs show how much of an impact the central players have on the out come of the game.

The action of the price of gold is particularly remarkable in face of the fact that the loss of purchasing power of the dollar should have moved the price of gold in the 2,000 to 2,500 range in comparison to the 1979-1980 peak. This can only be explained by manipulation of the price by the cartel and banks. We are privileged to have another buying opportunity, before the Gold Rush.

The question now is: Was the recent rise after the correction only a break in the downward move or is this a new correction? Nevertheless, we must remember that we are still in the summer season which is normally not too good for the precious metals. I thought and still believe that the new impact of affluence in Asia will have a long range new impact upon the price of the precious metals.

China is allowing the Renminbi to increase against the dollar over time. Their selected time. Also, China is shoring up for the summer Olympics. They, without a doubt, want it to be a great show for the world. China has become a major player in world finances and manufacturing, and they want to reveal this fully during the event. While they are allowing more economic freedom to their people, they are still a totalitarian government. This must always be in the back of our minds.

It is unlikely that there will be a massive intervention by the central banks to bolster the dollar, because the U S bank lacks the resources to repurchase dollars. We are totally dependent upon foreign purchases of our debt for survival. The Euro has exhibited a great deal of strength in recent days pushing it way to almost $1.60 which is about twice its original value. The dollar is showing a bit of strength today, but a day or so on the upside does not mean an end to the trend which is downward.

The general market has begun to show some strength. The DJI are up again today to about 182 pushing 12800+. This is a strong showing and may reach a level to confirm the continued strength of the Transportations. It remains an exciting and challenging market we are facing.

Even the financials are showing life with XLF (Financial ETF) moving above 26.50 which it has not done for a few weeks. This is remarkable in face of the continuing reports of losses from the bursting housing bubble. Recently, we have seen write offs by Merrill Lynch and Citibank.

The employment reports are not encouraging as the recession seems to be gaining a stronger foot hold on the economy. Thus, stagflation continues which may well bring the end of our empire binge.

Rest in the Lord and depend upon Him for everything. We must do our part, but the results are in His hands. We, as joint heirs with Jesus Christ, remain firmly within the Covenant which God made for Abraham and his descendants: that is, those of the faith of Abraham.

Best to each, Doug


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