Thoughts on Markets

Friday, November 07, 2008

The Lie of Paper Currencies - God laughs even louder!

Today's gold in green on the graph seems to be heading upward, but is reaching the point where it is generally capped. The cap these days seems to be applied at 750. As this is written gold is at 735 up 4.50. Crude oil was down yesterday and the dollar was up bolstered by the central banks interest rates cuts.
The DJI started the day up over 100, but has fallen back a bit. It is still positive, but the market day has just begun. I would suggest that up days provide an opportunity to lower holdings in the general markets. That is what I do these days. I am almost out of the general market. The DJI now is 8749+ up 51+. As this posting is being finished, the DJI is up 110 to 8800+. A lot of volatility! We will wait and see where it goes from now.

From Mineweb - Silver News:


Silver – knowns and unknowns, but a still bullish appraisal

An interesting viewpoint on the current state of the silver investment market form one of London’s specialist precious metals fund managers.

Author: Lawrence Williams
Posted: Thursday , 06 Nov 2008

Read the article HERE.

Yesterday's big news on central banks actions from Chuck Butler in The Daily Pfennig this morning:

"OK... The Big News yesterday was the size of the rate cut from the Bank of England (BOE)... As I was signing off yesterday I told you that the BOE had cut rates 150 BPS or 1.5%... This was HUGE folks... You just don't see Major Central Banks like the BOE, slash rates by 150 BPS every day... In fact, I can't be sure, but I don't believe I had seen this before from the BOE! So... The BOE must really think things are either 1. going to get real bad, or 2. are already really bad, and they felt this was needed to play "catch-up"... Either way, it's not good, folks... Sterling rallied when the news was first announced, but eventually, sold off.

The European Central Bank (ECB) cut rates 50 BPS or 1/2% like I thought they would, and the currency got whacked as it should have been... In fact, I think the sterling sell off was triggered by the fact the ECB did not slash rates more to stay in line with the BOE's cut... It was like, "WOW, things must really be bad in the U.K. if the BOE cuts 150 BPS and the ECB held the line at 50 BPS"...

The Swiss National Bank (SNB) surprised the markets with an unscheduled meeting rate cut of 50 BPS... Does anyone else get the feeling that we're all going to zero? It's like Central Banks around the world are in a race to zero! And you know what? There's nothing in their way to stop them from doing so! Except maybe their consciences!

'm really distraught with these latest Central Bank moves... And my conspiracy blood is boiling this morning... Let's just say... The Fed knows it has to move rates to zero, but realizes the damage it could do to the dollar, and sends a text to their VBCBF (very best Central Bank friends) and asks them for help. "If you cut rates too, then the dollar won't look so bad"... OMG! IMOH! (I'm outta here!)"

Do you think they are worried to make such moves? Are they working together to save the Federal Reserve? It is not likely that each made individual decisions of this magnitude. The conspiracy theory must be at work in this.

More on this from Bloomberg:

"King May Consider Most Radical BOE Rate Cuts Since World War II

By Brian Swint

Nov. 6 (Bloomberg) -- Bank of England Governor Mervyn King may have to consider the most radical round of interest-rate cuts since World War II as the financial crisis tears through Britain's economy."

Read the article HERE.

This from Casey's Daily Resource Plus on currencies:

"In the currency market, the dollar roared higher against the euro. Late Thursday, the euro was trading at $1.2677 vs. $1.2948 on Wednesday.

The British pound also tumbled—from $1.5926 a day earlier to $1.553—as both the European Central Bank and Bank of England cut interest rates."

With the dollar higher, precious metal prices have been capped again. Gold has held well over night and we will have to see what today's market reveal.

More on the auto industry wows from Bloomberg this morning:

"Analyst Lindland Sees Cash Burn as New Problem for Ford: Video
November 7, 2008 08:34 EST -- Rebecca Lindland, an analyst at IHS Global Insight in Lexington, Massachusetts, talks with Bloomberg's Carol Massar about Ford Motor Co.'s third-quarter operating loss and cash usage, and the outlook for the U.S. auto industry. Ford, with U.S. sales shredded by the worst financial crisis since the Great Depression, posted an operating loss of $2.98 billion, or $1.31 a share. The company said it used up $7.7 billion in cash and would cut more salaried jobs. (Source: Bloomberg)"

All three of our automobile manufacturers are in deep trouble as sales drop. Bargains will proliferate in an effort to increase sales. However, how does a company recover when sales fail to cover costs? The old saying is "They do it with greater volume." That simply does not track economically. The loses actually multiply. There will be more lay offs over the next few weeks. This does not bode well for overall American employment. Be sure you are supplying your employers with a maximum effort to retain your present job. Were you to lose your job, a replacement will be more difficult to obtain. A steady income is one of your greatest assets.

A worthwhile quote reported in Casey's Daily Resource Plus today shows us why the governments of today are so concerned about the price of gold and the potential of its historic use - money.

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State. - Joseph Goebbels, Minister of Nazi Propaganda

The paper currency scam continues and is obscured from many, because governments do lie to the citizens using Goebbels philosophy.

Market events for today from Better Trades: Economic Data and Reports: 8:30 AM Average Workweek
8:30 AM Hourly Earnings; 8:30 AM Nonfarm Payrolls; 8:30 AM Unemployment Rate; 10:00 AM Pending Home Sales
10:00 AM Wholesale Inventories; 3:00 PM Consumer Credit

Folks, these remain strange times and dangerous times in the investing arena. The markets, at best or mixed, but the significant drop over the last two days in excess of 800 on the DJI is LARGE.

This is Friday and stranger actions are typical of the last trading day of the week. Caution is the word for us to follow. I am still trading DROOY with purchases nearing 3.50 and sells over 4.00. DROOY last trade was 3.73.

Remember that everything acts in accordance with the Sovereign will of the Living God. What a joy it is to "Be still and know that He is God." Christians have the great comfort offered to them by a saving trust in the only begotton son of God: Jesus Christ. Through Him we have eternal life with Him and a fullness of temporal life in spite of challenges. This is the "peace that passes all understanding." And it is available only through faith which is a gift of God, Himself. Praise the Lord!

God still looks down from Heaven and laughs at the folly of men who believe they can ignore or change His law. However, God's word always accomplishes what He intended and it does not return to Him void of His will.

Remember that we are required to join with other Christians in corporate worship of our God. Do not neglect this duty and enjoy it as a blessing and means of His grace toward us. It is doubtful that the Christian can face challenges of the day without the encouragement, fellowship and joy of corporate worship.

Best to each, Doug


  • At 3:50 PM, Blogger Bytwerk said…

    The Goebbels quotation is a fabrication. See:


Post a Comment

Links to this post:

Create a Link

<< Home