Thoughts on Markets

Thursday, November 06, 2008

God looks down on more folly of man!

Gold is trading higher, but seems on the same course as yesterday. It is currently at 752.10 up 15.20.
Silver is romping up more strongly than gold, but may be tapering off presently. It is now at 10.37 up 0.57. Both metals are trading at higher levels than during recent weeks.

Mining stocks are somewhat mixed, but most are up some again today. Risk aversion is once again the order of the day. Investors are running to either precious metals or dollars. Yes, some prefer unbacked paper dollars, but the wise ones prefer gold and silver - the true historic money. Perhaps, once again in the not too distant future a government will return to a gold standard. That is not impossible with the financial turmoil of today.

Markets do not like uncertainty. The DJI reflected on the election with a near 500 drop. It is down about 25 presently. Looming heavily upon the market are Obama's announced plans for increased taxes upon capital gains and dividends. This would be a very serious blow to the stock markets if passed by Congress. In anticipation, we will likely see more selling of equities from now to the end of the year. There are great paper loses in the market due to the recent crashes. It is to the advantage of investors to realize some of these loses for tax purposes. This year Obama has added an addition incentive for such action.

From Mail on Line:

How many spondoolicks did Gordon lose

us in gold sales?

Last updated at 8:33 PM on 04th November 2008

It seems that England sold gold at the wrong time. Read the entire article HERE.

From the Financial Times on line:

Deflation risk boosts inflation target case

By Krishna Guha in Washington

Published: November 4 2008 20:22 | Last updated: November 4 2008 20:22

"The risk of deflation could lead Ben Bernanke to approach the new administration and Congress next year about adopting an ­inflation target at the Federal Reserve, some experts believe."

Doug's Comment - In Keynesian Economics, inflation appears easy to control by reducing the paper money supply and increasing taxes. In fact, this is so effective, that it is better to inflate and lower taxes to the extent that recession or depression is cured. However, there in reality comes a time went this no longer works in the real world. This article discusses some of this in view of the current problem facing the Federal Government and the Federal Reserve.

Read the article HERE.

More from Financial Times:

Ways out of the liquidity trap

Published: November 3 2008 22:23 | Last updated: November 3 2008 22:23

It is hard to credit now but, until early this summer, policymakers regarded inflation as a serious threat. No longer. Deflation is the spectre now haunting the advanced economies. This rapid shift in focus highlights the impact the credit crisis has had on the real economy. But inflation, though falling, is still relatively high in most large economies, and much will depend on what policies are put in place over the coming weeks and months.

Read the article HERE.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. - John Maynard Keynes

Keynes and his interventionist philosophy showed the way for governments to make slaves of the citizens. All of you socialist interventionist take notice. This is what you are seeking when you see the government of your messiah to care for you from the cradle to the grave. See it as the lazy person's way to live his temporal life. However, it ignores the fact that government feeding troughs have strings attached. They have a severe negative impact upon your financial situation and tend to hide from you the real Messiah who will have control over your eternal life. Jesus Christ is the way, the truth, and the life. No one goes to the Father without Jesus Christ.

Central banks and governments around the world are acting on Keynesian Economic Theory which does not work forever. I believe that our God looks down from Heaven and laughs at this as just another folly of man. However, all citizens do suffer under such policies whether they are Christians or not.

However, we as Christians can still look to our Savior (the ONLY Savior of value) and His covenantal promises to us for peace and comfort in such times as these. We can in a very real sense go about our business of the doing the very best we can under any circumstance and depend upon Him alone for the success of our actions. He always balances the books in the end.

Best to each, Doug


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