Thoughts on Markets

Friday, September 12, 2008

Precious Metals Sill in Crash Mode - More on Christion Economics

Gold seems to be following a path very similar to that of the last few days. Narrow trading range until NY opens, then down. Silver is virtually the same.
Here we see the graph of GLD which is a daily proxy for gold. On the weekly graph it is below the 50 day moving average, but remains above the 200 day. The recent "correction" would require a lowering of the trend line. While I believe that gold is over sold by a wide margin, there is little indication of an end to the correction. Both physical gold and silver are in great buying ranges if you can find some. Perhaps, an alternative to the physical metals in hand are the Metals Select Accounts of World Markets or metal holding accounts of You can easily check out either or both on the internet.
The US Dollar has shown great strength since mid August. I believe it is over bought, but it is not wise to buck a strong trend. The dollar is a bit off today, but the graph shows a good deal of strength. It seems that dollar bulls are rushing into dollars in preparation for deeper recession or just as a "safe" haven.

Insurers and banks face huge CDS losses By Aline van Duyn in New York
Get the full story at this link:

From the Daily Pfennig:
"OK, the Big story I brought you the other day about the Credit Default Swaps and all the bad stuff that could have come from a "default event" just didn't pan out that way, and I guess we can thank our lucky stars... Yes, $1.4 Trillion in Credit Default Swaps were settled, but in a far different manner than originally thought. Once again the Gov't stepped in, and "took care of the matter" so that Wall Street didn't crumble to the ground.

The problem here folks, is simply that $1.4 Trillion that was Credit Default Swaps on the books of investing financial firms is now a government guarantee for Fannie and Freddie debt. So, they bailed out the "boys" that had booked BIG FEES on these Credit Default Swaps... I guess when one looks at it closely, it's probably a good thing that the catastrophic event didn't happen... But... You know me, and I'll always find a chink in the armor...

And here it is... Guess where the money came from to pay for all of this? Remember that printing press in the basement at the Federal Reserve that Helicopter Ben Bernanke told us all about a couple of years ago? Well... It got a work out! So... More debt is being put on the books of the Gov't... And more dollars are being printed, so that those loans can be paid back in the future with cheaper dollars!

I want to make something perfectly clear here... I, in no way, want to see the financial markets ruined. But, what I would like to see is a Gov't that didn't feel as though every market event is something they need to take on their books... Which in turn are OUR books! And, I'm writing a letter to my congressmen and asking them why... Was it that people who are elected to represent me on issues like debt, were not involved in this decision? Was it legal? Was it constitutional? Ron Paul doesn't believe it was constitutional, the bail out of Fannie and Freddie.. I heard him say so on the Glenn Beck show Wednesday night! I would think tax payers would all be contacting their representatives and asking them about this!"

For the record, our international debt and propensity to protect financial institutions at any cost leads to more inflation. There is no other way for America to even begin to pay its world debt. Thus, we should look for more dollars in circulation leading at some time to greater price inflation.

From a biblical perspective, I would like to consider the following from Deut. 25:13-16 "You shall not have in your bag differing weights, a large and a small. You shall not have in your house differing measures, a large and a small. You shall have a full and just weight; you shall have a full and just measure, that your days may be prolonged in the land which the Lord your God gives you. For everyone who does these things, everyone who acts unjustly is an abomination to the Lord your God."

This is one application of the eighth commandment of our God which is "Thou shalt not steal." The unequal weights were often used by individuals and merchants to defraud one another. This was and still is theft.

The commandments of our God apply to every person who has ever lived or will live. Though we do not often consider, the same apply equally to governments. When governments debase their currencies, this is theft. Governments and banks are masters at this deception and use of unequal weights. They employ unbacked paper currencies for the express purpose of defrauding citizens. God will not hold a government guiltless when it violates His Law-Word. God's word does not return void, but accomplishes what He desires.

Think and pray about this. We should thank God that He has given us His word to judge all of our own actions and those of the government. We must daily study His word to gain the wisdom necessary to guide all aspects of our lives.

Best to each, Doug


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