Thoughts on Markets

Wednesday, April 23, 2008

There Are No Markets Anymore, Just Intervention

The graphs, above tell the sad story of how the price of precious metals is being manipulated. With the dollar plunging, oil rising, and base metals strong, it is amazing that the precious metals are not attaining prices in relation to the devaluation of the dollar. Remember gold should be in the $2,000 - $2,500 range, but it has been held down to less than half that.

Note the following from Casey's Daily Resource Plus: "That the metals didn’t react more powerfully is puzzling, and adds some credence to the view that the market is being heavily manipulated in order to make the collapse of the dollar seem less awful than it really is. . . . . . . . . .As the US$ fell...and oil (plus the CRB) rose to new record highs...neither gold nor silver was allowed to join in the party. Gold should have been screaming to the upside yesterday...and Monday...and Friday. But when the '8 or less' traders in the Commercial category of the COT control 80% of the entire Commercial short positions in both these metals, they can pretty well do what they want...and they do.

Every attempt at a rally in New York Globex trading was squashed flat once again, and what gains there were, were negated once the Comex closed for the day. Silver did little better."

Check out this article:
There Are No Markets Anymore, Just Intervention at

Folks, it looks to be a long dry summer for the precious metals. I have been stopped out of more of my mining stocks. Gold is now at 902.20 (was below 900 earlier) and silver at 17.11. I still believe that we will see both much higher by the end of the year, but we will have to wait until fall. It is tough to hang on now, but as the dollar continues to drift downward, there is no safer place to be than in the precious metals, mining stocks and other commodity stocks.

By the way, have you read about the riots over food shortages in many parts of the world? Yes, the price of grains has accelerated greatly, partially due to the misuse of them in production of ethanol. I say misuse, because ethanol costs in energy for production the equivalent of almost 1.5 gallons of gasoline and the finished product provides about 20% less power than gasoline. Speaking of gasoline, we are experiencing gasoline at about $3.40+. I really reacted when I found myself rejoicing that I found cheap gasoline @ $3.299 the other day. That is a bummer!

The stagflation continues with price inflation putting the bite on our income and the income not keeping up. Batten down the spending and search for bargains which enable you to spend the least amount for necessities and forego discretionary spending. We are headed for a lower standard of living.

Remember that we are all called to serve the Sovereign King Jesus. This is true, regardless, of our individual beliefs. Many will ignore the call and pay the penalty, but many will be enabled by the Holy Spirit to come to life and answer the call. Pray that you are one of the elect!

Best to each, Doug


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