Thoughts on Markets

Friday, June 06, 2008

Precious Metals Rebounding Today

Both of our favorite precious metals are moving up rather nicely today. Silver is the clear winner in the race, though. Presently, Gold is at 899.80 and silver at 17.51 with ticks on both upward. That is nice. Would that they would keep it up for a while. This rebound is a reminder that we are to buy on dips, such as the one we just had in the last few days. Buy on dips, but use caution. I believe we are not yet at the "sell the farm" place yet. The third phase lies ahead weeks, months, or years. It is up there somewhere. That will be a real blast!

Yesterday and today the mining stocks have been following the precious metals. they are posting gains with most showing in the green on my screen. DRD Gold (DROOY) is at 7.82 and Harmony Gold (HMY) at 12.00. Almost all are up!

The jawboning of Big Ben was trumped by the ECB hawkish remarks indicating a real effort to head off the inflation. The indication from Europe was that there were to be interest rate hikes in the future. Perhaps, not this month, but in the not too distant future unless price inflation corrects by itself. The result is a big drop in the dollar versus the other paper currencies today. The dollar has definitely resumed its downward spin.

The bursting housing bubble in England is reported as worse than here. That is a switch. The British pound was a strong currency until recently. Now the sub-prime and prime mortgages have come home to roost in England, too. This things seems to be circulating around the world as time goes on.

Back to Debt:

We examined yesterday the explicit requirement for the lender to cancel debts to brothers during the seventh year. We, also, looked at the implicit requirement for the borrower to limit his debt to one lender and to end debt during the seventh year. These requirements are to provide those of the household of faith with a Sabbath from debt.

Let's look at another biblical principle on a special type of debt: that of co-signing.

Pr. 6:1-5, "My son, if you have become surety for your neighbor, have given a pledge for a stranger, if you have been snared with the words of your mouth, do this then, my son, and deliver yourself; since your have come into the hand of your neighbor, go, humble yourself and importune your neighbor. Do not give sleep to your eyes, nor slumber to your eyelids; deliver yourself like a gazelle from the hunter's hand, and like a bird from the hand of the fowler."

Pr. 11:15, "He who is surety for a stranger will surely suffer for it, but he who hates going surety is safe."

Pr. 17:18, "A man lacking in sense pledges and becomes surety in the presence of his neighbor."

These seem to be a warning against co-signing for loans of any kind. From a very practical perspective, why does another person need to have a co-signer for a loan? Upon checking, you will find that the potential borrower does not possess a sound track record for prompt payment of past loans or a good name which would enable him to sign for the loan by himself.

In other words, in the eyes of the lender, he is not worthy of the risk involved in lending him the proceeds requested in the loan application. Therefore, a co-signer, who is qualified will have to sign with him for the loan to be approved.

Pr. 22:26, "Do not be among those who give pledges, among those who become sureties for debts. If you have nothing with which to pay, why should he take your bed from under you?"

Were you to in-advisably co-sign, you have taken on the loan for yourself. If the lender has any problem collecting from the unqualified first party to the loan, who do you think will have to pay.The co-signer upon whose record the loan was made, is on the hook to the lender to make good on the loan. The lender does not have to collect from the first party, but may go directly to the co-signer whose signature guaranteed the loan.

Thus, the warnings are to the unwise co-signer, get out from under the debt as soon as possible. Do not sleep or slumber, concentrate on having the loan contract fulfilled as rapidly as possible. You are to use haste as a gazelle from a hunter or a bird from a fowler. These wise animals get away instantly and you are to do the same. You must escape from the trap to which you have exposed yourself.

The principle is that you should never co-sign. Do not be misled by the warning against co-signing for a stranger, because the warning is also explicit for a neighbor or brother in the faith. We must always be ready to help a brother in need, but it is far better to give him or lend to him what he needs. Co-signing is out.

I sincerely, hope that these special messages on Christian Economics are helping all to learn of God's way of personal finances. Please, send comments and suggestions as they come to mind.

God's way is always best and those who follow it are blessed in many ways.

Best to each, Doug


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