Gold Still Bullish - Prepare for the worst and Pray for the best.

This is the US Gold Graph compliments of www.The-Privateer.com newsletter. Notice that gold remains in a bull market with the bottom at August 25, 1999. As noted the bull market was confirmed as shown on the graph. The current up trend line has held since the bottom was hit. Notice, too, that there was a strong correction from May, 2006 through early 2007. Then the all time high was struck on March 18 of this year. This graph shows that we are experiencing another correction presently. How long it will last no one really knows.

This is the time of year when precious metals generally languish in a narrow trading range through the summer. However; India, China, and Mid - East Sovereign Wealth Funds are a new source of funds for purchase of the precious metals. Many investors and central banks are beginning to favor currencies and other assets other than those in dollars. Borrowing from other nations are slowing.

Our economy is not percolating as the government statistics would have us believe. We no longer have a strong manufacturing base which would give us opportunity to export products into international market to to advantage of the lowered value of the dollar. Our manufacturing capability has been driven out by over regulation, taxation, and costs added under the influence of unions. Even much of our mining capability has moved out due to the over emphasis on environmental considerations.

The recent intervention by the Federal Reserve to save the banking and financial areas has met with very limited success. Big lay offs of workers in the financial and brokerage offices have been experienced and look to continue for the time being. The sub prime mortgages are still impacting adversely on the industry and foreclosures are looming in vastly increased numbers on the horizon. This promises a rough time ahead for those who must service large debt. This situation will be worsened greatly if unemployment were to increase. The net result is being revealed as consumers seem to have less disposable income and their discretionary buying is beginning to slow. After all, we have become a consuming economy rather than a manufacturing economy.

It is a time during which we must reduce unnecessary spending, pay off debt, avoid more debt, make our jobs as secure as possible, and save dollars for emergencies and investments. We must become very frugal people. It is important to give our employers the best we can. That is, we must make ourselves very valuable to our employers and provide more than is asked of us. We must work for our employers and clients as if we were working for the Lord Jesus Christ. That quality of work should ensure our job and the income it provides.

As we are learning in our study of II Corinthians, we are to earn for ourselves and more to be able to help those in need. First, for the household of faith and then for others. We are to be cheerful givers. While always praising the Lord for His blessings and the opportunities of service He provides for us.

Best to each this Lord's Day, Doug

Precious Metals Establishing Trading Range

There is something very interesting about the above www.kitco.com graph. Notice that for the last three days, there has been a significant drop at the opening of the New York market. This is typical of what has happened a great majority of the time. One must ask, "Why?" One possible answer is that the "cartel" or "da boyz" are protecting their short interest. I believe that is the probable answer, else why would it happen at the same times almost every day?

For most of yesterday, it seemed that gold was establishing a range from about 940 - 950+. Today, it has dropped below the bottom to 932 at this time. We will have to wait and determine the new trading range after last week's big drop. Silver is holding at 17.93 now.

This is the season that the precious metals generally take a rest. However, we have the new influences which may have an impact to keep them somewhat stronger this year. Time will reveal this to us.

In the meantime, keep your trailing stops on a good portion of your mining stocks and keep your powder dry searching for opportunities to add to your portfolio. At times, it is best just to sit still trusting in the Lord and do nothing in the market, but observe.

Meanwhile, the general market has had some bad down days, but it is up 57+ early today. All commodities seem to be under pressure. Perhaps, they are pointing toward sluggish economies. In spite of slow downs, both China and India are looking strong. The future for the Indian economy looks very bright as it moves to catch up percentage wise with that of China. One might even consider the ETF on India: PIN. Maybe call options would be in order when there are dips in PIN.

One method for protecting your precious metals portfolio from drops in value is to sell call options on some of the major miners in portfolio. You can sell the options at execution prices which will provide you with a profit if they are exercised. Usually, shorter term options are desirable when you are on the sell side. Once the sale of the option is made, the cash from the sale is put in your portfolio, and effectively reduces your cost of the underlying stock. If the option is exercised, they you will receive additional cash from the sale of the stock. However, it the option is allowed to expire, the original sale price of the option is yours to keep. A neat tactic.

Nevertheless, we must still praise King Jesus for His many blessings and seek ever more strongly to honor Him by keeping His commandments.

Best to each, Doug

Precious Metals Roaring Back

The graph for the last three days shows improvement. It seems, at least for the moment, all were oversold last week. Time will reveal for us if that is fact. The dollar has resumed is downward trend after the brief upward moment. Gold is 560.80 and silver 18.24. Glad that I was able to buy some options on silver miners: CDE, PAAS, and SLW. These are showing more signs of life.

The trailing stops on my mining stocks are moving up with the price of the stocks. That, also, is comforting. You should look into trailing stops on the ones for which they are available.

As I sent out in the morning email, there is unrest in South Africa and Congo is rattling sabers against the mining companies. All is not peaches and cream in Africa at present.

This in today's info@worldcurrencywatch.com:

"The Taj Mahal Refuses to Even Exchange Dollars At All

Recently, India policymakers decided that they would stop exchanging dollars at the Taj Mahal. Formerly, dollars were always welcomed. As a tourist, you could easily exchange your dollars for Indian rupees when you visited this wonder of the world. Today, that is no longer true according to India’s tourism minister.

This isn’t just an inconvenience for American tourists. It says something about the dollar’s standing worldwide. If Indian officials are officially snubbing the dollar, it shows that the dollar is losing its “safe currency” status.

By the way, India took in US$6.5 billion last year from more than four million tourists, so it’s a very big deal when they decide to take a stance against the dollar.

Think this is some sort of fluke? Think again. This “organized dollar shunning” is happening everywhere.

Most Money Changers in Amsterdam Won’t Take Dollars Either

Currency exchange outlets in Amsterdam recently stopped exchanging dollars for euros. They’re simply refusing to take dollars, even at an advantageous exchange rate for them. The dollar has been dropping so quickly lately that they are afraid that they’ll lose money while they’re making the exchange.

As one tourist was quoted as saying, “Our dollar is worth maybe zero over here.” She said, “It’s hard to find a place to exchange. We have to go downtown to the post office or central station.” It doesn’t end there."

Still think the dollar is a great store of wealth. Think again! It is loosing value everywhere. We will see more of this in the future. The dollar seems destined to lose its status as the Reserve Currency of the world. Then we will see further loss of purchasing power and greater price inflation here in America. That day seems to be well on the way.

However, we do have a Sovereign God Who loves and cares for His people. That does not mean that we will avoid all challenges, trials, and "disasters," but it does mean that He is working even these together for our eventual good. Praise Him daily for His gracious love and blessings. Then go out and share His love with all those with whom you come in contact. After all, we are His witnesses here on earth.

Best to each, Doug

What's With The Precious Metals?

Gold is doing better today as you can see in the green pattern on the www.Kitco.com graph, above. It seems certain that the price is moving to establish a range within which it will trade for some time. There are likely to be several attempts to break out of the range, mostly top side. This will be a time of consolidation before the next strong upward move. While the precious were oversold last week, it will be a time before we see $1,000 gold again.

The $1,000 price for gold has been established as a strong resistance level. Thus, as investors see this price being reached again, fear will develop and many will be encouraged to sell the gold and silver portions of their portfolio. Most have been burned once by the move to that level and most will attempt to avoid a second burning. That is why I suggested stops along the way for the mining stocks. I believe that is a good idea and have implemented trailing stops on a large portion of my portfolio to avoid substantial loss. Realize these are not perfect in all cases, but do provide a good deal of protection.

The trading range that gold is working toward seems to be somewhere between $910 and $930, but we will have to wait to see what the market has in mind. Any buying at this time for mining stocks should be done with caution and in small bits when you see that the price is right. It is likely a better time to sit aside and wait for the range to be firmly in place. Then it would be safer to add to your portfolio at the low side of the range from time to time. At times in markets, it is best to do nothing. Simply sit aside and observe market action.

If you have the margin account necessary for trading in options and the risk tolerance for such, options offer a great way to trade on securities in a trading range. Buying calls on the stocks at the bottom of the trading range and selling as the prices near the top. Of course, there is always the possibility that you will feel locked out should the price break out of the top of the range after you have sold. That has happened to me several times, but the trading, given you have a stomach for it, can be very profitable. Beware, there is always the opportunity that you will lose.

It is early in the day and the DJI are down about 60 points. Gold is 929.50 and silver 17.39. I still tend to favor silver over the long haul.

Study the markets well, plan you strategy well, prayerfully put your plans in the hands of God, move out, and depend upon Him to give you the results. He is absolutely in control of all.

Best, Doug

Monday & Precious Metals Are Looking Better

Well that is a much happier chart for those of us with precious metals and mining stocks. Copper still has not recovered as nicely as gold and silver, but it, too, is on the way up. Gold is at 926.10 and silver at 17.22.

Even the DJI is showing some more life 7up 239.91 at present.

We are still not out of the woods on the sub-prime fiasco. In fact, it is spilling over into much of our financial environment. The full extent will not be known for some time. The Fed has not completely solved the Bear Sterns problem yet.

We are experiencing stagflation at the least, and very likely a recession. Be careful on spending and use foregone consumption dollars to lower debt. The dollar is showing a bit of strength, but that is temporary unless all the central banks of the world come to the aid of our sick dollar. I still believe that the time is near when other central banks will lower their dollar reserves in favor of the Euro. We must keep in mind that all currencies of the world are fiat paper currencies backed by nothing. They are created out of thin air mostly by computer clicks.

There is still a need for rain in Texas. Once again, we are very dry here. Nevertheless, the Lord knows what is in our best interest, so we will confidently wait upon Him. He will care for us in His time which is not necessarily ours. Most of us tend to be impatient. However, we will rest in the Lord.

Best to each, Doug

I am putting 15% trailing stops on mining stocks!

Folks,

Here is the latest in over night trading of gold in Sidney and Hong Kong. Currently, gold is 912.70 and silver 16.91. Both are looking weaker than I had thought they should be.

This has been another gut churning correction for the precious metals and other commodities. I always expected a correction, but this is deeper than I had expected by far. The big question is, "How long will it last?"

I suspect that we will see the precious metals in a trading range for the time being. Possibly the range will run between about 900 and 930. Hopefully, we will see more on the high than the low side of that range, but only time will tell.

I believe it prudent to put the 10-20% trailing stops on the mining stocks. However, I did not put any stops on the bullion ETFs.

We have a long way to go to for the financial companies to reveal the extent of the sub-prime and solvency problem. The recent actions of the Federal Reserve and the rhetoric from the White House are evidence of the fear that exists on this matter.

I would also suggest that you hold some cash on hand in case it is needed when you cannot get to the bank to retrieve some.

Remember that all is in the hands of the Sovereign King Jesus, Who is working ALL things for His glory and the long term good of His people. We can rest in this assurance of the Covenantal God of all. Know Him and have the assurance for your selves and your families. He works through the covenantal head of each household.

Best to each, Doug

Silver Reported to be SOLD OUT!

From Casey's Daily Resource Plus:

"Analyst Peter Schiff agrees, entitling yesterday’s column Alice in Wonderland. Part of what he had to say: “How do you know when you’re through the looking glass? A fairly good indication is when the price of gold, which normally moves up in response to monetary easing, instead plummets in reaction to one of the largest rate cuts in Fed history. Apparently, [this] resulted from the 'hawkishness' shown by the Fed in only cutting rates by 75 basis points, rather than the 100 points that many had expected. It is a testament to how low the bar has been set that the Fed can slash rates in the face of a collapsing dollar and soaring commodity prices and still be viewed as hawkish on inflation. Is it just me, or is Ben Bernanke morphing into the Mad Hatter?” . . . . . .

Now, let’s talk about what you really want to hear...like what happened yesterday. Well, it was the continuation of what happened on Wednesday. Once the boys gave the overbought positions a big enough shove on Tuesday, the Cartel pulled their bids on gold and silver (plus all the other commodities they've got their fingers in) and down went the prices. As I said, the 50-day moving averages for both metals were ripe for the picking...and they did exactly that...and in spades! This was way more than I (or Ted Butler) thought they would do. I had a chat with Ted yesterday in the early afternoon, and he feels that this take-down way past the 50-day moving averages probably got between 90 and 95% of all the spec longs out there...with a few more to follow early next week. We both feel that the 200-day m.a. is too much of a stretch for the Cartel right now."

The following article is from http://news.silverseek.com/GoldIsMoney/1205995646.php

"Silver Shortage: 19 dealers reported "Sold Out"
By: Jason Hommel, Silver Stock Report-- Posted 20 March, 2008 | Digg This Article | Discuss This Article - Comments: 3

(SOLD OUT!!)

Silver Stock Report

You know me, I don't send out two emails in one day, so this must be important. Since my email earlier tonight, where I reported that 5-6 major silver dealers (Amark, Tulving, 2 in Vancouver, my local dealer, NWT Mint) are "out of inventory", 13 more reports came in, saying that the dealers were out of silver inventory. Some of these names are big names in the business, Scotia bank, the Perth Mint in Australia, CNI Numismatics in LA, APMEX says they have some items, but are looking to buy.

If there are any coin dealers or bullion shops that have an inventory, in stock, of more than 100, 100 oz. bars, let me know, and I'll give you FREE Advertising within 24 hours in my next newsletter.

Robert Mish reports that he has 100 x 100 oz. bars still, but he had 250 bars last week.
Mish International
Menlo Park
650-324-9110

Now think: How can the silver price drop by nearly $2/oz., when all these reports come in saying that the dealers are sold out, or nearly out, of physical silver? This is the clearest evidence of paper short selling manipulation that I've ever seen since I started watching the silver market back in 1999, and I've seen a lot of evidence!

Unfortunately, the COT reports only report through Tuesday. This Wednesday's action will not be revealed in the COT's until next Friday.

The public switched and turned buyers after gold hit $1000/oz. The coin shops normally sell to the refineries, and this creates a large part of the ~250 million oz. of silver recycling each year that meets the deficit between ~650 million oz. mine supply, and ~1000 million oz. demanded by inventory.

But now, this flow of silver just reversed. And if the refineries are not getting silver from the coin shops, industry will get squeezed, hard, and so will the major short sellers on the COMEX.

This is crunch time. Panic time."

Back to Doug -- Given that the previous article is true and I have no reason to believe it is not. It was reported by Casey's publication and is wide spread over the internet. It is amazing how the cartel manipulates the markets to their advantage. We must learn to live in this environment until they lose control. This means that we are well positioned in silver given we have not sold our silver interests. Our silver stocks - SLW, PAAS, SSRI, CDE, and SLV (Silver ETF), as well as options on the stocks should skyrocket next week. I will be watching the Asian and Australian Sunday night trading prices for silver and gold. Next week should be an exciting week and, hopefully, not like the one just completed.

Each Lord's Day, we celebrate the resurrection of our Lord and Savior Jesus Christ. As Reformed Believers, we do this in memory of His sacrifice in our place and in honor of His resurrection on the first day of the week. However, it is not unreasonable to give special emphasis one time a year. I pray that each of you will celebrate with Christians of all time, on the first day of next week. All honor and glory belongs to Him. We show the world this as we meet together in corporate worship as He requires.

Best to each, Doug Best to each,

Commodities, including Precious Metals Down

This is the DJI graph as of today at the close. Notice that the DOW has now made five attempts to break through its 40 Day Moving Average; as follows: About December 1st; near Christmas, around February 1st; near March 1st (did not quite reach the average, but tried, and yesterday. From a technical perspective, that is bearish. Note that it closed today below the Average.

The Dow Transportations, on the other hand have spent most of the same time above their 40-Day Moving Average except for late November through about December 15th. and the bad time early January to about the 25th. The Transportations have attacked the 200-Day Moving Average three times and now look like they are trying to better it again now. This is certainly more bullish than the DJI from a technical perspective.

And Richard Russel continues to look for confirmation of either the bear market which was signaled in November, but never confirmed by the Transportations. This non-confirmation is encouraging.
Gold has definitely taken a big hit over the last two days. It closed today at 942.90 down 38.40 and silver followed suit with a close of 18.35 down 1.32. This is not good news for those of us holding the precious metals. The big question, "Is this simply another correction after too rapid a surge up the price ladder over the last two weeks, or is it an end to precious metals bull market?" Let's look at the chart, above, on GLD: the ETF for gold bullion.

GLD has stayed well above its 40-Day Moving Average since at least the first trading day of December. It is still there. The hit of the last two days has it reaching downward for this average. Were it to cross it, that would tend to be bearish. If it holds above the average, that would remain bullish.

Intervention into the markets by the central banks causes volatility giving us wild up and down days which try the strongest of us. We have yet to experience the all out gold rush to precious metals and mining stocks as we had in late 1979 and the first of 1980. Gold adjusted for the inflation of the dollar over that period of time calls for a price above $2,500 per ounce. This would seem to give some encouragement that higher prices are on the horizon. I believe we will see them this year. Therefore, I am holding firm and hanging on tightly to weather this correction and consolidation period.

Buying, if any will be very selective and in very small increments. Hopefully, we will see the bottom of this move very soon.

Rest in the Lord and trust in Him.

Best to each, Doug

General Market Bullish Serge - Precious Metals Hit

Yesterday was a banner day for the DOW. It advanced across the 50-Day Moving Average. From the technical perspective, this is very bullish. Obviously the buying which fueled the move was the Fed Reserve rate cut of 3/4%.

During the same period of time, the precious metals suffered as there was selling to gain funds to invest in the general market. This was exactly what the Fed Reserve was hoping. The bashing of gold was, I am sure, celebrated in Washington.

However, when we consider the extremely rapid recent serge of gold to above $1000 per ounce, it was due for a correction or consolidation before further climb. Those who have been recently introduced to the precious metals suffered the most. Of course, I suffered some on my purchases during this week. Remember, that I always suggested incremental purchases with each correction. That is, one should use caution and not commit the entire amount of dollars on hand, but move in with small purchases to add to the portfolio.

What is going on with the Federal Reserve's action? There is a theory within Keynesian Economics on recession and inflation.
FIRST: Recessions are very difficult to control, so the economy must be flooded with enough (unbacked paper) currency to push spending to higher levels of inflation (actually, price inflation).
SECOND: Inflation is easier to control by decreasing the flood of currency and increased taxation.
THEREFORE: Inflation (price inflation) is to be greatly preferred over recession or depression.

Thus, it is no wonder that governments and central banks take these actions. With ours, it is inflate or die. They do not care about the value of the dollar. In a centrally controlled economy such as our welfare government, it seems to those in power that there is no other way. Actually, for a time this has historically worked in a number of nations. I and many others have wondered over many decades at the way it has worked in America. How long it will continue to work only the Triune God of all knows, as He continues to pull the strings of all that occurs.

It is also true that, historically, nations which have gone this route have paid dearly for their intervention into the market place with paper currency and over regulation. Governments always expand with greater and greater intervention into the market place and into the lives of individual citizens and businesses, because they assume to role of the Messiah. Little do they realize that they are claiming divinity which belongs to no earthly power. There will come a day of reckoning.

There is a possibility that there will be a collective central bank movement to strengthen the dollar in the near future. This is done by buying dollars with their own currencies. The banks have acted in concert several times to do just this. It has worked from time to time. Why would they do it? It is to their self-interest. Remember, most of them have a large number of dollar instruments in their reserves. As the dollar falls in value, they are suffering great losses. The volatility of the dollar is of great concern to the banks around the world.

The unknown in the new international financial arena is the presence of the sovereign wealth funds, particularly of Asia and the mid-East. These are slushing around the world, including America, to purchase assets: real estate, businesses, commodities, and securities of all types. We will have to wait and see the impact of this additional currency into the market places of the world.

Gold has plunged today to 944.10 and silver to 18.32. However, we must remember that at these prices, gold is up over a month ago by 38.90 and over a year ago 292.20 while silver is up 1.31 for the month and 5.13 for the year. That is still a rather handsome move.

I am cautiously waiting for signs of a bottom in this correction before committing additional cash.

On the currencies, the Swiss Franc has been a big winner over time. It has now exceeded par with the dollar as have both the Canadian and Australian dollars.

Stay focused upon our Lord and Saviour Jesus Christ and rest in His love for His people.

Best to each, Doug

Gold Above $1000

Well, folks, we are above $1000 and have been there all through the night. Of course, we should realize that the $1000 mark is but another milestone in the route to higher prices. However, it is a psychological point which has an impact only from that perspective. The Kitco.com graph, above, shows that there has been a slight drop in the price of gold with the opening of the New York markets.

This seems to happen quite often. Many believe that it is a concerted effort on the part of the cartel to put a cap on the price of gold. As I have mentioned before, governments and banks do not like for gold to be seen in its true light: Real Money. Gold tends to expose the fraud of the fiat unbacked paper currency. Paper currencies allow governments to steal in violation of God's Word, "Thou shalt not steal." You bet, this applies to all of us and all organization, including governments on the face of the earth. Remember God is not mocked, "what we sow, we will reap."

As the price of precious metals moves up, we are hesitant to add to our portfolios. Remember as it moves past each milestone: 400, 600, 700, 800, and 900, we thought to ourselves the price is too high. We wanted to wait for a correction. When that came, we were afraid to jump on board for fear that the price would drop further. Then it moved higher, and we decided to wait for another correction. That fear resulted in procrastination and prevented us from obtaining the security of more precious metals in our portfolio. Now we are just above $1000. Are we going to wait for another correction?

It is better to dollar average into an asset which is increasing in value than to do so on one that is decreasing in value. Putting the price into perspective with inflation of the dollar since 1980, gold should be somewhere between $2,500 and $3,000. It is not there yet. Will it go that high? I do not know, but look at what the Federal Reserve in concert with the Federal Government is doing and think about it.

The lowering of interest rates, the flooding of dollars into banks, and moves to save hedge funding brokerage house does exactly what has been done since 1971. Remember that is the time that the dollar was completely severed from gold. What has happened to the purchasing power of the dollar since then? Yes, it has dropped like a rock in the family swimming pool. Now the Federal Reserve is staying the course of pumping up the economy with a flood of more dollars and lower interest rates. Will the result of that have a different effect upon the purchasing power of the dollar? I think not! It will continue its slide to dangerous levels in its current cruise over uncharted waters. Thus, the precious metals should continue to increase in value.

I am now investing more in the mining stocks and mutual funds which are invested therein. Also, the ETFs and trusts which invest in bullion gold and silver. I like CEF, GLD, and SLV.

Gold is now at $1,010.40 and silver at $20.39. Silver still has a way to go to catch up with gold, so it could be a good choice for investment at this time.

In all investing, be sure that you understand your risk level. Commit the investments to the Lord and ask Him for results.

Best to each, Doug

$1,000 Gold!

From Casey's Resource Plus this morning: "It was an historic day: after a slow, steady climb, the price to buy one ounce of gold cost $1,001.50 at 10:35 am Thursday. Amazing, when you realize an ounce of gold could’ve been purchased for $269.30 on the same day in 2001, the year the current bull market in precious metals began. That’s a return of 370% in 7 years, from a yellow metal that has to be dug out of the ground and pays no dividends.

For the day, gold was up $11.70 (1.19%), ending at $995.10, its first close above $990. The next milestone: closing above $1,000. Overnight, gold was down 60 cents.

Silver’s move was even bigger percentage-wise, gaining 55 cents (2.75%) to close at $20.56 for the day. Year to date, silver’s move has now doubled that of gold’s."

Yes, folks gold touched $1000, but it must cross that milestone and continue upwards. The mining stocks are moving upward as well and should soon give us the rewards we expect. Beware of the corrections along the way. Once the $1,000 is crossed and the prices exceed that for a time, there will be even more interest in owning the real money.

The price of gold is responding to the value of the falling dollar, the increased demand from Asia, and, now, the fear which is spreading among investors. The last reason for the precious metals sprinting is beginning to have a strong impact upon demand.

The fear of the Federal Reserve and our government is shown in the massive interest rate cuts this year. It is further demonstrated in the billions of dollars thrown at the banks, and the proposed helicopter drop of the Federal Government this spring. Yes, those in power are under a great deal of stress over the situation they have created and are attempting to solve with more of the same. All of us pay the price as a result of these games they play.

From Washington today, "Good Morning, Americans, Welcome to stagflation with our compliments! We have worked very diligently to present you with this wonderful situation. Now we will use the same means to get you out of the trouble." Of course, this would never be admitted, as true as it it!

A well respected economist, Stephen Roach, stated that America is facing a similar situation to that of Japan after the easy money with lower interest rates of the 1980s. It took Japan two plus decades to have any relief. He expects ours to great much worse before it gets any better, because we are meeting the situation with the same tools Japan used. Also, we have a great deal of military involvements in most parts of the world which Japan never had.

Rest assured in the Lord of all. He moves all men everywhere in accordance with His divine plan. He loves and cares for His people and will make all things work together for their eventual good. Be still and know that He, alone, is God.

Best to each, Doug

Helicopter Ben & Other Banks Threw Out Cash

The following is from Casey's Resource Plus:

"But today's banking system as pointed out in recent Investment Outlooks, has morphed into something entirely different and inherently more risky. Our modern shadow banking system craftily dodges the reserve requirement of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever. Financial derivatives of all descriptions are involved but credit default swaps (CDS) are perhaps the most egregious offenders. - Bill Gross

After the mass market interventions by the central banks on Tuesday, I have no idea what the future will bring in the short term. It is now apparent that the central banks will do anything to prevent a collapse. With the FOMC meeting scheduled for next week, it's unclear as to what action they'll take on interest rates, as they have appeared to have abandoned emergency rate cuts to reliquefy the system in favour of swapping "cash for trash". Let's see how long this money 'fix' keeps the Wall Street junkies feeling no pain this time."

Solvency is what is needed, not liquidity. The liquidity injections simply add more unbacked paper currency to markets awash in dollars already. That yield is inflation yielding price inflation which means higher dollar costs for everything we purchase.

The dollar is down substantially since the banks blew the bugle and charged in with 100s of billions of dollars. Gold has rebounded higher in relation to about half of the major currencies of the world. It started upward as the London market opened and took a leap as New York opened. It is now 979.30 and silver is moving upward from 19.92 now.

Most of the mining stocks are making a better showing with the markets being open for only about forty minutes. We must watch to see how they go forward into the rest of the day. By the way, crude moved to 108 yesterday in response to the trashing of the dollar. Most currencies are moving up in relation to the dollar.

At least scan the articles by Turk and Butler, I sent out this morning. They are both informative. We still should take a long term view on precious metals, in particular, and on other commodities, as well. We are in and will continue for a time in a period of stagflation with price inflation with wages lagging behind the curve. The job picture is worsening whether the government statistics show it or not.

Be thankful that the Sovereign God Who loves and care for His people remains in control of all. He moves all men, whether His or not, to carry out His will. We are the means by which He controls all.

Best to each, Doug

Markets Up Today!

From the Daily Pfennig this morning:

"Our good friend John Nadler of metals dealer Kitco was on TV this morning talking about gold and commodities in general.  He believes we could see one more dramatic move up, but expects a correction toward the end of the year which could bring prices back closer to $800 and ounce.  He said long term investors should maintain positions, as it is an excellent diversification; but short term traders should look for an opportunity to lock in some gains and wait for better buying opportunities.  John believes the supply and demand picture does not support the levels for gold, platinum, and especially oil which shot up to another record overnight."

What Nadler said is entirely possible. The precious metals have sprinted upward with great speed. As long as the dollar continues its downward trend which seems to be the direction, the price of the precious metals and commodities will continue to rise in terms of the dollar. The prices are not totally dependent upon the price of the dollar. The increased demand from China,India,and the oil laden Mid-East is exerting upward pressure, too.

The will be corrections along the way. I continue to suggest holding both silver and gold metals and investments in the ETFs, etc. which hold the metals: CEF, GLD,and SLV for the long term. The mining stocks will do well as the metals increase in price and will provide more leverage as gold moves above 1000. For trading, I use options on the mining stocks. These are for short term trading since options have an expiration date.



The 24-Hour Gold Graph, above shows once again that gold was higher over night in Asian trading, but dropped during the last half of trading time in London. It has moved upward again just before the New York opening. Gold is now at 973.70 up 323.79 from a year ago and silver at 19.65 up 6.72 from a year ago. These are not too shabby performances over the year.

The DOW is up 216-217 to almost 12000. It is showing more strength than it has for the last few days. This provides some encouragement to the general stock investors, as well. It must go much higher for the bear trend to be broken. But this looks good at present.

Almost all of the mining stocks are moving up again. Here are a few: AGYM 1.33; CDY 1.24; CDE 4.84; DROOY 11.26; GFI 15.42; GSS 3.82; HMY 13.37; IAG 7.59; KGC 25.12; KRY 25.13; MRB 5.20; MEM 50.44; PAAS 39.57; SLW 17.36; SSRI 34.52; VGZ 4.54; XRA 4.51. Good day for the mining stocks, too.

Had some nice rain for a change yesterday and it is nice and clear today. The Lord has provided the much needed rain and given us a beautiful follow on day. We certainly must praise Him daily for the blessings He gives.

Best to each, Doug

Another Buying Opportunity

Both gold and silver were down in overnight trading. This is clearly shown for gold in the above graph from Kitco.com. Presently, gold is at 969.20 and silver at 19.68. Both are giving us another opportunity to add to our portfolios. They are both off marginally from Friday's close.

The following is from the dailypfennig.com:

"I read a story over the weekend that suggested China will try to let the Renminbi appreciate vs. the Euros instead of the US$ as exports to Europe will likely be growing at a greater clip than those to the failing US economy.  The Chinese currency actually dropped 3.3% vs. the Euro last year and is now expected to rise 9.5% vs. the Euro in 2008.  China's trade surplus soared to a record $262 billion in 2007, prompting calls from European officials to reduce trade imbalances.  Letting the Renminbi appreciate vs. the Euro will stem some of these protectionist calls.  So what will this mean for US investors?  It should mean the Euro will continue to advance vs. the US dollar which will continue to take a back seat to what is starting to be seen as the world's new reserve currency."

By the way, this is a valuable free daily publication which is available from www.everbank.com. I suggest you subscribe to it.

I suggest you initiate or add to your precious metals and mining stocks during this lull in the advance. The bull market in both is still with us and should be for some time. These temporary windows of opportunity may not be as frequent in the future as in the past.

Invest only that with which you are comfortable. Be certain of your comfort risk level. Investing is not worth a wall of worry which can lead to all sorts of physical health problems. Plan, commit your plan to the Lord, move out in accordance to the plans, and leave it to the Lord Jesus Christ to give you success or change your direction. It is well to watch over your investments, but we must also learn to rest in the Lord for permanent peace in all situations.

Best to each, Doug

Wild & Wooly Market This Week

An amazing week for the markets. The first graph showing what is happening to the dollar vs other paper currencies. It is now in totally unchartered territory. Since about 1973 when this index was initiated, the dollar has never been this low. From a technical charting perspective, there are no established support points below the present value. Therefore, it is unknown how low the dollar can go. Even educated guesses are suspect.

The second graph presents the long range perspective of gold. This graph is very bullish and reveals that gold is in a powerful bull market. It has established new highs this week and has experienced several sandy spots along the way. It is currently down to 976.30, but the last indication was positive. Last night was a mixture of up and down. It, once again, moved down as the US markets opened.

Silver has been very strong, as well, but has hit a few sandy spots on the way. It is currently at 20.19 and seems to be moving upward. Silver has really been sprinting to catch up with gold.

The general market has suffered tremendous selling with the Dow now at 12054.50 and now seems to be in an upward move. It has varied this morning between down and up and is currently up about 20. The drop in value of the general market has likely forced some investors to sell the precious metals and mining stocks to cover margin calls on the general market holdings.

Margin Calls: Many investors borrow funds to make investment purchases. The borrowing is against the value of the cash and stocks in their brokerage accounts. Thus, when the market prices drop, the value of their holdings can become insufficient to cover the borrowed funds. In these cases, the broker will issue a demand upon the investor for additional cash to cover the shortage. This is a margin call, which if not answered with a deposit of cash, will cause the broker to sell some of the investment securities in the investor's account. Most investors would not want the broker to sell, so they will select the investments for sale to cover the margin call.

The Dow has moved to 12.074.67. Gold to 977 and silver to 20.37. Perhaps, the market is beginning to turn around. Remember that both gold and silver are in firmly established long term bull markets. They will hit the sandy spots from time to time, but should continue to move upward. Thus, we should see the sandy spots as buying opportunities.

We should all rest firmly in the Sovereignty of the one true God of all. He is in control and doing a great job. Much better than we or any other meddling, intervening authority could ever hope to achieve. He is working all according to His plan laid before He established the foundations of the earth and created man. It is a great blessing for all of His people. Let us all serve King Jesus as Lord of all.

Best to each, Doug

Da Boyz of the Cartel at it Again, Still!

From Doug Casey's Resource Plus today, "Almost without exception, the Cartel picks Tuesdays for their big smacks, because the cut-off for Friday's COT is at the close of regular Comex hours...around 1:40 p.m New York time...so anything they do from thereon in, won't be in the COT until the following Friday. This is their SOP...which I've spoken of several times before. After the close of trade on the Comex yesterday, the margin for silver longs was increased...again. So the margin calls will be going out as soon as the Comex opens this a.m. This was done to force out the leveraged speculator on the long side. You will notice that they never ever make life miserable for the shorts. That's because it's the exchange's unwritten rule to protect them."

Yesterday gold and silver dropped, but did not close at their lows for the day. Platinum fared better. Today, we are seeing a recouping of much of yesterdays losses with Gold presently 974.40 and Silver 20.12. If you were wise, you added to your holdings in precious metals and/or stocks. Personally, I added to my Call Options on GSS, SLW, and PAAS and a little bit of CEF. We should expect these bumps along the way. I still believe that gold will exceed 1000 this year, possibly before the usual run up in the Fall.

It is wise to use caution and make incremental additions to your portfolios at each opportunity. There is still some intervention by the cartel as the report, above, indicates. China, India, and the Sovereign Wealth Funds may be big players as well. Most of the foreigners know the value of the precious metals better than most Americas. We have not had to use the metals during severe economic problems as have they. Many of their families been saved by having the real portable wealth of precious metals and jewels. We should pray that we will never have a similar use for them. However, if the situation should ever arise, it would be a blessing to have the resources.

On the economic front, I believe we are definitely in a period of stagflation. This is a time when the economy is anemic and there is wide spread price inflation. It is a time when our spending should be very limited and our building of emergency funds and investments should take a very high priority in financial management.

It is likely a good time to plan ahead using John Pugleys' ALPHA STRATEGY. His book in the 1970s suggested putting aside non-perishable consumable items when they are available at bargain prices for use in the future. Normally, we accumulate savings and investments to provide the services and things we will need in the future. However, when we cash in our investments to buy these, most will pay income tax on the profits. If we purchase items today at lower prices than we would have to pay in the future, we are in fact saving, but there would be no income tax on the benefit of the lower price paid. Think about it!

Remember, our salvation comes from Jesus Christ ALONE. He is the way, the truth, and the LIFE. He gives us brains to seek His wisdom in the Bible and apply it to all areas of life. Scan the Bible and see how often there is a discussion of economic subjects. You will be surprised if you have never done this before.

Best to each, Doug

Gold is presently living it up in Sidney and Hong Kong

Gold is on the run in In Sidney and Hong Kong over night. It went up above $980 and is now about $979.60. That is quite a start for the week. Of course, when the markets open here in the morning, we will have a better indication of the course for the week.

On the other hand, the DJI has run up against a strong resistance at about 12750 which it touched near the end of January and the week before last in late February. It would have to break above that to show any life. Of course, it may well do that in the near future, particularly when the FOMC lowers interest rates again this month. There is wide belief that it will lower the rates; however, the long term interest rates have not responded as the Fed thought it would. These rates seem locked in at a higher than expected level.

The DJI showed very poorly last week losing in excess of 315 on Friday, alone. Even the Transportations were down about 70+. The general market is showing mixed signals which are difficult to decipher.

It is still wise to stick with the precious metals and natural resource investments. There is now a indication that funds and retirement plans are shifting funds in these markets. We could be in for a real upward move in these sectors of the markets. The demand for precious metals, mainly gold is very strong as the wealth of China and India grows. The Asians have a real appreciation for precious metals.

Silver has been showing a good deal of life in recent trading. It is racing to catch up with gold and may even make a better percentage wise record than gold for the time being.

Iran has opened the oil trading in its currency. It will also accept the Renminbi as well for the time being. Perhaps, Russia will begin to trade oil for Rubles. These two together could deal a significant blow to the U. S. Dollar. Before, oil has been traded in dollars, only. That would greatly reduce the purchasing power of the dollar and result in a big increase in the price inflation which we are experiencing now. We would have no means, other than military, to defend the dollar, because of the debt we owe to the world.

The latest reports are over 25,000 condos for sale in Florida with many thousand more coming into the market weekly. Those stuck with condos in Florida are in deep trouble. Many are being sold to foreign investors who are moving in to pick up what they see as "bargains." America is being bought by those abroad.

It will be very expensive for Americans to travel to Europe these days with the Euro around $1.50. Everything seems to be getting more expensive for us. Of course, we realize that this is the result of a significant loss of purchasing power of the dollar by design of the Fed and the Federal Government. This is a form of theft of the citizens and a hidden tax on what we have left.

Thankfully, our Sovereign God is in control and will protect His people in the long run. We must daily praise and thank Him for whatever He provides for us. Remember, He owns the cattle on a thousand hills. In fact, He owns everything, is very generous to His people as the study His word and follow His way.

We have another exciting and challenging week ahead. Let us get a good night of rest and prepare to redeem the time that King Jesus gives us.

Best to each, Doug

Inflation not the worry says Bernanke

Bernanke said, ”The Federal Open Market Committee will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.”

What this means is that the Fed and the Federal government fear deflation and recession much more than inflation. Thus, they will sacrifice the dollar to post pone recession. I say "postpone," because their solution is to pour more gasoline to put out the fire. It is their joint policy of easy credit flooding the economy with dollars which has created the mess we are in now. What will more of the same mean, but a greater problem. At the very best, it may buy a few more weeks or months.

The consumer spending, though somewhat less, is masked by the higher prices paid at the pump, for heating & cooling, and for virtually all consumables gives the illusion of greater spending. The higher prices for what we consume results in false picture of spending compared with prior spending. The dollar is worth less now than it was in the past. Their policy of more dollars will make the dollar worth less in the future.

At the same time, the loss of purchasing power of the dollar is resulting in an increase in the dollar cost of almost all natural resources, including the precious metals. By the way, Gold closed at 974.30 and Silver at 19.81 on Friday. It is important to know that the price of gold, silver, and platinum has increased in terms of all paper currencies.

There is a great demand, in particular for gold among the people in China and India. These populations are becoming more affluent, and they are more aware of the value of the precious metals than are most of us in America.

I pray that each of you is well positioned now in the precious metals for preservation of wealth and in mining stocks or the sector mutual funds for the leverage they provide.

Will have more to write in another post this week end. Keep your focus upon the Lord Jesus Christ and prepare for corporate worship tomorrow.

Best to each, Doug