Thoughts on Markets

Tuesday, October 07, 2008

Demand Depletes Gold Supplies - Silver Opportunity?

Butler reminds us in the article below that silver may be the buy of the times, because it is lagging so far behind gold. However, we must remember that gold is real money while silver is viewed more as a raw material for manufacturing. There is a faint glimmer of money in silver, but it is not as significant as that of gold. Silver does look like the better buy for the time being. Silver is currently at $11.50.
The green curve on today's graphs seems to be closely following that of the red from yesterday. The intervention begins with the opening of the NYMEX. How obvious can they really be? Is there no shame?

Gold shows no signs of being in anything like a free market. With the depletion of supplies of physical gold at many retailers, the price should be in the stratosphere. It is not! This can only be explained by intervention of bullion banks and governments. It appears that the price of gold is being dictated by the futures and derivative markets, not the physical markets. There is a massive run on physical goal.

With the world financial markets in shambles, there should be a run to gold by everyone. It provides the only security for wealth in a world awash with FIAT unbacked paper currencies. We should be in the midst of a massive gold rush, but it is only in the physical metal where the significant demand has been evident. It is important to remember there are no more markets only intervention.

The present price of gold is $876.30. As it approaches $900, expect that it will again be slammed down by all the intervention.

Even Kitco is having trouble filling orders for physical gold as this from their website clearly shows:

"Kitco is working diligently to fulfill all existing client orders. We apologize for any delays in order fulfillment which are a result of production and delivery delays imposed by certain mints and by our suppliers.

The following products have been temporarily removed from our Precious Metal Store until further notice due to production and delivery delays that retailers are currently facing; 1 oz Gold bars, 1 oz Kitco Gold bars, 10 oz Gold bars, 1 oz Silver Eagles, 1 oz Silver Maples, 1 oz Silver Philharmonic coins, 1 oz Olympic Silver Maples, 100 oz Silver bars and 1 oz Palladium Maples."

Germany considers national financial "shield"

Associated Press

BERLIN (AP) - Germany's finance minister said Monday he is considering creating a "shield" that would protect the country's entire financial sector, arguing it would not be possible to continue to address troubled financial institutions on a case by case basis.

However, Finance Minister Peer Steinbrueck made clear that Germany does not envision making its move as part of a U.S.-style bailout plan for all of Europe. He said he and Chancellor Angela Merkel agree that the German government must remain the sole "master of the process."

Steinbrueck spoke after the government on Sunday put together a new 50 billion euros ($69 billion) rescue package for distressed lender Hypo Real Estate AG. Steinbrueck's ministry reached a deal with private banks late Sunday to infuse an additional line of credit worth up to 15 billion euros ($21 billion).

"We must now try—beyond a single solution at Hypo Real Estate—to stretch a shield across Germany as a whole, so we do not stagger from one case to the next," Steinbrueck said on Deutschlandfunk radio." Read the entire article HERE

"An Exceptional Opportunity

By: Ted Butler

-- Posted 6 October, 2008

When fear and emotion run high, as they presently do, it often creates exceptional profit opportunities. In other words, when everyone is running scared and is concerned about risk, it is precisely the time to look for rewards as well. We are currently positioned the best I have ever witnessed for risk and reward in silver. The downside looks extremely limited and the upside looks explosive. Yes, volatility is great, but everything is lined up perfectly.

I would like to revisit a familiar theme - the suggestion that gold-heavy investors take advantage of the extreme undervaluation of silver compared to gold. This is not intended as a knock on gold, or a suggestion that gold can’t or won’t go higher. It would not surprise me if gold moved much higher. I hope that it does. Then why would I suggest that gold owners convert some of their gold into silver? For the simple reason that silver should climb much higher in value than gold. Maybe two or three times, and perhaps much more.

In fact, if silver eventually reverts to its historical ratio of 16 to 1 to gold, that means silver would have outperformed gold by more than four-fold. At that rate, every dollar invested in silver would return four times more than a dollar invested in gold. What are the chances that old ratio could return? Quite good, I think."

Read the entire article HERE

Once again, it is important for us to remember the Lord our God who has blessed our nation for so long a time. However, God's ordained male headship of families has been undermined, families have become dis-functional, churches have caved in to society rather than being a light to the world, and we have elected unqualified leaders who do not acknowledge the Sovereignty of God and love His law. Therefore, God has taken away the blessings and replaced them with curses. The Lord blesses only those nations whose God is the Lord Jesus Christ. We must return to Him before He will again bless our nation. I pray that Christians will humble themselves in prayerful repentance, honor our God, and follow His ways 24 hours a day, seven days a week. Then He will heal our nation.

We are facing a very critical time in our history. The winner of the pending election will be faced with some of the most difficult challenges of our nations short history. I pray that the leaders will be well versed in Scripture, the accurate account of God's providence in history, and will apply Biblical standards to all of his actions in office.

Best to each, Doug


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