Thoughts on Markets

Wednesday, July 23, 2008

This is flagrant intervention, not Free Market action!

Folks, we are facing the greatest period of intervention into the precious metals markets that I can remember. The boyz and the Plunge Protection Team are busy manipulating these markets in ways we have never seen nor even expected to see.

Gold has been depressed to $925.20 and silver to $17.51. The free market does not exist! This is blatant manipulation by deep pocket funds, banks, and the government. The war on gold is in full swing.

While the price of the precious metals has been hit severely, the price of mining stocks, while down, has not been as severe in most cases. DRD Gold (DROOY) at 6.44 and Harmony (HMY) at 11.04 are screaming buys at present. Even the preferred silver miners: Pan American Silver (PAAS) @ 31.95 and Silver Standard (SSRI) @ 28.35 are good buys. I also like Jan 09 Calls on The Miners (GDX). You investigate and make your own decisions depending upon the present assets in your portfolio and available cash on hand.

We are still in the summer months which usually give us doldrums in precious metal prices. The fourth quarter is very likely to be better for the precious metals. It historically is!

The big question each of us must face is, "Will there be more bank failures?" I do not believe the banking industry is out of the woods yet. There are likely to be more write offs of bad debt and consolidation of banks to hide the real financial situation.

The general market is looking much better, as a result of manipulation. However, the jury is still out deciding whether it is a new bull market or simply a bear bounce. The question here is, "Where is the bottom or have we seen it already?" Richard Russell says watch the Dow July 15 low of 10962.54. It may have been the bottom. The market will tell us over time. We can only guess at this point.

As goes the dollar, so goes These United States. The current tenuous health of America is based upon the dollar as the reserve currency for the world. Currently, we are seeing Sovereign Wealth Funds and Central Banks moving away from dollars. If this continues, our financial woes will increase exponentially. Since the Federal Reserve is the creator of the dollar reserve currency, we enjoy the benefit of international trade in dollars. Other nations must convert their currency to dollars to trade in most of the international markets. The Euro and other currencies are being used more and more in some international markets. This erodes the advantage of the dollar as the reserve currency.

Folks, we are in unchartered waters. Perhaps, this is the wrath of God being poured out on the nation which has turned its back on Him. The current moral decay in America is testimony to a people who no longer honor and respect the Sovereign God Who has so abundantly blessed our nation. At the very least, His blessings have been removed. It is up to us, as Christians, to humble ourselves before Him, confess our sins, seek His face and His way in scriptures and turn back to Him. Without this, our nation is doomed. I still rest in His promise that nothing can separate us from His love for us in Jesus Christ our Lord.

Best to each, Doug


  • At 10:08 AM, Blogger stocksystm said…

    Is it just me or does Richard Russell sound like a snake oil salesman? "The market will tell us over time if July 15th was the bottom." No sh*t Sherlock, tell me something useful.

  • At 11:53 AM, Blogger Doug said…

    Richard Russell has been around a long time and is quite familiar with markets. In my opinion he gives excellent advice.

    He knows, as do I, that precious metals retain purchasing power while the paper currencies do not. Therefore, he recommends holding gold and silver. He also suggests holding some dollars to take advantage of buying opportunities.

    If you bought mining stocks and precious metals during earlier this and last week, you were wise.

    This is useful to wiser folks. Hope you followed through, too.

    Best, Doug


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