Thoughts on Markets

Friday, October 03, 2008

Massive Rush into Precious Metals - Prices Remain Low

The dollar has become very strong against most currencies. The euro has suffered the most as European Banks convert euros to dollars to service toxic waste debt which is denominated in dollars. This seems to be the temporary reason for the strength of the dollar. The dollar remains an un-backed currency. Its backing is the full faith and credit of a bankrupt nation. Here is part of the story from MineWeb.com today.

MARKET MAYHEM - AGAIN

Dollar makes 15-month highs, gold suffers again

Amid another slaughterhouse day on the markets, stocks and commodities - led by precious metals - plunge.

Author: Barry Sergeant
Posted: Thursday , 02 Oct 2008
JOHANNESBURG -

Full Article HERE

The price of gold is decidedly tied to the dollar. However, one must wonder about the world wide rush to precious metals without a corresponding increase in the price of the metals. This is world wide, as reported in the following article:

Financial Crisis: Rush for gold as savers queue for bullion

Savers have been queuing in the street to buy gold bars and coins, as they search for a safe place to invest their money.

Full Article HERE

The shortage of metals is real and the demand is soaring, but the price is still very low. How long can this total violation of free market concepts be allowed to exist? There are investigations into the bank and government intervention, but results are hidden from the public.

I am looking to buy bullion coins. Both the Royal Canadian and U. S. Mints have coins available, but the premium is high. Some of the lessor preferred coins; such as, British Sovereigns, Austrian Philharmonic, and Mexican Pesos may be more widely available and with lower premiums. Even the ETFs and Trusts (GLD, SLV, CEF) in precious metals are a way to own the metals.

The extreme volatility of the markets today are a warning that all is not well. There is great fear among investors today. I see the wide swings in the general market as an opportunity to bail out during strong upward moves and sit tight on the reverse. The downward moves result in margin calls for those borrowing for investment. These calls tend to escalate the falling prices of markets.

The economic reports are somewhat discouraging. From the Commerce Department, we saw factory orders drop 4% in August which is the greatest drop in two years; durable goods fell 4.8%; non-durable goods fell 3.3%; and shipment of factory goods fell 3.5%. This plus the increase in unemployment does not look promising for our economy.

Have you noticed the increased frequency of sales these days. The retail market must be suffering. I have seen some terrific buys in home electronics on the Internet. Bet there is fear among retailers. The U.S. automobile manufacturing are suffering, too.

Gold is at $828.20 on a down tick, and silver at $11.35 on an up tick. The DJI are up about 169 to 10652.82, still below the critical level of 10750.

From The Music Man, there is real trouble here in River City, but not from a pool table. It is from the folly of FIAT currencies and market intervention coupled with greed and fraud among the financial institutions which are floundering now. In more ways, than is easily counted, our government, banks, and financial institutions have violated the Commandments of our God and are now reaping the rewards which are due. The people will be among those who suffer most.

However, we have a wonderful God who works all things for His glory and the eventual good of His people. I pray that each of you are among the people of the faith of Abraham and receiving the promised peace that passes all understanding by the grace of God.

We must diligently study His word on a daily basis and pray that He will lead us through and enable us to help others as we plow through the financial storm. He is faithful and hears the prayers of righteous men.Praise Him moment by moment!

Best to each, Doug

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