Thoughts on Markets

Thursday, September 25, 2008

I the Dollar on Its Last Legs?

Yesterday, UBS gold analyst John Reade had this to say..."Comex option expiry on Thursday has a lot of open interest between $890 and $910/oz, and we believe it is no co-incidence that gold is struggling to get far from here at the moment. Barring an external factor breaking gold out of this range - which effectively means either a big move in the dollar, perhaps crude oil, or possibly risk aversion - then we will remain around the current levels until after the expiry, which takes place after the Comex close. Then gold will be better able to move more freely, as gamma hedging will reduce."

The, above, article from Casey's Daily Resource Plus reveals the motive behind the manipulation of Gold prices, and to a lessor extent of silver, as well. Perhaps, after today's expiry, we will see gold prices and mining stocks sprint forward tomorrow.

The 24-Hour gold graph above reveals the extent of the intervention by the bullion traders into the market. There can be no other explanation for such a significant drop in the price of gold coincidence so soon after opening of the NY Market. Can this be anything other than manipulation?

With prices so temporarily low, I believe this to be a great buying opportunity for precious metals and mining stocks. I am buying DROOY at market which is presently $5.00.

From GATA today:

"China stops its banks from lending to U.S. banks


Mainland Lenders Ordered to Halt Interbank Deals with U.S. Firms

By Jane Cai and Adam Chen
South China Morning Post, Hong Kong
Thursday, September 25, 2008

BEIJING -- Mainland regulators have told domestic banks to stop lending to United States financial institutions in the interbank market in a bid to prevent possible losses during the financial crisis, industry sources said yesterday.

The ban from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to US banks but not to banks from other countries, a source said." For the complete article:

Folks, this is serious. The world sees what is being hidden from us. At the very least, the smoke and mirrors from those here in the know are hiding the facts from us. We must learn to prayerfully investigate and act in accordance with God's Biblical standards. Pray for wisdom!

"Time for a gold rouble?

24/09/2008 16:29

(John Laughland for RIA Novosti) - There used to be a habit of framing old Tsarist bonds and putting them on the wall. Lenin's decision to renege on the Russian imperial debt meant that it became mere paper, interesting only as a historical relic.

In the light of the recent financial crisis in the USA, could the same thing happen now to the bonds issued by the American government, and could the country which has dominated the world for the last half century now enter history as a bankrupt state? And what can Russia do in the circumstances?

The decision by the US government to inject $700 billion into the financial system means that the already gigantic annual budget deficit of the American state (previously some $450 billion a year) will now rise by a factor of three. The total state debt of the USA will rise to well over $11 trillion. It is obvious that such a colossal debt can never be repaid. Instead, it will be serviced by more debt in the future. The contrast with Russia, which has painstakingly sanitised its state finances to the point that it now has more money to lend than the IMF, could hardly be greater.

The recent financial crisis itself grew out of this American culture of debt. To some extent, all countries share it: since 1914, all countries use paper currencies, i.e. debt instruments which are never redeemed. Whereas before the First World War, bank notes were essentially vouchers for specific amounts of gold cash, now the "promise to pay the bearer" (which remains inscribed on British bank notes) is in fact hollow."

The article goes on to recommend that the rouble be backed with gold. That would be a very desirable action which is not impossible for Russia to take. Will they do it? I don't know, but think of the value of the rouble in international finance were it backed with gold.

In a Bloomberg story..."Investors outside the United States, who own more than half of all Treasuries outstanding, say the government's $700 billion plan to revive the banking system will diminish the appeal of the nation's bonds."

How about that, even our Treasury issuances are being questioned by foreigners. Maybe we should wise up, too. As the dollar depreciates in value, Treasuries can take hits which far exceed the meager interest paid. Makes sense to me. Thus, they really become "Instruments of guaranteed confiscation," as Franz used to say.

Folks, the situation does not look rosy for the dollar. Perhaps, we will have the thorns without the beauty of the blossoms.

Keep your focus upon King Jesus and His word.

Best, Doug


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