Gaza Fighting Heating Up - Dollar Down - Metals Up

Folks, The news from the Israel vs Hamas is that it is heating up quite strongly. This has impacted upon the dollar and pushed it down today. Both gold (880.30) and silver (11.06) are up very strongly.

I have put in 5% trailing stops on some of my VGZ and HMY. As usual, I hope they do not sell for a great while, but should either drop a good deal, they will be sold. I believe this to be a good idea at present. As I always warn, you make your decisions based upon your own wisdom and risk tolerance. We all need to sleep comfortably at night for good health. Worry robs one of sleep.

From Bloomberg on the smoking Mid East:

Israel May Call Up Army Reserves After Bombarding Hamas in Gaza

By Gwen Ackerman and Saud Abu Ramadan

Dec. 28 (Bloomberg) -- Israel’s cabinet agreed to call up as many as 7,000 army reservists, signaling that two days of air raids on the Hamas-controlled Gaza Strip may be followed by a ground invasion to halt rocket attacks.

Read the article HERE.




From Financial Times:

Dollar slips on gloomy US data

By Neil Dennis in London and Anuj Gangahar in New York

Published: December 24 2008 10:33 | Last updated: December 24 2008 10:33

The dollar fell against the yen but held steady versus the euro on Wednesday as new data on spending, unemployment, and durable goods reinforced the gloomy outlook for the US economy.

Data on durable goods orders and inflation are due for release at 1330 GMT, but by that time, there will be few traders outside of the US left at their desks as offices close early for the Christmas holiday.

The article is HERE.

The Daily Pfennig today presents a quote from Christopher Wood's The Bubble Economy on Japan's financial crisis. The book was written in the early 1990s.

In the book he quotes the Levy Institute circa 1991... "monetary policy would not, on its own, be able to restart a depressed economy suffering from asset deflation and widespread financial crisis, for lower interest rates cannot motivate fixed investment when the market is glutted with existing assets worth much less than it costs to replace them."

How true that is! It presents in a few words wisdom that seems absent in Japan then and America today.

From Bloomberg from Japanese credit rating agency:

Japan Should Scrap U.S. Debt; Dollar May Plummet, Mikuni Says

By Stanley White and Shigeki Nozawa

Dec. 24 (Bloomberg) -- Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession, said Akio Mikuni, president of credit ratings agency Mikuni & Co.

The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes “drastic measures” to help bail out the U.S. economy, Mikuni said. Treasury yields, which are near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere, Mikuni said.

Read the article HERE.

The real threat for the dollar is for it to lose its reserve status. How long will the rest of the world be content to hold depreciating dollars? That is the critical question.

On our side of the coin, if the bail outs and other infusions of cash (unbacked FIAT currency) into America is at all successful in avoiding or solving the recession/depression, we will be in for price inflation and very possibly hyper-price inflation as we had back in 1979-1980. Then the precious metals will become the ONLY store of wealth for us.

I am so thankful that I am not in control. It is a joy and life of peace to know and trust the living Sovereign God of all. He is absolutely in control and working all things for the good of His people. Praise Him daily, confess your sins before Him daily, and seek His help in avoiding them in the future. It is absolutely amazing that He cares about any of us. Be certain that you are one of His.

Prayerful study of His word, fellowship with other Christians, and corporate worship, including the sacraments and the sound preaching of the Word, are the means whereby the sinner is led to the only savior, Jesus Christ, as the Holy Spirit uses these means to bring the sinner to life from the death in which he lives.

Best to each, Doug