Thoughts on Markets

Thursday, October 09, 2008

Big Move by Gold and Mining Stocks Yesterday

No markets only intervention from today's Daily Pfennig:

Yesterday afternoon I got a minute to read a newsletter that brought something back to my mind that I had talked about in July and early August, and that is the Huge Dollar Short Covering we saw in July while I was in Vancouver... At that time, it appeared very suspicious, and I said it was Gov't intervention... Well, it may have been some of that, but it now appears to be a widely known fact that the Gov't gave the "heads up" to several large banks, and allowed them to cover their dollar shorts and sell Gold... Hmmm... Don't you think it would have been nice for them to give all us investors the "heads up" too? This just ticks me off to no end folks... You can't believe how angry I get when I begin to think about this stuff!"

More on the international banking crisis also from Daily Pfennig:

"Speaking of messes... It was reported this morning that Kaupthing Bank, the largest Bank in Iceland, has fallen, as control was seized by the Gov't. The currency CAN'T EVEN TRADE AT SPOT! That means immediate cash isn't available, folks! This is very serious stuff! Somebody expressed dissatisfaction with the price we received in the market the other day at 171... Yesterday, the last spot trades were done at 259! UGH! A foreign exchange dealer at Nordea in Copenhagen said, "Effectively the krona can't be traded at the moment because there are no banks to clear the trade.""

That is extremely serious. A halt in trading of a national currency. I sure am glad that the coordinated rate cut by the central banks yesterday solved all the financial problems. NOT in spades!

Comments on the upward move in gold mining stocks yesterday from today's Casey's Daily Resource Plus:

"The gold shares were something else again. This was the biggest percentage move in gold stocks I'd ever seen. You too, eh? I could hardly believe my eyes...and tapping the glass of computer monitor didn't change it any. Needless to say I was delighted to see it, but the part of me that's from Missouri looked at it with deep it was some sort of Trojan horse. Let's was up less than $20...and the Dow got killed. How come the gold shares did follow the equity markets this time? Did Joe Six-Pack suddenly find religion and run to gold equities...or are the insiders buying because: a) they expect an explosion in the gold price, or: b) they are buying them now to dump them on an even bigger rally later in order to kill it. As Ted Butler says, the boyz are the biggest criminals that you can imagine. Never underestimate them. And after eight years of this...I don't. So I'll remain sceptical...but optimistic...if that makes any sense."

Gold has had a good two days run as indicated in the GLD graph, above. The mining stocks really showed brightly yesterday. Is that a double bottom "W" being formed? Possibly, but we will have to wait and see if that type of bullish graph formation comes to fruition. Would be nice for a change, but we do not have markets, only intervention.

As this is written, the DJI are down about 80 points. Gold has been capped, again, to $890.20 down $16.30. Silver has moved up $0.08 to $11.85. There was a large amount of silver sold out of the SLV yesterday, likely due to investors cashing out to cover losses in the general market which had another 90% down day. The general market is decidedly bearish. Even the coordinated attack by the central banks utterly failed to stem the tide so far.

The situation in Iceland banks should cause us to review history of the Great Depression and remind us that bank holidays are a potential threat to us today. This threat is real and should be taken seriously. If that should happen, cash in hand is the means of survival. Take heed. You are forewarned.

There is another possibility which could come about. This one is a great threat. What would happen if market trading in gold was suspended? Of course barter with gold and silver could be a temporary solution. The Russian stock market has experienced several mandatory days of shut down. Think about it!

We are told by our God to "be wise as serpents and harmless as doves." God gave man, not only an eternal soul, but brains for use. He also gave us His word as an "operation manual" for all of life. It was given to lead ALL MEN whether they accept it or not. Remember, it was prepared and preserved for us through out the ages by our Creator God. Do not turn away from it or you will face the wrath and curse of the Living, Sovereign God. He says that we must kiss His Son: Our Lord and Savior Jesus Christ. Do it or live in eternal Hell.

Best to each, Doug


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