Thoughts on Markets

Monday, August 04, 2008

Gold and Silver Languishing - America is Short of Vital Natural Reources


Gold and silver are being shoved down again. This is in spite of the facts that our unemployment at 5.7% (by government manipulated statistics) and workers' hours have been cut by at least 0.4%. By the way, the Mexican Peso is at the highest level against the U.S. Peso, I mean Dollar in almost 6 years.

The Federal Reserve remains nestled rather uncomfortably on the horns of the same dilemma. To strengthen the dollar and fight inflation a rise in interest rates is required. If the interest rates are raised, the economy will come to a virtual halt. That is not a very nice place to be. Though we are being financially punished, I am glad not to be facing that decision. Of course, I would opt for fewer dollars in circulation and the resulting financial chaos now rather than later when the disruption would be much worse.

From all over the world, governments are crying, "Mine. Mine. Mine." They are declaring their holdings of vital rare, common, and precious metals are theirs alone. Check out this article at the following web site. http://www.resourceinvestor.com/pebble.asp?relid=44996 This makes sense. Most of these materials are vital for the production of many tools, such as, drills for deep well drilling. These natural resources are not available in These United States. In fact, most are held by governments which are not very friendly to us. Without these minerals, we cannot drill, build air planes, and military materials. Thus, it is no wonder that our standard of living is shrinking.

Meanwhile, the mining stocks are languishing at levels which make purchase very tempting. If you have not gotten on board, I believe this would be a time worth considering. The following are a few examples of buys for me: DROOY 5.95; HMY 9.92; IAG 6.62; KGC 17.99; VGZ 3.83; SLW 12.39; SSRI 28.36. There is always the possibility of lower prices given the intervention and the summer season. We have not seen these prices in months.

Gold is at 905.40 and silver 17.30. Both are off their lows, but not very strong at present.

Thanks be to our God for the peace He provides His people in the midst of the storms of life. The storms are often presented to us for our growth in faith and trust in Him. Let us always be sure to thank Him for them and ask that He would show us the area of our lives He is trying to grow for us.

Best to each, Doug

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