Thoughts on Markets

Friday, August 22, 2008

Volatility is the Watch Word for These Markets

Both silver and gold have settled down in early trading possibly setting the course for this Friday. Traders are making adjustments due to the weekend ahead. The shortage in supply of precious metals at these low prices continues. It is evident in the statement of the U. S. Mint quoted in newsletter today, as follows:

"Because our vendors are not able to supply enough one-ounce gold bullion blanks to meet the unprecedented demand we are experiencing, the United States Mint notified our authorized purchasers on August 14, 2008, that we must temporarily suspend sales of the 2008 American Eagle One-Ounce Coin.

"However, one-half ounce, one-quarter ounce, and one-tenth ounce 22-Karat American Eagle Gold Bullion coins are still available to authorized purchasers and are in stock at the United States Mint. In addition, one-ounce American Buffalo 24-karat gold bullion coins are still available to authorized purchasers and are in stock at the United States Mint."

Price controls whether from government or imposed by paper metal prices, still result in shortages. The prices producers can obtain in the market are too low and discourage them from offering their products for sale.

Apparently, the following joke is traveling around Russia these days:

A wry Russian joke captures the one-sided relationship between prime minister and president:

Putin and Medvedev sit down for lunch at a Moscow restaurant.

The waiter asks,“And what will you two gentlemen be having today?”

Putin replies, “I’ll have the steak.”

“Very good, sir. And what about the vegetable?”

“He’ll have the steak, too.”

Guess who is in charge. Putin asserted Russia's growing power in the Georgia incident. Russia has shown that it controls the flow of energy products to Europe. There is no doubt that Putin is in charge.

There is much unrest in the world and it has begun to flare up in the mid-east and in Pakistan. What is next?

All of this should be very positive for precious metals. Also, the dollar took some severe hits yesterday as the leading indicators were down 0.7% against a forecast of -0.1% as reported by the Conference Board. It reported also that there would be slow growth for the rest of the year and a possibility of a halt in growth. They forecast a possible recovery in the second half of 2009.

The play of the dollar and commodities is very volatile. Adding to the play was the Philadelphia Fed's manufacturing index which came in at -12.7 the ninth consecutive month of worsening activity in the area.

Both silver and gold are on a down tick with silver at 13.37 and gold at 825.60. More volatility ahead. It is early in the day. Mining stocks are mixed today. Yesterday was definitely an up day for the mining stocks. The DJI is up some 177 at present - Up, Down, Up, Down, Up. Always keeps is guessing.

Remember to join in corporate worship of our Lord on the coming Lord's Day. It is important to participate in the worship and sacraments of the church. The grace and fellowship with other believers is valuable for Christian growth.

Best, Doug


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