Thoughts on Markets

Thursday, October 23, 2008

Gold Sinks and Growth Passes from Us to Asia

The mining stocks are suffering along with the precious metals. All are in great buying ranges at present, but we must hold tight and wait for a turn around after a bottom is established. For the time being, I am holding most of my mining stocks.
Gold is showing a slight upward move at present, but it is in very low territory which I would not have thought possible. We do not have markets any more, only intervention which is difficult to foresee. Gold is at 721.60
Silver may be showing the way for gold, but is still at 9.58. What a great price for accumulation. But I believe we should wait for a firm bottom to be established. Normally, one would expect an upward bounce after such significant drops. But these are not normal times.

The news on precious metals and all commodities is not good for the time being. The dollar strength is encouraging many to dump all paper assets in favor of the dollar. The dollar is preferred among the other currencies. The attractiveness comes from two sources, as I see it. (1) After using the dollar since WWII, most are familiar with it and comfortable using it. (2) Because of economic and financial woes in most of the world, investors foresee more interest rates drops in other countries which would be positive for the dollar.

We must constantly remind ourselves that paper currencies have no backing and are just that, paper. They only have value in relation to other paper currencies.

The fundamentals behind the dollar are still questionable. It is backed only by the full faith and credit of the U. S. Government which would be in bankruptcy court months and years back were it a business. The only way to avoid bankruptcy, if possible, is to create out of thin air more and more dollars. This will continue to be the "solution." Thus, we will have at some time in the future a price inflation, because of the devaluation of the dollar. The articles which follow give some insight into the present crisis.

Humor from GATA:

No credit? No assets? No problem at U.S. Treasury!

Section:

3:22p ET Saturday, October 18, 2008

Read entire article HERE

From Casey's Daily Resource Plus:

"This historic commodity sell off (spec long liquidation on the Comex/CME) has plumbed new depths. At today's prices, there are virtually no metals that can be mined without losing big money on every ounce or pound that's dug out of the ground. This can't last...and won't. It's only the timing of the turnaround that is hard to know. However, just about every technical indicator that I've seen this week, shows that we are more oversold now than at any point in decades...if not longer. Oversold (and overbought) conditions at historic extremes such as these have only lasted for a very brief period of time...then reversed violently. Let's see if that scenario is in the cards this time."

From Mine Web today:

GOLD ANALYSIS

STILL POSITIVE LONG TERM

Central Bank gold lending – a market distorter

Some explanations of Central Bank gold lending from Jeff Nichols and a still-positive long term view on the gold price.

Author: Lawrence Williams
Posted: Thursday , 23 Oct 2008


Read the article HERE

From Monday Morning today further explanation of the crisis:

Thursday, October 23rd, 2008

Fears of Mortgage Rate Re-Sets May Fuel LIBOR Manipulation and Mask Deeper Banking System Problems

By Shah Gilani
Contributing Editor

Read the article HERE

The world is changing. America, land of the free and the brave is changing. The dollar is the reserve currency of the world. As long as it remains so, we have been over decades, significantly since we left the gold standard, to create as many dollars as we needed to buy products from the world. In reality, this was a type of theft condemned by God's Law Word. Look closely, we generated paper and computer blips which the world had to accept in payment for their products.

God looks upon theft of all types by men and governments as fraud. He does not tolerate such violation of His word forever. We participated in this; and therefore, we are guilty before the Sovereign Ruler of all. Thus, we are reaping the reward for what we have sown.

The light of the word of God is passing from America. We have been blinded by the excess of opulence and ease due to the dollar reserve status. For a time we enjoyed the benefits while ignoring the obligation for presenting to the world a stable currency upon which to base trade. Thus, we are moving into a time where the financial engines of the world will be the Asian countries.

While some are saying that China will suffer greatly during this period of time, it is likely that their recession will be shallow. They have a huge, growing middle class and those in other Asian nations to replace the lower level of exports to America. The recent forecast for China's GDP growth is +9% for next year, down from 10% this year. Wow, what a drop! Our will not even be one half of this.

We will no longer be the manufacturing and financial center of the universe. It is mostly to be Asia. Thus, we must tighten our belts, reduce spending, increase saving, and get accustomed to a lower standard of living.

It is important to keep our hearts and eyes focused upon the Creator and Sustainer of our lives: Jesus Christ. He says, "Be still and know that I am God." He is the only way through all types of storms of life.

Best to each, Doug

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