Thoughts on Markets

Thursday, October 02, 2008

Gold Prices Are Down In Spite of Great Demand

Gold is now at $850.20 on a down tick. Silver is, also, being slammed down to $11.77. This is in the face of great demand and vast shortages. I can see no reason for the disparity between this situation and the phenomenally low prices except intervention. Remember, we no longer have free markets only intervention.

There is more intervention coming with the passage of the BAIL OUT by the Senate and the expected passage by both houses in some form. The foreign banks will reap a big gift if it passes in the present form according to today's Daily Pfennig:

"Oh... And DID YOU KNOW.... That foreign banks that have bank operations in the U.S. can transfer their toxic waste bonds to the U.S. operation, and then the U.S. operation can feed them to the Fed under this Bailout Package? WHAT! ARE YOU KIDDING ME!? This Bailout Package is being force fed to us with the "fear factor" of a recession crisis... WE ARE ALREADY IN A RECESSION CRISIS! Have these dolts not seen the unemployment numbers each month? Did they not see that "real" GDP in the 2nd QTR was negative? This piece of the Bailout Package has me mad as a wet hen! Good thing no one is here, because I'm throwing stuff and yelling at the walls! I'll be back in a minute, this is all too much for me to stomach!"
Folks, The results of the potential bail out from Casey's Daily Resource Plus:

From Casey's Daily Resource Plus today:

"Buyers of physical metal continue to vote with their paper, however, with those who can afford it transferring large blocks of their wealth into something tangible. Investors are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults, the London Bullion Market Association says.

“There is an enormous pick-up in investment demand. I have never seen a market like this in my 33-year career,” says Jeremy Charles, chairman of the LBMA. “The gold refineries cannot produce enough bars.”

Vault staff are also doing overtime,” said a banker at the LBMA’s annual meeting, adding that investors in some countries were paying premiums of up to $25 an ounce above the London spot price to secure scarce gold bars.

Johan Botha, a spokesman for the Rand Refinery in South Africa, which manufactures the Krugerrand, the world's most popular gold coin, said the plant was now running at full capacity seven days a week. “Even so, now and then we have shortages,” Botha said."

Further along the same subject line from Casey's:

"In gold news, my usually reliable source had the following goodies for me: The Royal Canadian Mint will not be making any more investment-sized gold bars for the rest of this year. And, until further notice, they are not taking any new orders for silver or gold Maple Leafs either. In other news, the word is out that A-Mark has virtually nothing left in its inventory to sell. They're probably not alone, as I would think that that condition exists just about everywhere in the world right now. There was no change in GLD yesterday after that 30 tonne increase over the previous two days. And no change either in the SLV, after a decline of 1.6 million ounces two days ago."

More from the UK Times:

Financial Crisis: So much for tirades against American greed

Ambrose Evans-Pritchard says it is ironic that European banks have turned out to be deeper in debt than their US counterparts."

Complete article HERE

Here are comments from Taipan Daily today:

"You know -- biz. It just ain’t there. Where’s the local car dealer trying to move the last of last year’s Pontiacs? Where are all the folks selling Adirondack chairs, or rebuilt Harleys or locally made fruit and flower baskets?

The silence is deafening.

Still, if you dig a little below the facile headlines, you’d learn that the bailout may be sucking up all the air in the room, but that trillion dollars is NOT really this week’s big story. That is reserved for a lowly zero.

Because zero is the change in consumer spending from July to August.

The bright guys over at the Commerce Department were kind of hoping that spending would go up about 0.2%. That’s not much, but it would at least have been double the increase between June and July.

The Economic Stimulus Act of 2008 (remember that?) was supposed to have one of those multiplied effects wherein Joe buys from Fred, who in turn hires Mike, who takes Sadie out to dinner etc., etc.

Instead, there was no gain whatsoever, demonstrating quite clearly that dumping $152 billion into a system already overburdened with excess dollars wasn’t quite the cure Washington thought it might be.

Here’s another “small” figure that dwarfs that trillion-dollar package Congress is screwing around with: Excluding “volatile food and fuel” (snicker), prices increased 0.2% July to August, and 2.6% between August 2007 and August 2008. The latter is the largest spike since January 1995.

Run these “ tiny fractions” all the way through the system, and American disposable income fell 0.8% in July and 0.9% in August. To paraphrase Ross Perot, that loud snapping sound you hear is millions of pocketbooks, wallets and checkbooks snapping closed.

And it’s not going to get any better anytime soon. According to the latest Bloomberg economist survey, the last quarter of 2008 should be the worst in almost 20 years."

Wow, the silence is deafening!

Folks, we are seeing the destruction of the last few vestiges of our God given freedoms which were noted and written into the Constitution. My children and grandchildren will not enjoy the freedoms we had in my younger days. Most cannot imagine the freedom of movement and lack of Big Brother's spying we enjoyed.

It is so true that when Citizens trade freedom for security, they surrender both. We, Americans should recognize that we have neither and are losing more freedom with every act of government.

These are exciting times, and we must act to protect whatever wealth we may possess. I have been buying gold coins this week. Some are available from the Canadian Royal Mint and the U. S. Mint. These come with a large premium. However, some of the less popular coins; such as, South African Krugerrands, Austrian and Hungarian Krone, British Sovereigns, and the Mexican 50 Peso may be found at less premium cost.

The dollar is presently strong, so it is a better time to purchase coins which can be found than in recent times. Remember, the dollar will not always be strong as there is nothing supporting it other than the full faith and credit of our bankrupt nation.

It is rapidly becoming obvious that we must reduce our spending, build currency reserves for emergencies, and work to reduce our debt. Look around, there are many without jobs or other sources of income. How long will your job or income last? Therefore, prepare for the worst and if it does not come about, rejoice that the Lord has preserved you once again. Frugal preparations are never wasted and the self discipline gained through the experience will stand you well in the future. Lessons learned and properly interpreted are never wasted exercises.

Scripture warns that we should never put our trust in men, wealth, or government. Only the Lord Jesus Christ should be the person we trust. He is faithful and is the same yesterday, today, and forever. Thus, He word is faithful and worthy of our worship and trust. He is in control of all.

Be prepared! Best to each, Doug


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