Thoughts on Markets

Monday, December 15, 2008

Metals Sprinting Forward and Stocks Following

Both gold and silver are sprinting upward today following the rise of last week. A weaker dollar destined to be further weakened by a FOMC lower interest rate tomorrow. It seems the Fed is on a path to destroy the dollar. Perhaps, we are nearing the end of paper currencies. At any rate, I was disappointed about some of my mining stocks hitting stops on a pull back before the run up which followed. I am now holding cash and searching for potential buys of stocks which have yet to join the parade or a fall back of my normal trading stocks: DROOY, HMY, and VGZ. Fortunately, I did not sell all of my mining stocks. The Lord has taught me not to do that and I am thankful for His insight!

From GATA on gold:

Former Fed governor hints at big upward revaluation of gold

9:21p ET Friday, December 12, 2008

Entire article HERE.

More from GATA:

Comex said warning brokers about December gold squeeze

From "Midas" Commentary
by Bill Murphy
Friday, December 12, 2008

Article HERE.

This from James Turk as a commentary on

More on Gold Backwardation

Dec 12 2008 12:39PM

The article is HERE.

The mining stocks in general have been moving upward very nicely. Some prices are, as follows: DROOY 5.74;GDX 30.58; GFI 9.78; GG 30.56; GSS 0.84; HMY 10.21; IAG 5.34; KGC 17.35; KRY 0.15; NEM 37.94; PAAS 15.16; SLW 5.07; SSRI 12.185; VGZ 1.46; XRA 1.51. At present the DJI is down 108+ to 8519.21 and bouncing around some. Thus, we see that the mining stocks are holding very well as are the precious metal prices.

The retail demand for precious metals has overwhelmed the supply and it is still difficult to find any of the common bullion coins. The U. S. and Canadian Mints are still selling coins, but the premiums are very high. Even when other retailers will sell coins there is a high premium and a delay of weeks for delivery. Many have stopped taking orders for the coins. This is a direct result of the low paper price of the metals in the futures markets.

Let's take a look at the automobile fiasco which is developing before our eyes. What will be done? Will President Bush divert some of the bail out cash approved for and designed for "relief" of the credit crunch and divert it for the automobile manufacturers? That would most certainly be a violation of the intent of the Congressional approval and open the door for other manufacturers. We will have to see what happens.

From the Daily Pfennig this morning:

"David Nicklaus of the St. Louis Post Dispatch has this to say, which makes a whole lot of sense to me! "The Detroit Three have been losing market share for decades, and their bloated cost structure makes it difficult for them to turn a profit even in good times. They have too much debt, too many models, too many dealers and, sad to say, too many workers.""

My comments - The problem the Detroit Auto Makers is facing was caused by a wild bag of influences. David Nicklaus focused upon the bloated cost structure which is a major influence. I would suggest that the CEOs and other high mukimuks in the industry were paid obscene salaries for doing a very poor job, the labor unions added to the problem by demanding ever increasing undeserved salaries and benefits, as David intimated, and all of this waste was supported by ever increasing debt. However, that ignores the significant impact of government regulation and taxation which has virtually eliminated our mining industry and sent much of our manufacturing industry out of the country. Even the counterfeit money we have in the form of un-backed paper dollars has had an negative impact upon the auto makers. Thus, they have been working in a hostile environment created by government and done of poor job of management.

Solution to this situation is a difficult task. It cannot be solved by an infusion of more cash or credit. It cannot be corrected a continuation of the policies which created the situation in the beginning. That would be total folly.

Any solution will involve severe hardship upon all concerned. However, the hostile environment must become more friendly: that is, there must be less government intervention. Management and labor unions must reduce the cost of both. Management must concentrate production of only the most popular models, eliminate many less popular models and brands, begin to reduce debt, and cut costs at all levels.

A government largess or bail out will simply perpetuate the excessive costs, poor management, and will move more toward the socialistic form of government with a Automobile Czar. This will be a further concentration of micro management by government of the auto industry. Always keep in mind that it is primarily the government which has brought us into the present situation and government solutions will simply be more of the same. It will just make the situation more difficult when the books are finally balanced in the future. The free market, at least a freer market will always do a better job than government intervention.

Gold is now 837.70 and silver 10.60. Both are strong on up ticks.

God must be having a great laugh at the folly of man as he attempts to solve all problems through his messiah, the government. Even during this Christmas Season when we celebrate the ONE, TRUE Messiah: Jesus Christ our Prophet, Priest, and King, man continues to look for other gods. It is a play out of the Biblical Book Eccelesiates which takes one through the folly of man's search for one solution or pleasure in life after another and finds that each is nothing but folly.

I believe that man, created in the image of God, was implanted with a propensity to search for his God throughout life. However, only those in the Lord's Book of Life find that this can only be fulfilled as the Holy Spirit brings him to life, shows him the sin in his life, and leads him to his only Savior: Jesus Christ, in repentance and newness of life. This is the goal of all of his life, but he seeks it in all the wrong places.

Bow before the true King and find the abundant life on earth and the eternal life with Him. Do it now! Let this Christmas be the best one in all of your life.

Best to each, Doug


  • At 11:20 AM, Blogger Alxsteele said…

    Doug--Joel Hathaway here, could we exchange email. I'd love to pick your brain from time to time.



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