Thoughts on Markets

Sunday, May 11, 2008

Precious Metals Higher



I writing this on Lord's Dy night (May 11th). The Sidney and Hong Kong Markets are open as is the NY Global Mkt. Gold has moved up some and seems to be trading a higher level. Silver is following the path established on May 9th.

Both are showing a sign of more strength. Remember that we are still in the summer period of languishing prices of precious metals. I had to turn on my A/C the night before last. Since I live on a hill, I get great breezes that are around. Reluctantly, I turned mine on as the temperature reached 90+ degrees at night. I dearly prefer the fresh air to the indoor A/C recirculated, but at times, the temperature forces me to use that of the A/C.

I am trading options on the mining stocks and doing some trading in futures in commodities. However, I have stopped trading in mining stocks. Both DROOY and HMY are up from the prices of my purchases last week. I knew that the prices were a bit too low at that time. I am thankful to the Lord that He gave me the wisdom and courage to add to my holdings. This is a change from the normal. The prices usually drop some after I make purchases, but not this time. Thankfully, I have added to both of these core holdings at a reasonable price.

It takes intestinal fortitude to add during these times, but I consider it important to do so. We never know when the prices will move into the third wave of excessive exuberance and go parabolic. Gold has been clearly held down in price by intervention of the central banks and governments. This has been true since about January of 1980. However, it is up considerable from the lows of the intervening years since President Nixon removed the interchangeability to dollars for gold on August 15, 1971. Since then we have experienced a considerable increase of the unbacked dollars in circulation and the natural depreciation of the purchasing power of the dollar.

The obscene expansion of debt of America and the accompanying expansion of spending at all levels of government and on the part of consumers has lead us to the time when the standard of living in America is bound to drop. Price inflation has become a way of life for us.

It is imperative that we reduce our spending and turn to saving. This is the true definition of saving >> foregone consumption. The saving forms the basis of investment in business which is the life blood of business. Without savings, America is doomed to become a third world country.

Of course, all is in the hands of the Sovereign God of all. However, few of us recognize His majesty, and power. He demands and receives recognition of His people and is continually preparing them for eternal life with Him. In the last days, He will balance all the books and pay what is due to everyone. He will reward the sheep who have followed His ways, and punish the goats who have ignored Him and lived out their lives for their own satisfaction.

Best to each, Doug

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