There Are No Markets Anymore, Just Intervention

The graphs, above tell the sad story of how the price of precious metals is being manipulated. With the dollar plunging, oil rising, and base metals strong, it is amazing that the precious metals are not attaining prices in relation to the devaluation of the dollar. Remember gold should be in the $2,000 - $2,500 range, but it has been held down to less than half that.

Note the following from Casey's Daily Resource Plus: "That the metals didn’t react more powerfully is puzzling, and adds some credence to the view that the market is being heavily manipulated in order to make the collapse of the dollar seem less awful than it really is. . . . . . . . . .As the US$ fell...and oil (plus the CRB) rose to new record highs...neither gold nor silver was allowed to join in the party. Gold should have been screaming to the upside yesterday...and Monday...and Friday. But when the '8 or less' traders in the Commercial category of the COT control 80% of the entire Commercial short positions in both these metals, they can pretty well do what they want...and they do.

Every attempt at a rally in New York Globex trading was squashed flat once again, and what gains there were, were negated once the Comex closed for the day. Silver did little better."

Check out this article:
There Are No Markets Anymore, Just Intervention at http://www.gata.org/node/6241

Folks, it looks to be a long dry summer for the precious metals. I have been stopped out of more of my mining stocks. Gold is now at 902.20 (was below 900 earlier) and silver at 17.11. I still believe that we will see both much higher by the end of the year, but we will have to wait until fall. It is tough to hang on now, but as the dollar continues to drift downward, there is no safer place to be than in the precious metals, mining stocks and other commodity stocks.

By the way, have you read about the riots over food shortages in many parts of the world? Yes, the price of grains has accelerated greatly, partially due to the misuse of them in production of ethanol. I say misuse, because ethanol costs in energy for production the equivalent of almost 1.5 gallons of gasoline and the finished product provides about 20% less power than gasoline. Speaking of gasoline, we are experiencing gasoline at about $3.40+. I really reacted when I found myself rejoicing that I found cheap gasoline @ $3.299 the other day. That is a bummer!

The stagflation continues with price inflation putting the bite on our income and the income not keeping up. Batten down the spending and search for bargains which enable you to spend the least amount for necessities and forego discretionary spending. We are headed for a lower standard of living.

Remember that we are all called to serve the Sovereign King Jesus. This is true, regardless, of our individual beliefs. Many will ignore the call and pay the penalty, but many will be enabled by the Holy Spirit to come to life and answer the call. Pray that you are one of the elect!

Best to each, Doug

Precious Metals Having the Summer Blahs!

Precious metals are up a bit today, because the dollar is moving lower again (still)! Gold is at 920.20 and silver 17.51. However, it appears as though we are in for a long dull summer. Examining the graphs, above, we see on the 1-Year Graph that gold remains in a long term bull market. But as we look at the 30-Day Graph, gold is trading in a range between about 910 and 940. Until it breaks from this range, it will be dull for us in precious metals.

On the other hand, the general markets seem to have discounted all the economic problems. Richard Russell says that the market looks forward better than any small group of advisers or gurus. That has historically been true. There is the collective wisdom of all the buyers and sellers in the general market. The market appears to have resumed its long term bull posture.

As sound economists have known for centuries, a free markets involves the collective wisdom of all the buyers and sellers which is far superior to that of a centrally planned market. From the Book of Proverbs "For by wise counsel thou shalt make thy war: and in a multitude of counsellers there is safety." (Pr. 24:6) Adam Smith in The Wealth of Nations calls this the "Invisible Hand" which guides the free market. This principle is critical to success in any market, and certainly, in the securities markets.

However, the hooker is that our markets for goods, services, and securities are not free. All are subjected to manipulation by central banks and governments of the world. At the foundation of this intervention are the FIAT paper currencies of the world which are subject to the centralized "wisdom" of bankers and governments. From there, we are confronted by regulation, excessive taxation, and direct currency intervention in markets to accomplish a wide variety of goals.

Were the financial markets to be free, they would very dependable indicators of what lies ahead for the economy and the markets, themselves. However, the ability of the markets to look ahead are limited by the prevalent direct intervention and manipulation of paper currencies. Given this limitation, the security markets are very likely the best forecaster of future economic health. Thus, we must use the market technical action (prices and volumes of exchanges) for assessing the markets and, probably, the economy.

The markets have been uncertain for a time. Under Dow Theory, the DJI failed to confirm the action of the Transportation Average. The Transportation Average has been a strong force. We are beginning to see why. While the trucking industry is suffering greatly, because of the increases in fuel prices, the rail industry has become the transportation of choice. It is less costly for long hauls and the trucks have been relegated to more localized delivery to save on fuel expense. The DJI has increased a good bit during the last couple of weeks. The use of rails has caused the Transportations to be strong, and the movement of goods to markets has been a stealth encouragement for the DJI which we are now beginning to experience.

The unknown, at this time, is when/if the central banks will begin to replace the dollar as the reserve currency of the world. If that occurs, it will be devastating to the purchasing power of the dollar. With that shadow hanging over us, we must reduce debt and build reserves of cash and investments to cover us in event of job loss. The economy is still experiencing stagflation with price inflation and wages not able to keep up with the loss in purchasing power of the dollar.

Some of my stops on mining stocks have been hit. I did not want that to happen, but it is likely best. Of course, there were a limited number of shares with stops. Most were set weeks ago at 15%. I have replaced the stocks with options on, mainly, silver mining stocks and have also purchased some calls on the DIA (which follows the DJI). That is what I am doing at present, and it may or may not be wise for you to follow. Study and make your own decisions.

Remember that our Sovereign Lord is in absolute control of all. Rest in His promises.

Best to each, Doug

Cartel Pushes Precious Metals Down

Silver 17.52 and gold 911. What a game the cartel and banks play with our precious metals. There is an end to the game, and our concern is as was David's seeking God's blessing, "How long, O Lord?" The graphs show how much of an impact the central players have on the out come of the game.

The action of the price of gold is particularly remarkable in face of the fact that the loss of purchasing power of the dollar should have moved the price of gold in the 2,000 to 2,500 range in comparison to the 1979-1980 peak. This can only be explained by manipulation of the price by the cartel and banks. We are privileged to have another buying opportunity, before the Gold Rush.

The question now is: Was the recent rise after the correction only a break in the downward move or is this a new correction? Nevertheless, we must remember that we are still in the summer season which is normally not too good for the precious metals. I thought and still believe that the new impact of affluence in Asia will have a long range new impact upon the price of the precious metals.

China is allowing the Renminbi to increase against the dollar over time. Their selected time. Also, China is shoring up for the summer Olympics. They, without a doubt, want it to be a great show for the world. China has become a major player in world finances and manufacturing, and they want to reveal this fully during the event. While they are allowing more economic freedom to their people, they are still a totalitarian government. This must always be in the back of our minds.

It is unlikely that there will be a massive intervention by the central banks to bolster the dollar, because the U S bank lacks the resources to repurchase dollars. We are totally dependent upon foreign purchases of our debt for survival. The Euro has exhibited a great deal of strength in recent days pushing it way to almost $1.60 which is about twice its original value. The dollar is showing a bit of strength today, but a day or so on the upside does not mean an end to the trend which is downward.


The general market has begun to show some strength. The DJI are up again today to about 182 pushing 12800+. This is a strong showing and may reach a level to confirm the continued strength of the Transportations. It remains an exciting and challenging market we are facing.

Even the financials are showing life with XLF (Financial ETF) moving above 26.50 which it has not done for a few weeks. This is remarkable in face of the continuing reports of losses from the bursting housing bubble. Recently, we have seen write offs by Merrill Lynch and Citibank.

The employment reports are not encouraging as the recession seems to be gaining a stronger foot hold on the economy. Thus, stagflation continues which may well bring the end of our empire binge.

Rest in the Lord and depend upon Him for everything. We must do our part, but the results are in His hands. We, as joint heirs with Jesus Christ, remain firmly within the Covenant which God made for Abraham and his descendants: that is, those of the faith of Abraham.

Best to each, Doug

G-7 Said Nothing, So the dollar is Up!

The graphs tell us that the summer doldrums are upon us in the precious metals. We have to keep reminding ourselves that gold is a political metal. The cartel plays pricing games with it using options on the metal. They play the dollar, as well. The value of the dollar in relation to other currencies has an impact on the price of gold and the other precious metals. It seems that, barring any expansion of the war or disruption of oil supplies, the metals will establish a trading range for next 3 to 5 months and are likely to break upward in the fall if the pattern holds true to form.

Gold has moved to 925.9 and silver is at 17.68. The mining stocks are holding fairly well after the drop of gold from $1000 several weeks ago. DROOY is down to 8.92 which I thought we would not see. You should note the article I sent earlier today on DROOY (DRD Gold). I still believe this is a sound company. It has been adversely impacted by the shortagbue of electrical power in South Aftica. It will take some time for the infrastructure to be expanded, but we would hope that it will be done as quickly as possible. In the meantime, the supply to the mines will be lower than desired.

Well, folks, there seems to be a lot of rejoicing over the "good news" from the G-7 meeting. However, there was a lack of any positive plans or encouraging official news from the meeting. I guess the total optimists just listened through rose colored ears, so the dollar has rebounded a bit since.

The fundamentals that are a curse on the dollar remain firmly fixed. We still are engaged in a war that becomes more costly in lives which we Americans value highly and dollars which we do not have. Our balance of trade remains unbalanced since we have by taxes, regulation, and unions run our manufacturing out of county. We have astronomical levels of debt at all levels of government, as well as, for businesses and individuals. As a result, consumer confidence is down as is consumer spending.

The real black cloud over the dollar is the fact that we are supported by other governments, central banks, and foreign citizens buying our debt instruments. They are lending to us in great quantities. However, the purchase of our debt has slacked off some this year. Were this to stop or drop a great deal more, our bankruptcy would become apparent. Tied together with this is the fact that the dollar remains the reserve currency of the world. Should the buying of our debt dry up, there would be a mushrooming tendency for central banks to dump dollars and replace them with another currency. That would end the dollar's reserve status on significantly lower our economy and our standard of living.

On the consumer spending, have you noticed the prices at the grocery stores recently? Wow! It appears to me that the level of price inflation is in the 8-10% range, regardless, of what the government tells us. Have you noticed the downsizing of packaged grocery items? I noticed the other day that the quart jar of mayonnaise was no longer a quart, but 30 ounces. That is another tactic of manufactures to keep from raising the price of the product. You should recognize that the price has actually increased by lowering the amount in the similar container. How about the cost of filling the tanks of the gas guzzlers? Yes, there is price inflation which is resulting from the ever growing flood of credit and actual dollars into the economy.

The Privateer reported that Europe is pulling away from the U. S. control of NATO to form one of their own. Soon the pressure is likely to be upon America to withdraw our troops from Europe. Troops would, also, be withdrawn from some of the 150 places throughout the world. I have been mulling over in my mind of the impact of this here at home. First, this would be a welcomed opportunity for reducing the cost of occupation of so many countries, so the federal spending could drop. With all of our troops here at home, there would be a reduction in force putting many folks out into the civilian economy searching for jobs. Thus, there would be an increase in unemployment which has been been edging upward this year. So, we are facing a potential double edged sword: lowered cost, but higher unemployment.

Who said that this is not an exciting time to be alive? Our Sovereign God never said that our lives would be always a beautiful rose garden. However, He did promise to be with us forever and that is a real blessing upon which we can depend. He is working out His will in America and in every life according to His plan. Remember that nothing can separate us from His loving care. He will preserve His people to ever live with Him in the mansions He has gone to prepare for each of us. What a wonderful Lord and Savior: Jesus Christ.

Best to each, Doug

Precious Metals Repeating the Play of Aril 8th

Both silver and gold seem to be repeating their paths of April 8th. Look at the similarity of the over night action and the action near the end of London trading and opening of New York.

Yesterday both gold and silver had stellar days, but today is a different story. We are in very volatile times in the precious metals and commodities markets. Crude was up strongly and closed at about $111. Supplies must be low, demand high. Look out for sticker shock when you arrive at the pumps. It takes a lot of dollars to feed the gas guzzlers these days and it is likely to higher over time.

Silver is down to 17.91 and gold to 925.20. I am searching the call options on, mainly, silver miners. Gold miners are also options. I bought some DROOY on Monday, and I believe it to be a good long term play. However, DROOY was downgraded from buy to hold by a major investment bank. It is wise to use caution in this market.

The direction of the general market is yet to be revealed. There is some good news and some bad news impacting on the market. Many are concerned, but we must wait and see how it goes. It is difficult to see how the world wide flood of paper currencies could do anything, but result in price inflation in everything, including precious metals and commodities.

It is likely wise to do a little stocking up on durable consumables when they can be found at discounts and bargain prices. That is one way to stay ahead of price inflation. Remember investments which enable you to cash them in and pay the higher prices of tomorrow also cost in income tax. Durable consumables purchased a lower prices and used when price inflation is raging have no taxable consequence. Therefore, you have profited without the burden of income tax. Think about it!

We can all rest assured that all of us and everything is firmly in the hands of the one true God of all. Nothing can separate His love from His people and He cares for them above His only begotten Son: our Lord and only Savior, King Jesus.

Best to each, Doug

Bull Trends in Place - Metals Up Today!

Above, we have the 24 hour silver and gold graphs from Kitco.com. Notice how similar the green (today) curves are. That is amazing! One could overlay one on the other and there would be very minor variation. Another exciting over night trip for both. This time, the prices really escalated at the New York opening.

Yesterday, there was little volatility in the prices. The volume of trading seems low, as well, so we could have increasing volatility. Both are still on a long term bull run. At times it will seem as a walk or crawl, but upward is the trend. Expect corrections along the way.

Meanwhile, our economy is not expanding as many have told us. See the following from the DailyPfennig.com newsletter:

"Unfortunately, I don't think anyone would use 'strong and stable' to describe the US economy right now.  Even the FOMC seems to have finally come to the realization that we are in a recession!  Yes, the minutes of the last FOMC meeting was released yesterday afternoon, and they showed the Federal Reserve officials are now anticipating that the economy would shrink in the first half of the year.  Some were even concerned about "a prolonged and severe economic downturn."  Finally!!  I guess they are just a little slow on the uptake, they had to wait until the data hit them like a 2 x 4 upside their heads.

Policy members said they saw little sign that housing markets have reached a bottom and 'some believed that a prolonged and severe economic downturn could not be ruled out' according to the minutes.  Even Big Ben had to admit last week that the US economic expansion is coming to an end.  So now, over a full year after Chuck warned of the coming downturn, the Fed agrees that we are in a recession.  I guess sometime next year, when inflation hits double digits, we will hear them start worrying about rising prices. 

The results of a survey by Bloomberg news showed that economists now predict the US economy will not expand at all from January through June of 2008.  A majority of these economists now project the US is, or will soon be, in a recession.  We believe we have been in a recession since the beginning of the year, and we've got more than a few more months before we get clear of the downturn.  Meanwhile, the dollar will continue to slide vs. the currencies of those economies who are more stable."

Things are not any better in London, either. The housing bubble has burst there, as well, and prices are dropping.

Looking at the precious metals today, we find gold at 928.80 and silver 18.15. These are comfortable prices. Gold must hold above 900 to show signs of moving to new highs. They will be reached, but we will have to be patient for a time. Meanwhile, look for opportunities to add to your portfolio.

The mining stocks are holding firm. Most are up today. Here are some prices: AGXM 1.49; CDY 1.19; CDE 3.63; DROOY 9.75 (That is a potential buy); GDX 49.22; GFI 14.22; GSS 3.45; HMY 11.49; IAG 7.45; KGC 23.54; KRY 2.06; MRD 6.48; NEM 47.26; PAAS 39.57; SLW 16.39; SSRI 30.79; VGZ 4.38, AND XRA 4.43. All in all, not back considering the bouncing of the prices of the metals, themselves.

Wonderful weather here in Texas. A bit dry, but cool nights and not too hot during the day. The Lord is blessing us in so many ways. Weather is only one of His blessings. We must always count our blessings and praise Him for each.

Best to each, Doug

Silver Shortage More Evident Now

Both gold and silver are showing more signs of life today. The patterns in the graph are remarkably similar. There remains a large amount of open interest in both of the metals. One would have expected the short interest to drop, but it has not. Therefore, there is still an overhang of influence in both. Gold is trading at 905.80 and silver at 17.48 as this is written. Perhaps, the recent correction is over, but there will be more.

I believe we will see a strong resistance at the 1000 level. It may be very difficult to break through it the next time around. There were too many late folks who bought near the end of that upward move and many were burned, because they had hoped for a quick profit well above 1000 and were caught with big paper losses. They are likely to cash out near 1000 next time, rather than risk another blood bath.

Those of us in for the long haul are not as concerned about the corrections along the way. Certainly, they hurt, but we must realize that bumps occur. Nothing goes straight up forever. In fact, there will come a time when there is a blow off in the precious metals. That is when we hope to unload the mining stocks at a handsome profit. However, it remains wise to keep trailing stops on a portion of your mining stocks to prevent substantial paper losses during the climb.

This from Casey's Daily Resource Plus this morning,

"In silver news, the silver ETF did not liquidate one single ounce of silver during the $5 drop in price we just had. Here's what Ted Butler had to say when I asked him about the ETFs in an e-mail exchange we had yesterday afternoon...."The ETFs have been interesting though. GLD has held firm as far as holdings, with no decline during the sell-off this week, which is unusual. SLV has not only held at record levels, but added 2.5 million to a new record yesterday. Looks like more may be added soon as a result of volume last couple of days." It's a good bet that SLV is having real trouble getting enough silver to meet its obligations. This is something I intend monitor carefully from now on."

I am planning to buy more calls on PAAS, SLW, and CDE, to take advantage of the dwindling supply of silver which should make silver an outstanding play for the immediate future. There must truly be a real shortage here. Certainly, it will be good long term as well. It is wise to watch the market to see how this plays out. I would recommend cautious buying.

We will have to see what the Lord has in store for us in the markets this Friday. Fridays are always interesting. Early today the DJI is off about 25 and most mining stocks are up.

Remember to answer our God's call to corporate worship on the Lord's Day. It is our duty and pleasure before the One, True, Living God of all.

Best to each, Doug

Are Precious Metals Our of the Woods Now?

Upon New York open today, we see both silver and gold moving upward which is more comforting than the horrendous down days we have experienced. The fundamentals beneath the bull market in the precious metals is still in tact. We still have the gushing deficit spending of governments at all levels, the continuing very costly war, the expansion of supply of dollars, and all with no end in sight.

Consumers are being squeezed between higher prices for food, fuel, and utilities with little if any increase in wages. In fact, more people are being laid off from employment. Even Ben in his address to congress said that things do not look as rosy. He said that the economy was "contracting." But with his rose colored glasses, he looked to the second half of the year for the economy to strengthen. Do you think he knows something that we don't or this just rhetoric?

Silver is responding better than gold, and I am looking to buy more silver stocks and ETFs with silver (CEF and SLV). Of course, we must remember that silver is not the monetary metal that gold is, but it is a close relative. There seems to be a great growing shortage of silver at retail and also becoming so in the wholesale arena.

Keep trailing stops on the mining stocks and cautiously add to portfolios on each substantial dip in prices. By the way, the mining stocks did not suffer during the last correction at the same percentage as the metals, themselves.

Keep your focus upon obedience to our King Jesus and rest in the fact that He is in control. Best to each, Doug

Precious Metals Beaten Down Badly

Folks,

This is another exciting day in the precious metals and commodities markets. Which ones aren't? However, today both gold and silver got kicked in the teeth and seemed to be headed for the 10-count on the mat. Both have rebounded some from the low around 10:30 or so. Notice that silver has a better, although bad showing than gold. Silver did not go down as far percentage wise and rebounded more smoothly.

The mining stocks did not react as violently to the losses in precious metals today. However, one of my trailing stops was hit and a portion of DROOY was sold. Of course, as it always seems, mine were sold at the low for the day and DROOY has rebounded. Nevertheless, I was able to pick up some options on Silver Wheaten (SLW) and am trying on CDE. I thought it was a good time to buy into more silver mining stocks, since silver is acting better than gold.

I am still convinced that the precious metals are in a bull market. The other commodities are there, too, but have been hit extremely hard. Even copper suffered a great deal. Perhaps, we are in and will go deeper into recession before the economy improves at all. Even China is having some challenge with inflation. We may be exporting our recession to the world.

The Federal Reserve is seeking some Draconian powers over both the stock and commodity markets. This is all designed to "save the big banks." Of course, it will be at our expense in both freedom and taxation. We are destined to bail out the failing banks. This seems to be in concert with the actions of our president in the "Patriot Act" and other unconstitutional actions he has taken, often with approval of the Congress. Aren't you glad that our Sovereign God is watching all of these questionable actions and laughing at the folly of man as they seek to achieve ever greater power and wealth.

We will need to hang tough and patiently await the return of freedom in our markets. Hopefully, the manipulation will begin to dwindle. It is important to follow the markets and remember the longer term trends within the markets. Each correction is no fun at the time and all of us wonder how long and how deep the moves will be. These are the times that try us to the core.

Keep your mind alert by daily studying the Scriptures of the Old and New Testament to find the way, the truth, and the life in Jesus Christ our Lord. It is through Him alone that we can receive forgiveness of sin and reconciliation with God, the Father. There is no other way. Do not neglect the power of corporate fellowship in worship together with the saints of God.

Best to each, Doug