Thoughts on Markets

Tuesday, August 05, 2008

All Commodities are Being Hammered


Well, folks, we are being treated with more of the same for the precious metals. Both of ours were hammered again yesterday and it looks like more of the same today. The mining stocks are still suffering even more than the metals themselves. Below is what Casey's Daily Resource Plus had to say on the subject today:

"Needless to say, I spent some time on the phone with Ted Butler yesterday. He feels (and I sadly agree) that both gold and silver are being set up to be smashed down one more time before the 'all clear' can be sounded. Monday was just the start. The prices that both metals sell for at the very bottom is not as important as the number of long contracts that the bullion banks can get the tech funds/small specs to liquidate. In gold, it could be around $870...and don't forget that the boyz got silver $2 below its 200-day moving average in August 2007. So be prepared for anything. As Ted Butler said..."it's painful, illegal and manipulative...and it's no fun to watch your portfolio shrivel". Ted's latest commentary is part of today's required reading, and it's linked further down."

Here is the link to Butler's article: http://www.investmentrarities.com/08-04-08.html I recommend that you read it. His articles are usually on the money and interesting; albeit, often long. They are worth the time.

Remember, we are still nearing the better times for precious metals as the cooler part of the year is just over the horizon of time.

By the way, I just had a thought about the drop in commodity prices. The Chinese Olympics are due to start next week and the Chinese government is vitally concerned about showing off China to the world. There were rumors, likely true, that a lot of the manufacturing plants in China will be shut down during the Olympics to remove some of the pollution. If that happens, would not there be less demand for manufacturing raw materials and energy from now until after the Olympics. Makes sense in my feeble mind. What do you think?

Of course, I am not discounting that there seems to have been a cut back in demand for gasoline here and in Europe. There is a slow down in both of our economies which could be a contributing factor to the drop in commodity prices, as well. By the way, the slow down here is becoming particularly evident in domestic automobile sales. The "bargain" prices and 0% financing are testimony to the dropping demand for new cars. Even Toyota is cutting back on the Tundra pick up.

We have at home the distraction of the approaching election. The sound bites are presented ever more rapidly and consistently. Reminds me of the question, "How can you tell if a politician is lying?" That's easy, "He is lying if he opens his mouth." Sad, but too often true.

Silver is at 16.70 and gold at 885 now. Both are on down ticks. Be very careful in buying the mining stocks even at the current "bargain" prices. Of course, it is virtually impossible to always buy at the very bottom and sell at the very top. However, close is quite adequate. I did add to DROOY and HMY yesterday.

I am trying to stay in gold, silver and cash.

Study the bible as the only standard for all of life. It was written for us by our Creator who is in absolute control at all times. He knows what is best for us and has given us this wonderful manual for life.

Best to each, Doug

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