Thoughts on Markets

Wednesday, November 26, 2008

Be Thankful to God for Preserving America


The, above, two graphs give us a better picture of the price movement of gold (proxy GLD) and silver (proxy SLV). Both have moved up some, but silver is lagging behind the movement of gold. Notice that this week's run up has been rather sharp. The trading yesterday was thin, but still fairly strong for both of our precious metals. The coiled springs seem to be pressured ever tighter, so it is just a matter of time before both are released for a greater upward swish. When is always our asked, but unanswered question. Having experienced the gold rush of 1979-1980, I can assure you that it is something to see. The rush of the late 1790's was nothing to compare with it.
The price of gold is not moving upward in comparison with the first two days of this week. We are likely due for a healthy rest before the upward move continues. That would be a blessing which would allow us to reposition ourselves into more of the mining stocks. DROOY is still holding strong at 4.10 and VGZ is up to 1.23. In both cases our trailing stops were hit a bit early in the rally. I am thankful for a profit on both trades. I am watching to add more to my stock of DROOY, but hopefully at a lower price perhaps, in the area of 3.50 or less.

Gold is at 816.70 on a down tick, and silver is at 10.38 on an up tick. Is silver trying to catch up with gold? Only our Sovereign God knows, but it may be.

By the way, this is likely to be a day of thin trading, as many folks are already on their Thanksgiving Day holiday. The rest are working their way into the pre-quit for the holiday. Net will be a day of light trading. Could become very volatile, because the trades which exist could have a magnified impact on prices.

On gold from Casey's Daily Resource Plus:

"“With the flood of liquidity, that’s going to float the boats and sink the dollar,” said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. “Commodities look set to stage a comeback on the dollar weakness. The real strength is likely to be in gold.”

Legendary investment biker Jim Rogers concurs, saying yesterday what now appears to be baked into the cake. The buck is “going to lose its status as the world’s reserve currency,” Rogers said. “It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.”

But the bears remain unconvinced. “We are short of gold,” said Dennis Gartman, editor of the Gartman Letter and a usually-reliable indicator of how not to bet. “We shall always sell rallies such as these that retrace as classically as this market has.” This is “nothing more than a rally in a bear market.”"

General comments from Casey's Daily Resource Plus:

"Were it not for the chance of a government bailout, in lieu of an imminent Chapter 11 bankruptcy filing, (General Motors) bonds would trade for much less. And there lies the truth about what America's capital markets have become: a rigged game. - Jonathan Weil, Bloomberg, 20 November 2008

As you already know, what Jonathan Weil said in the quote above is absolutely true. Everything is rigged. And as GATA's secretary treasurer, Chris Powell, puts it..."there are no markets anymore, only interventions." So that leaves us with only one truth left, and that's the precious metals...physical gold and silver in particular. Buy them with both hands while they're still on sale, as I doubt they'll be that way for much longer."

Folks, it is a very good thing that the Chili Queens of Alamo Plaza in San Antonio are no longer offering their bowls of delicious hot delight. Else, they would likely be partitioning Washington for bail outs and receiving billions of dollars. It does seem that Paulson and Bernanke are passing out dollars to the tune of almost trillions (that's with a "T") a week to any and everybody who has run a sloppy business. Looks like a nationalization of many financial and possibly industrial businesses. Welcome to the land of comrades.

This pumping of countless trillions of dollars is bound to result in the mother of all inflations. Perhaps, we will go through a prolonging of our present recession/depression, but there can be no result other than inflation. That is why it is so important to emphasis gold and silver in your portfolios.

The cure being applied is the cause of the present situation. How can it be expected to solve our problem. One cannot put out a fire by pouring gasoline on it. It seems that folks would examine the history of Japan's recession which continues even now. They attempted to solve it using the same methods. Even Roosevelt's solutions to the "Great Depression" did not work. It took WWII to bring us out of the depression. All of this is simply more of man's folly for the God to laugh over as He observes.

Let us be certain to praise and thank our God that He has preserved our nation for so many years of our folly. Let us, also, pray that He will raise up true godly statesmen who will return this nation to the spirit of the its founders and George Washington who was our greatest president. King Jesus provided America's Joshua, Washington, at a time of great need. He can do it again in this time of great need.

We as individuals, families, and churches must repent, turn from our sin, seek our Savior's forgiveness, follow His way for Him to ever heal our nation from its apostasy. We must be a nation whose God is the Lord.

Best to each, Doug

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