A New World - A Different World - Lower Std of Living

Yesterday, we saw the Fortis Belgian Bank get some 11.2 billion Euro from Netherlands, Belgium, and Luxembourg. Then the UK nationalized most of Bradford and Bingley. Further, Icelandic government bought 75% of Gilnir. More creeping into the international banks. And there are more on the way.

The following is from Casey's Daily Resource Plus today:

The Lehman collapse marked the end of Wall Street risk intermediation as a significant component of system financial intermediation. Going forward, credit growth will be chiefly generated by the banking system, supported by various forms of government backing...Importantly, this new financial structure will ensure minimal risky lending as well as significantly reduced risk taking. And from a global perspective, I believe new-found fears of lending to the American financial sector marks the beginning of the end of our economy's capacity for trading new financial claims for imports of energy and goods. - Doug Noland, prudentbear.com - 26 September '08

The following our statements by German Financial Minister Peer Steinbruck in an interview by Der Spiegel. These are copied from The Daily Pfennig 9/30-2008:

"We are experiencing the most severe financial crisis in decades, although one should be careful about historic comparisons with 1929. One thing is clear: After this crisis, the world will no longer be the same. The financial architecture will change globally.

The source and focus of the problems are clearly in the United States. There are many causes. After 9/11, a great deal of cheap money was tossed into the market. Apparently some of that money went to people with poor creditworthiness. This led to the growth of the real estate bubble. The banks embarked on a race over profit margins. Then speculation spun completely out of control.

I see neither the need for nor the possibility of taking on the responsibility for American banks. Besides, our situation is more robust."

Yes, it is our fault. Our reserve currency has failed to be stable as it was promised to be. However, since August 15, 1971, the dollar is without backing; and therefore, without a bridle to reign it in when creation of this FIAT currency goes wild. In spite of this, the dollar remains somewhat stronger against most major currencies with the exception of the Japanese Yen.

Yesterday, the DJI was off 777+, the largest one day drop ever, but not the largest percentage wise. It was a very nasty day in the general markets which overflowed into the precious metals mining stocks. Some have said that it was due to the failure of the bail out to pass Congress. That may account for some, but there is great fear. It is world wide, as we have seen by the bail outs of not only our own, but international banks.

The world of finance will be forever changed as a result of this situation. Lenders will be more critical of the ability of borrowers to repaid loans. Collateral will be more closely examined for actual market value. 

Certainly, there will be more dollars in circulation to head off recession or depression. Stagflation is here for some time as many jobs are lost.

The DJI is now up some 243 revealing yet more volatility. Folks, at times the best investment strategy is to get out of debt, to build up a currency reserve and possibly buy some more physical metal if you can find any. Be sure that you have your checking account in a sound bank. Others are due to fall before this situation is cleared.

Silver is definitely lagging behind gold. If you can find pre-1965 silver dimes and quarters latch onto them. Silver will not be down forever. And there is an availability problem. Few are being brought to market at these ridiculously low price for silver.
Gold has again been capped at $900. It is reasonable to assume that some of the downward pressure on the precious metals is due to some sales for cash by investors. However, there is only one thing that can explain the low physical price of the metals. That is government intervention; likely, due to the Plunge Protection Team (PPT). There is no other explanation for the significant and instantaneous decreases in the price of gold and silver every time they rise significantly. This is blatant intervention.

We As much as we would hope for free markets, we have none. In fact, we have almost a totally managed economy. This management has failed and we are beginning to reap the rewards, thereof. Stagflation, Inflation, Recession, and Depression are the rewards.

The free market would have allowed unprofitable, inefficient banks and businesses to shape up or fail. By bail outs, our government has condoned the inefficient use of our scarce resources. Further, the actions have delayed and increased the severity of the correction which we are now experiencing. Welcome to Amerika.

Be every thankful that our Sovereign God is in complete and absolute control. That does not mean that His people will not suffer along with the rest of the nation, but it does mean that we have great peace and comfort in knowing that He loves us and gives us great insight into the wonderful end He is creating for us as He balances the books in the last days. Praise God daily for His blessings and comforting promises.

Best to each, Doug

DJI Off 777.68 - Biggest One Day Drop Ever

There we have it! The DJI off 777.68. That is nasty, nasty, nasty! This is a new low in recent times. Now move to the Transportations.
This, too, is nasty, nasty, nasty! This is confirmation with the DJI in this move. The general market looks very bad. It is not a nice place to be these days. I wish I had more puts in place, but that is hind sight. I did unload Financials puts today for some profit. Now let's move to the gold miners.
The mining stocks were down, but not nearly as much. And the dollar was a little stronger today. I added some more DROOY at 4.88. It closed at 4.60. My purchases always seem to drop immediately upon purchase. It is like buying a new car and losing on the deal as you drive away. However, most often the stocks have bounced back rather soon after. Cars do not!
The AMEX Gold Bugs Index shows a drop, as well, but like the GDX nothing like the general market. Both the miners and gold bugs (MACD) seem to indicate a turn downward.

Gold held up pretty well and is now $904.10. Silver is 13.09 with a lack luster showing for the day. Silver continues to lag behind gold. Its day will come.

The Royal Canadian Mint does have gold and silver coins for sale. The premium is high, but the coins are new and available. One can also check with Kitco, Investment Rarities, and Franklin Sanders for pricing many coins. Delivery may be a bit slow, because the demand is very high.

It seems that the bail out (now "Rescue Package") is on it way to passage. More, rather, greatly increased inflation is on the way.

Wachovia went under today, but was bought by Citicorp after much persuasion by FDIC. That is better than a take over by the government, but not a lot better. Soon all financial institutions may be under control of our socialistic/totalitarian government. Then watch the expansion of big government.

The Fortis Dutch Belgian Bank (from the 1800s) is in big trouble and a "Rescue Package" is being discussed by Belgium, Luxembourg, and the Netherlands.

The continued financing of our deficit spending seems to be more in question these days. Were that to stop, we would simply issue more dollars for more inflation. Welcome to the 3rd World. It is really time to get out of debt. To have some cash on hand. A corrolary to that is check the health of your bank. More are in line for problems.

Let us keep our eyes, prayers, and hopes solely on the Lord Jesus Christ in whom we may have the sure hope of His promises to His people. We can rest in peace amid all kinds of storms with Him. He is in control whether one acknowleges that or not. Our individual and church beliefs do not change facts, but have a tremendous impact upon our lives and well being.

Best to each, Doug

Here Come De Rescue, Or Is It?

Both silver and gold seem to be following Friday's graphic curves. Gold is still struggling to get above $900, but is slapped back on each advance. Silver seems to be lagging behind gold for the time being. Gold is at 895.90 and silver at 13.15.

By the way, check out the Royal Canadian Mint (www.mint.ca/). They have both gold and silver coins for sale with a low shipping cost of about 12.95 CDN. The prices are in CDN and one can purchase with a credit card. I ordered a few of the 1/4 gold coins.

The top news of this week will likely be all about the latest governmental intervention in our capitalistic free market. Oops, scratch that! Though those "in the know," our elitist blame the capitalistic unregulated free market for all of their failures, this ignores the fact that we do not and have not had a capitalistic free market for many decades. In fact, it was being put to death in the 1800s and was killed during the last Century. Do not be deceived, those in power are always searching for a Scape Goat to blame for their failures.

I remember during the great price inflationary period of the late 1970s that all the politicians were blaming the consumers for too much spending and for consumers demanding too big an increase in pay. If that was not bad enough, they even blamed businesses and landlords for raising their prices. Of course, the heart of the matter was government/central bank vast inflation of the U.S. Dollar since all backing of gold was removed by President Nixon on August 15, 1971. Nevertheless, the political fingers of blame are always diverted away from themselves. In this, there is little, if any change today. The popular media is quick to pick up the same finger of blame, as well.

It is a simple matter of supply and demand. When the supply of anything increases with a constant demand, the value or price of the "anything" increases. Thus, it is easy to see that when the supply of dollars increases by printing more dollars or increasing the cost of credit to add to the supply of dollars, purchasing power will diminish. That is the current plight of our dollar.

The bail out, I will be politically correct, the "rescue package" represents another increase in the supply of dollars. Guess what will happen to the value of the dollar and what will be the result in prices of everything we need and want? Yep, prices will rise, and we will be poorer.

Government will continue to play the intervention game and eventually, foreigners will decide that the dollar reserve has got to end. Then, we are really in uncharted waters with even so much as a rudder. We will be on drifting on a sea of financial disaster.

The band aids which have been applied have consistently increased in size. None has solved the prior problems. This newest band aid is the biggest yet. Do you think it will solve the problem for which it will be enacted this week?

Since we have been dumbed down by the government socialistic schools, most of us are unaware of what is happening. Many do not even care, because the look to the government as their messiah rather than to King Jesus who is the true and only Messiah. Remember, the "Blessed in the nation whose God is the Lord." He must be our Lord or we will fall as a people.

However, in Him, His people have all the necessary security which is available and we know where we will be in the fullness of His time. What peace and lasting joy He provides to His people in the promises of His word. I praise God daily for His many blessings.

Best to each, Doug

How Long Will God Tolerate our Tower of Babel?

Silver and gold have rebounded from yesterday's drops. By the way, silver closed yesterday almost even while gold was down big time. Currently, gold is at $900.90 and silver at $13.46. There seems to be further attempts to cap gold at $900. It will take greater demand (possibly just more aversion to risk) for it to break upward through this resistance line in the sand. Both of the curves (green) look similar to the beginning of yesterday's curves (red). I was hoping that we were over the manipulation, but it seems to be appearing again/still.

The mining stocks are showing a good bit of life today with DROOY back up to 5.22. Yesterday I bought it barely over $5. Hope you were able to get on board, too. It is still in a good buying range. It closed yesterday at 4.94. The trusts are up some today, as well. CEF is 11.29; GLD 88.88; SLV 13.36.

Bad news was all over the net yesterday. Examples, follow: New home sales down 11.5% in August; Durable Goods Orders down 4.5% in August; Core Capital Equipment Goods down 7.5% in August, and Labor Department weekly jobless claims moved to the highest in seven years (Some of this may be due to Hurricane Ike).

Folks, the bailout which is now being sold as a rescue package will not solve the problems. It is simply a larger size band aid. Below are some news items which speak more about the the world's view of the U. S.

U.S. will lose financial superpower status: Germany

Thu Sep 25, 2008 6:08am EDT

By Noah Barkin

BERLIN (Reuters) - Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.

In some of the toughest language since the crisis worsened earlier this month, German Finance Minister Peer Steinbrueck told parliament the financial turmoil would leave "deep marks" but was primarily an American problem.

"The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the center-left Social Democrats, told the Bundestag lower house.

"The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar."

For the complete article go here:

www.reuters.com/article/newsOne/idUSTRE48O2L020080925

Chris Powell

Bailout can't hide it; the country is busted

By Chris Powell

Published: Friday, September 26, 2008 12:23 AM EDT

"Even leading Republicans in Congress, including presidential nominee John McCain, recoiled from Treasury Secretary Henry M. Paulson's proposal to take absolute power over $700 billion to be borrowed by the federal government and used to purchase every sort of bad debt without ever having to answer for it -- not to the courts, not to regulatory agencies, and only occasionally and incidentally to Congress itself.

The bad-debt bailout would be the biggest government patronage program in history and would amount to declaring martial law over the U.S. financial system and economy. Even if such martial law is necessary, its implementation should be put in democratic hands -- a non-partisan agency with full transparency, statutory standards for its purchases, and close accountability to Congress.

All the same, even if it can work -- that is, prop up insolvent financial institutions -- the Treasury's proposal is still a proclamation of the collapse of the whole U.S. financial system. Even if some financial institutions are saved, the collapse will manifest itself in other ways, probably ways more damaging to the public. For who cares if Goldman Sachs and Morgan Stanley endure if the issuance of $700 billion more in government bonds drives interest rates way up, diverts credit from the private economy, devalues the already sinking dollar, and sends commodity prices soaring again?

In that case the financial class will have won another battle in its long war against the producing class. It will be again as was said about the maneuvers of the Second Bank of the United States two centuries ago: "The bank was saved; only the people were ruined.""

You can read the whole article here:

www.journalinquirer.com/articles/2008/09/25/chris_powell/doc48db9d8625518811197071.txt

The following article is from Truth Out (www.truthout.org):

Government Seizes WaMu and Sells Some Assets

Thursday 25 September 2008

by: Eric Dash and Andrew Ross Sorkin, The New York Times

"Washington Mutual was seized by federal regulators Thursday night in the largest bank failure in American history. It was immediately sold by the federal government to JPMorgan Chase, the nation's largest savings and loan. (Photo: Elaine Thompson / AP)

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation's largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

The move came as lawmakers reached a stalemate over the passage of a $700 billion bailout fund designed to help ailing banks, and removed one of America's most troubled banks from the financial landscape."

When the temporal situation looks the worst, we can always rest peacefully in the assurance that all is under the control of the Sovereign God of all. He is working His will and has all planned to proceed to the end He has decreed.

The Tower of Babel was an example of how man continued after his father Adam in an attempt to replace God's Law with man as the law giver. God does not long tolerate such activity of His creations. Man in Adam was given the mission of taking dominion over all the earth and its creatures under the Sovereign God. Man was to be God's steward over all of creation. However, he was always to act in total obedience to God.

We, as a nation, have turned from our Creator and look to the government as our messiah with cradle to the grave security and welfare. This is the present day Tower of Babel. God will not long allow us to continue our disloyalty to Him and will tear down our tower and scatter us, as well.

God's basic unit of society is the family. Today, the family is under attack by virtually all media, the government schools, and government, itself. The laws not respecting God's definition of marriage and supporting the taking of children from families by Child Protective Services are only two of the ways governments are attempting to disrupt the families of America.

We and our churches must wake up to this attack upon Christians and speak out as prophets of old who confronted the earthly kings. Churches and Christians must recognize the danger of government schools and step up to God's requirement for parents to instruct their children using God's word.

Let us pray for a return the God of our fathers and pray for forgiveness of our sins, individual and collective.

Best to each, Doug

I the Dollar on Its Last Legs?

Yesterday, UBS gold analyst John Reade had this to say..."Comex option expiry on Thursday has a lot of open interest between $890 and $910/oz, and we believe it is no co-incidence that gold is struggling to get far from here at the moment. Barring an external factor breaking gold out of this range - which effectively means either a big move in the dollar, perhaps crude oil, or possibly risk aversion - then we will remain around the current levels until after the expiry, which takes place after the Comex close. Then gold will be better able to move more freely, as gamma hedging will reduce."

The, above, article from Casey's Daily Resource Plus reveals the motive behind the manipulation of Gold prices, and to a lessor extent of silver, as well. Perhaps, after today's expiry, we will see gold prices and mining stocks sprint forward tomorrow.

The 24-Hour gold graph above reveals the extent of the intervention by the bullion traders into the market. There can be no other explanation for such a significant drop in the price of gold coincidence so soon after opening of the NY Market. Can this be anything other than manipulation?

With prices so temporarily low, I believe this to be a great buying opportunity for precious metals and mining stocks. I am buying DROOY at market which is presently $5.00.


From GATA today:

"China stops its banks from lending to U.S. banks

Submitted by cpowell on Thu, 2008-09-25 04:15. Section: Daily Dispatches

Mainland Lenders Ordered to Halt Interbank Deals with U.S. Firms

By Jane Cai and Adam Chen
South China Morning Post, Hong Kong
Thursday, September 25, 2008

www.scmp.com

BEIJING -- Mainland regulators have told domestic banks to stop lending to United States financial institutions in the interbank market in a bid to prevent possible losses during the financial crisis, industry sources said yesterday.

The ban from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to US banks but not to banks from other countries, a source said." For the complete article: www.gata.org/node/6670

Folks, this is serious. The world sees what is being hidden from us. At the very least, the smoke and mirrors from those here in the know are hiding the facts from us. We must learn to prayerfully investigate and act in accordance with God's Biblical standards. Pray for wisdom!

RIA Novosti"

"Time for a gold rouble?

24/09/2008 16:29

(John Laughland for RIA Novosti) - There used to be a habit of framing old Tsarist bonds and putting them on the wall. Lenin's decision to renege on the Russian imperial debt meant that it became mere paper, interesting only as a historical relic.

In the light of the recent financial crisis in the USA, could the same thing happen now to the bonds issued by the American government, and could the country which has dominated the world for the last half century now enter history as a bankrupt state? And what can Russia do in the circumstances?

The decision by the US government to inject $700 billion into the financial system means that the already gigantic annual budget deficit of the American state (previously some $450 billion a year) will now rise by a factor of three. The total state debt of the USA will rise to well over $11 trillion. It is obvious that such a colossal debt can never be repaid. Instead, it will be serviced by more debt in the future. The contrast with Russia, which has painstakingly sanitised its state finances to the point that it now has more money to lend than the IMF, could hardly be greater.

The recent financial crisis itself grew out of this American culture of debt. To some extent, all countries share it: since 1914, all countries use paper currencies, i.e. debt instruments which are never redeemed. Whereas before the First World War, bank notes were essentially vouchers for specific amounts of gold cash, now the "promise to pay the bearer" (which remains inscribed on British bank notes) is in fact hollow."

The article goes on to recommend that the rouble be backed with gold. That would be a very desirable action which is not impossible for Russia to take. Will they do it? I don't know, but think of the value of the rouble in international finance were it backed with gold.

In a Bloomberg story..."Investors outside the United States, who own more than half of all Treasuries outstanding, say the government's $700 billion plan to revive the banking system will diminish the appeal of the nation's bonds."

How about that, even our Treasury issuances are being questioned by foreigners. Maybe we should wise up, too. As the dollar depreciates in value, Treasuries can take hits which far exceed the meager interest paid. Makes sense to me. Thus, they really become "Instruments of guaranteed confiscation," as Franz used to say.

Folks, the situation does not look rosy for the dollar. Perhaps, we will have the thorns without the beauty of the blossoms.

Keep your focus upon King Jesus and His word.

Best, Doug

Hollywood is Attacking the Family - Gold Capped at $900

Folks, as you examine the green trace of today, compare to the red trace of yesterday. From all appearance, we will have another day like yesterday. Gold may be capped by the powers that be at 900 for the time being. Not very exciting; in fact, a boring time for the precious metals. Gold is $888 and silver $13.36.

All of the focus is upon the gigantic band aid that King Henry and Bernanke are pressuring Congress to approve. Some of the Democrats are asking the real question, "Show us the details of the plan". As usual, the liberals in Congress are playing politics.

However, if you believe that a measly $700 Billion will save the whole system, I have a bridge which you might want to buy. I will sell it on the cheap! We are looking at a few Trillion. As the saying goes, "A billion here, a trillion there and soon you are talking about a great amount of currency."

The German economy is not as lame as many would have you believe. Even though consumer confidence dropped more than expected, the economy there is much stronger than ours. Unmentioned in most media is the fact that much of the ECM trading is among the partners. This is ignored by most of the "chicken littles." The sky really is not falling in Europe.

I believe that foreigners and international central banks are stinging from the loss of value of the dollar. Then are not nearly as naive as we are lead to believe. Under the circumstances of the day, how long will they continue to buy dollar instruments to support our debt? Some have already begun lowering the dollars in reserve and it is becoming more difficult to sell our debt to them.

In spite of the challenges of the credit bubble and the downward slide of the dollar, I believe the most critical crisis in America today is the killing the family. Hollywood never misses an opportunity to attack the family. The new "310 to Yuma" is an example in several ways: (1) The son disobeys the father and goes into a burning barn to save the horses. The father saves him, but the world is being taught that it is Okay for a son to disobey the father against the Forth Commandment. (2) The wife, almost violently, opposes the father's quest for dollars necessary to save the farm in violation of her God given place of honor in the family as commanded in Ephesians 5:22,23 where she is told to be obedient to her husband. (3) The father is presented as a weak, incompetent man while God requires the father and husband to be head, protector, and provider for the family. Thus, his authority is undermined. (4) The criminal who is being held is presented as the wise man throughout. In fact, he is a violent murderer.

This is simply one example of Hollywood's attack on God's basic unit of society the family. I urge you to critically examine movies that you watch. Look for these clear examples of how the family is being viciously attacked by this media. However, be aware that the attack is multifaceted. It occurs in television shows, particularly the serial "situation" and "realistic" shows and across all media. As, if you view, use a critical eye and look for glaring examples of this explicit thrust of Hollywood's elite. You will be surprised at what you find. There is almost no broad media presentation or even advertisement which does not in some way attack the family.

The attack on the family is for the purpose of undermining the denigrating the father to destroy the family. Without strong spiritual leadership of Godly fathers, the family is doomed. The heart of the matter is Hollywood is attempting to stomp our Christianity ignoring our Christian heritage.

Folks, it really is time to get on our knees, ask for God's forgiveness, turn to Him in obedience, and pray that He will heal our land.

Join me in this effort, before it is too late. There is nothing in Scripture which guarantees that These United States will last forever.

Best, Doug

A Bailout Above the Law - Necessity of Independent Thought

Gold continues to trade around the $900 level. It is now at 897.50 and silver is at 13.30. Both are holding fairly well. The mining stocks have run upward a good bit this week, and are mixed at present. They should be much higher and may soon be.

The DJI is up about 34 and has been bouncing around a good deal, but not showing much strength. Guess all the bailouts and proposed additional ones are worrying investors. Fear seems to be capturing most of the investors and they are not taking much risk these days. In this, they are correctly acting.

Let's take a look at the situation in which we find ourselves today.

Preceded by a multitude of great news (lies) from all those "in the know" government and industry leaders, the naive were encouraged to be optimistic on the economy. The assurances have been nothing but smoke screen to obscure the torpedoes of the financial industry in America.

The last two weeks have seen the greatest series of financial failures the world has ever witnessed. We have had 12 banks fail which is really small potatoes. Then we saw Freddie and Fannie nationalized to "prevent the entire collapse" of the mortgage industry. Merrill, the Bull Company was bought out to save it. AIG was nationalized rather than allow it to fail. Lehman went bankrupt. The two remaining major brokerage houses have changed to bank holding companies to take advantage of low cost loans from the Federal Reserve to save their own hides. I would suggest that there is much more of the same to come.

A travesty is that the CEOs of most of the failed companies have been fired or exited with big bonuses for their own financial security. At the same time the shareholders of the defunct companies have been robbed of most, if not all of their equity in the companies. Then, there is the matter of the tax payers for many decades in the future will be paying for all of this fiasco.

Here are some of the analyses of the "solutions" we are being offered. Do not be deceived, we are in uncharted and very dangerous waters for the foreseeable future. We will be months and likely years muddling through.

From Casey's Daily Resource Plus today:

In a Bloomberg story yesterday, McDonald's Corporation told some of its US franchisees to seek other ways to finance store improvement because their bank, Bank of America Corp., declined to increase lending. If a very successful company like the Golden Arches Supper Club can't get more money...what are the chances for "lesser lights" out there? From the King Report on Sunday night..."We are now at the limit of what solons can do constitutionally...so Hank is trying to circumvent the Constitution, by asking Congress to write a bailout bill that grants Hank and his minions absolute power, free of judicial review. Unbelievable!!!" Yes it is, Bill. I see in an Itar-Tass story that Prime Minister Vladimir Putin has called for changing the architecture of the international financial system. He said that "the whole world economy cannot depend on one money-printing machine."

From New York Times:

A Bailout Above the Law

By ANDREW ROSS SORKIN

Published: September 22, 2008

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency,” the original draft of the proposed bill says.

And with those words, the Treasury secretary — whoever that may be in a few months — will be with vested with perhaps the most incredible powers ever bestowed on one person over the economic and financial life of the nation. It is the financial equivalent of the Patriot Act.

From New York Times:

The Party's Over
by Patrick J. Buchanan

"The Crash of 2008, which is now wiping out trillions of dollars of our people's wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.

The new era will see a more sober and much diminished America. The "Omnipower" and "Indispensable Nation" we heard about in all the hubris and braggadocio following our Cold War victory is history.

Seizing on the crisis, the left says we are witnessing the failure of market economics, a failure of conservatism.

This is nonsense. What we are witnessing is the collapse of Gordon Gecko ("Greed Is Good!") capitalism. What we are witnessing is what happens to a prodigal nation that ignores history, and forgets and abandons the philosophy and principles that made it great."

So here we are! Welcome to Amerika, comarades. It is time to diligently pray that God will lead us through without complete collapse of everything we enjoy. Batten down the hatches, for a the big storm ahead.

As Buchanan reports above, we are not witnessing a failure of free market economics or conservatism, but a collapse of socialistic controlled economy. In fact, we are, with the latest request of Treasury Secretary Paulson, moving further into the socialism of a government more tightly controlled financial system. He has requested virtually unlimited power to "save us." This will fail, too!

The God of all the earth did not allow the other Towers of Babel to bring a utopia to the world. He will not allow this one, either.

I still believe that precious metals will be the media in which most of our investments must be placed. It seems more than ever, we are moving into a period of great inflation of the paper currencies of the world. This will make the precious metals, themselves, the bet means of preserving any wealth that we possess.

It is time to plan your way out of debt, hold tightly to your job, find ways to increase your income from other sources, reduce discretionary spending in all areas, develop savings and investments. Develop frugality to a greater extent. But, above all, seek the Lord where He may be found.

King Jesus is always found in His word found in our bibles. Become a daily reader of the Bible. Get to know His law and how each of us violates it on a daily basis. He has made us and sustains us moment by moment. Without Him, we are lost and guilty of sins against the Father God.

But, thanks be to our Father, because He has made the way for us to be reconciled to Him through the Lord Jesus Christ. Jesus came to earth as a man to live a sinless life and to take our place on the cross that we may share in His righteousness. This is the great good news of the gospel. It is real! Remember, it is real and He is the only way to be justified before God the Father. There is no other.

As we have moved into very dangerous times, it is wonderful time to seek out sound reformed churches which bring families together and will support one another as in the days reported in the Book of Acts. Each of need the weekly worship of God in the fellowship of other believers.

Best to each, Doug

Do We Now Have a Financial Dictatorship?

Gold is again on the move toward $900. Will it be slapped down again? I do not know, but it is moving very strongly and has broken through both the 50 Day and 200 Day moving averages. A detractor is the fact that the 50 Day remains below the 200 Day. It will take a longer run to reverse this.
Silver has, also, taken a nice upward spring, but is yet to surpass the averages. If is lagging behind gold.
The Miners are also lagging gold and have yet to break through the averages. The upward thrust is quite strong, but must be of longer duration to break through the averages.

Gold is presently at $898 and silver is at $13.33. Both are up strongly on the day. Could it be that the shorts have been covered? That would be nice for the precious metals.

From the Taipan Daily this morning is the following headline:

We Now Live in a Dictatorship
Three men now control virtually every aspect of your financial life. Find out how to defend yourself from them!
by Adam Lass, Senior Editor, WaveStrength Options Weekly

The article continues:

"The greatest coup ever attempted is almost complete.

Forget about the sitting U.S. president. Every time he spoke, last week, he was greeted by resounding boos from the only audience that votes 24 hours a day, five days a week: the global stock market.

Forget about those two guys running for president, too. By the time either can take the oath of office, the office itself will be little more than a sinecure.

Forget about the heads of state in Europe and Asia, for that matter. Nothing they have had to say has mattered a bit (and that includes that KGB upstart in Russia).

The world’s various legislatures, including the U.S. Congress? Impotent.

The central banks of Europe? China? Japan? Sidelined.

The entire world economy now jumps at the beck and call of three men: Henry Paulson, Ben Bernanke and Timothy Geithner.

They may have official titles like “U.S. Treasury secretary,” “chairman of the Federal Reserve,” and president of the Federal Reserve Bank of New York”… but you probably should get used to the idea of addressing them as “The Great Triumvirate.”

For years now, Washington has systematically destroyed the value of the dollar.

This campaign of destruction led directly to the real estate bubble, its demise and the ensuing mortgage crisis.

The entire time, these three men have quietly assured the public that all was well, that no precipitous actions were needed to be taken to forestall the troubles that were bearing down on us like a 300-car coal train barreling down Thunder Mountain."

I do not buy everything that is said, but I believe they have hit upon the threat to our financial security. Most Americans look to the government and banks to solve the problems these entities have created. Reminds me of sending the fox to guard the chickens.

Of course, government schools have been into social engineering to dumb down Americans for decades. The success they have achieved is evident in the total dependence upon the government for everything from the cradle to the grave. It is their messiah without the Sovereign Power of our one true Messiah: Jesus Christ, The Lord.

As I have reported before, "We no longer have markets, but intervention." Thus, it will be more and more difficult to manage financial assets. Gold and silver have been money for centuries, while paper FIAT currencies have been around for a relatively short period of time.

FIAT currencies are controlled and issued by decrees of governments. Ever wonder why we have taxes in a nation that can print all the dollars they want. Our central bank system creates dollars with every dollar it lends. Such a deal!

It seems to me that taxes are used simply to direct businesses and people to spend or invest in "government decreed" areas. Or to refrain from spending or investing in all other areas. Thus, taxes seem to be more for control of citizens than to fund the government.

The bank and government solution to all problems are two fold, as follows: (1) If a funded program is failing, the answer is always to throw more dollars at it, and (2) If a financial problem arises, produce more dollars. In either case, the answer is always more inflation.

This will make precious metals the foundation for the future. It should continually cause the price of the metals to increase in terms of the debased dollar.

Thankfully, our Messiah is in charge and directing all things for the glory of the Father. That is a blessing for each of us which gives us peace and comfort in times such as these.

Best to each, Doug

America Home of the Unfree Chickens Ready for Plucking

Gold is showing recovery mode from the recent gut wrenching correction. The recent virtual seizure of the financial industry by the Federal Government assures us that the dollar will continue to slide and precious metals will cost more in dollar terms.

Silver is actually responding very nicely to the government actions. The pent up demand for precious metals is beginning to show up very nicely. The depletion of smaller coins and bars at the retail level continues. When the prices were artificially down, there was a very great demand. Now that prices are moving up, the demand continues.

The dollar does not look very healthy. The promise that nobody; that is, nobody in the financial business will be allowed to go broke regardless of the reckless us of resources. Of course, this will saddle the tax payers with a debt that will never be repaid without the destruction of dollar. Our foreign "friends" are becoming more disenchanted with our paper currency. They understand much more clearly than American citizens the result of this monumental debt and its effect upon the purchasing power of the dollar. Casey's Daily Resource Plus discussed this in the following paragraphs from today's issue:

"It was a truly remarkable day for the precious metals, as gold recovered fully from the biggest drop in nearly three decades. From Thursday’s afternoon peak to the early Friday morning low in London, gold gave up nearly $90, silver around $1.20. But as noted, by the time the smoke cleared on Friday afternoon, both metals were solidly in the black, and still rising as the Globex went into recess at 5:15.

All markets’ attention were focused Friday on Hammerin’ Hank Paulson’s latest brainchild, which essentially amounts to a bailout plan for everyone. Equities markets reacted predictably, shooting higher on the mistaken notion that this means the worst is over. The government will save us, hurrah hurrah.

Gold investors sent an entirely different message to those few who are still paying attention to reality. These moves can mean one thing, and one thing only.

Jim Sinclair of jsmineset.com, put it succinctly: “Today's reported potential infinite bailout of all and any portends … the largest increase in dollars outstanding since the Jurassic Age … It closely models actions undertaken regarding the production of currency liquidity seen in the ‘Weimar Republic’.”

In our view, all Americans should be deeply concerned about what their government is up to. This is sheer fiscal insanity. Lest we forget, the 2008 budget deficit was already predicted at some $400 billion, even using the government’s lax standards. That was before the economic “stimulus package,” and way before the events of the past week.

The tragedy for the country is that these clowns won’t have to answer for their misdeeds after January, and that the only presidential candidate with the slightest grasp of economics, Dr. Ron Paul, won’t be taking the oath of office. If you don’t got gold, you better get some, because your paper just got hugely devalued. Again."

It seems as though much of the jump in precious metals was short covering by those who have been manipulating the prices. Perhaps, they have moved to the long side and are now buyers rather than shorters of the metals.

Even the base metals, including copper, made good showings yesterday. This, too, reflects a loss of some respect for the dollar.

The last few days of Federal intervention into markets show wake many folks up to the fact that we have a controlled economy and have moved very far away from the free market of our founders. This is a shame, because the U.S. Dollar for many years was a stable currency backed with gold. Our markets were much freer, as were our citizens.

The free market is capable of handling every challenge. However, for it to operate properly, unsuccessful businesses, including banks must be allowed to fail. This is the penalty that poor businesses face. The remaining successful businesses meet consumer needs with greater economy and efficiency. The successful businesses make the best use of scarce resources to satisfy consumers.

One other necessity for the free market to operate properly is for individuals and businesses which engage in fraud and other crimes to be appropriately punished by a godly judicial system in which no one or business can buy its way out of responsibility.

The freedom, we experienced under our prior stable currency, free market, and sound judicial system, was a blessing of God upon these United States. This led to great growth in wealth and multitudes of products and services which were never enjoyed to the extent of America during the freer days of our existence. We must pray that God will provide the people the will to select candidates which will follow the will of God and again bring the great blessings to our nation.

We now have none of these foundations for the market place with the heavy hand of government wielding its power therein. These draconian actions should remind us of totalitarian states of the past. Several, of which, we joined with much of the world in bringing down. We do not have a free market economy. We now have a centrally managed economy. It is a socialist, welfare state. One that cannot support itself, and is totally dependent upon loans from the rest of the world for our very financial survival.

Frederic Bastiat in his great book, The Law, had as a major theme that citizens get the government they want. He does not deny God's hand in provision of the government, but rather gives the people exactly what they seek. This was true in Israel's request for an earthly king rather than continue with the King. God gave them Saul who turned out not to be so good for them. Through the government schools, news media, television, and movies, Americans have been socially engineered into the concepts of Marxism. Thus, they crave a welfare state in which all problems are solved by government. They seek solutions directly from the entity which created the problems in the beginning.

We, as a nation, now seek not God's way, but the pragmatic. Thus, we live in a time when the prevaling belief is that "the end justifies the means," whatever it takes. Would that we would return to our Creator and live in accord with His word. We crave for God to bless America, but seem unwilling to return as repentant, obedient children to Him. Without these actions which He requires, we cannot expect His blessing.

I pray that you will share this with all of your friends and relatives that many will be convicted and turn with repentance back to faith in the God of our fathers.

Best to each, given the price, to each of you, Doug

End of any Remains of Financial Free Market

From the Washington Post:

Citing Grave Financial Threats, Officials Ready Massive Rescue

Lawmakers Work With Fed, Treasury To Try to Restore The Flow of Money

Paulson, second from right, met yesterday with key lawmakers and policymakers."

Paulson announces the government's intentions with House Speaker Nancy Pelosi and the Fed chairman Ben Bernanke."

Treasury Secretary Henry Paulson announces the government's intentions with House Speaker Nancy Pelosi and the Fed chairman Ben Bernanke. (By Lauren Victoria Burke -- Associated Press)

The Above from the Washington Post. See the full article
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/18/AR2008091804200.html?hpid=topnews

Even China is getting into the game as reported in Casey's Daily Resource Plus today:

"In other news I see in a Bloomberg story that "China will scrap the tax on stock purchases and buy shares in three of the largest state-owned banks to shore up investor confidence..." And lastly it appears that Ford and GM are going to get the $25 billion in loan guarantees from the government that they were asking for. These two companies alone account for 10% of the corporate high-yield debt market in the US."

Ever more intervention into the market place by the Federal Reserve and the Federal Government. "There are no more markets, only intervention!"

The central banks have put in well over $180 Billion over the last two days. This provides liquidity to move markets, but does not help solvency which is the root problem. It just shows with crystal clarity that the U. S. Government and Federal Reserve are willing to do anything to keep the world financial system from failure. I seriously doubt that such band aids will solve the multi-trillion dollar problem. At best the actions will delay and increase the severity of the ultimate solution.

Meanwhile the recent jump in retail sales of precious metals shows clearly that there is much fear. People are beginning to reach for the final safe harbor in the world wide flood of paper currencies.

From Bloomberg:

Gold Coins, Bullion Sales Go `Gangbusters' as AIG, Lehman Fall

http://www.bloomberg.com/apps/news?pid=20601213&sid=awFy4i6wSdmg&refer=home

Adding to the concern is the drop in price below $1 per share of two major money market funds. Both Putnam Prime Money Market Fund and Bank/New York Mellon's Institutional Cash Reserve Fund are the culprits. Money market funds have historically been considered to be one of the safest assets to preserve cash. Apparently, the trust has been misplaced in some of them.

Volatility is the name of all markets these days. Earlier the DJI was up well over 400, but is now up only 293 as I started, but is now 357 at the end of writing. Yesterday was a banner day for the DJI. Both gold and silver great early moves, but disappointing finishes. Today started a bit slow for the precious metals, but there seems to be some recovery now with gold at 857.50 and silver at 12.30. Look for more wild rides ahead with sandy spots here and there.

Folks, we are facing an election, the results of which will reshape much of our way of life. We are faced with choices between two candidates who have both been and propose more violations of our Constitution, pro-abortion, pro-war, socialist, and have not offered any sound solutions to the problems facing our nation. Neither has set a standard of God's Law and therefore would continue on a path of chaos. We either follow God's Law or live in chaos. As James tells us "If we violate the least of the Commandments, we are guilty of all." This is true for all people and equally applicable to governments.

Mrs. Palin is a Christian woman who is knowledgeable and very attractive, but, as I understand it, has not, as governor supported the Constitution. She has added a great deal to the candidacy of McCain, but I have great concern that she is setting the wrong example for the young ladies of our nation. As she has served as the Governor of Alaska and as she likely will serve as Vice President of these United States, can she fulfill her primary God given task of being a perfectly appropriate help meet for her husband and home maker for her children? Can a husband fulfill his God given calling as head of the family and its provider if he is a Mr. Mom? I would pray that the young ladies of our nation fix their eyes and goals on the high calling that God has given them rather than seek careers which prevent primary attention to this calling.

Our nation is facing grave challenges ahead. I pray that our God will raise statesmen to replace the politicians we now have. All is up to Him, and I know that He will put the president of His choice in office. I pray that it will be a blessing and not simply more of His judgment upon our nation.

Let us turn back to Him, His word, repent and walk in His ways.

Best to each, Doug

DJI Up A Measly 10-15 - Gold Up to 898.40 +33 for the day

With gold at 891.70 and silver at 12.67, the GLD proxy for gold is looking strong. Now lets look at the miners.

GDX, the miners market vectors is beginning to look stronger, too. The mining stocks have not responding as rapidly as the price of gold, but they are on the move with virtually all of them strongly in the green today.

There was selling pressure on the precious metals last night in the thin trading volume of the Hong Kong Asian market. It looks like a bit of either profit taking or the boyz weakly putting a cap on the boom.

This graph of the AMEX Gold Bugs Index reveals that the smaller miners have not enjoyed the rise in the price of gold as much as was expected. However, they seem to be on the road playing catch up.

The global credit system is suffering from the US crash mode of the general market. Investor confidence has turned more toward fear. Even the AIG bailout does not calm the fears. The fears are forcing many to avoid risk and move from paper currencies to the precious metals.

The Federal Reserve is now with the $85 Billion bail out (probably buy out) of AIG is now in the insurance business big time. Of course, they have bought a bankrupt company with created dollars. By the way, the US Government purchase of Fannie and Freddie gave it some $5.1 Trillion in additional debt. I wonder how much debt the Federal Reserve assumed in the AIG deal.

The world has plenty of liquidity, but still faces a severe solvency problem. There is a great deal of mistrust among banks. Therefore, each is hesitant to lend to another member of the banking community. Loans are drying up between banks.

There is also some more movement out of dollars by foreigners, as well as, American investors.

Another side of the picture is that nationalization of the financial industry has taken several steps forward. That is a strong move further toward socialism. Think of the entire financial world owned by the central banks and governments. That would put too much unlimited power in the hands of those which must be controlled by constitutions enforced by demand of the people. Welcome to more totalitarianism.

Some highlights from yesterday: Russian stock market suspends trading, Goldman Sacks may have to divest assets or merge, housing starts here lowest in 17+ years, and our financial debacle may still be ahead. Nothing has really been solved, yet. We have only applied more band aids. We need solutions.

We should bite the bullet now and let the chips fall where they may. The market can correct even major disasters. However, it never happens without pain. Our band aids simply postpone the inevitable and made the final balancing of the books ever more painful.

The God of all in Heaven looks down at the folly of man in derision. He is in control, and often gives us our wishes. Just as in Romans Chapter One, He lets us have our own desires and then reap the consequences thereof. Woe to him who does not follow the will of the Sovereign of all. Each of us is required to be obedient to Him even if we do not acknoledge His existance. His law word is for all.

Best to each, Doug

Gold Jumped the Highest in One Day since 1985

Folks, it is as though a spring under the price of the precious metals had finally been released. Perhaps, the boyz have loaded up with long future positions on the metals. It is about time.

Over night has revealed even further advances for both gold and silver. Currently, gold is up against all major currencies. Gold at 873.40 and silver at 12.29 in Asian trading sounds good for the metals. The mining stocks have responded nicely, too. All were up at the close today.

Risk in the world today is driving many people to seek the safety of traditional money: the precious metals. Metals are reacting as they should to the financial hurricanes which have been plaguing us recently.

Think of our Federal Government spending our dollars to effectively buy Freddie Mac and Fannie Mae. Then to buy AIG. Sounds more like we're moving beyond a socialistic government with even greater governmental ownership of the mortgage and insurance businesses. What's next?

Bank of America both Merrill with all of its liabilities. That should give a lot of confidence to those of you who bank with them.

From The Daily Reckoning Australia "The War on Capitalism:"

" --Well, the solvency crisis is upon us. And part of the endgame is that the investment banks are forced into shotgun marriages of convenience with commercial banks. Lehman waited too late and was not only left at the altar. The doors to the church were locked while the building was set on fire. Barclay's is now picking through the rubble.

--Merrill wised up early and fell into the arms of Bank of America. And now it is Morgan Stanley's turn. It was jilted by investors today and fell 24%. This must've caught the eye of another spurned financial, Wachovia Bank. It looks like an arranged marriage is in order.

--Do you, remaining but humbled investment bank, take you, struggling commercial bank, to be your lawfully wedded financial partner, for richer or for poorer, until bankruptcy do you part? "

More of the financial and banking industries have there backs against the wall. Will Uncle buy them, too?

Think about all of our dollars spent conducting mid East wars and now to bail out firms "to big to be allowed to fall." Where are the dollars coming from? How many dollars will be created out of thin air to finance such endeavours. We are getting into more trillions than we have. Our debts can only be paid with even more created un-backed paper dollars. The result of that can only be more price inflation while wages are stagnant, at best, and many folks are losing jobs.

Folks, we must really batten down the hatches and lower debt. It seems that rough times are on the horizon. The result of the election will be yet another higher level of risk to all of us.

Be thankful, as am I, that none of us will have to occupy the seat of the winner of the election. Whoever sits in the seat of the president will face the greatest challenge ever faced by any prior president. And the problems will not be solved any time soon.

Be thankful, too, that King Jesus is putting into that office His the person of His choice. His choice will be for our blessing, or more likely, for a continuation of our curse. We must as a nation turn back to Him or suffer the consequences of our individual and national sins. Only the nation whose God is the Lord will receive His blessings.

Best to each, Doug

Both the DJI & TRANS Headed Lower

Folks, this is an ominous sign with both the DJI & Transportation confirming one another. Were the DJI to close where it is now well below the July 15th low and the Transportation to drop another 100+ points, we would have a double confirmation of a bear market. This is crash territory.

So far, the volume on both is light which is somewhat of a blessing. Without huge volume, we do not have panic selling. However, there must be some quantity of margin calls out there.

My puts on XLF (January) and MTW (October) are working nicely today. Both are in the black. Perhaps, tomorrow will be an up day, so I can add to both.

Here is the latest on gold. Quite a contrast, I'd say!


Keep your thoughts on King Jesus and His many blessings. Cling to His promises at all times.

Best to each, Doug

DJI Crashing - Precious Metals Booming Upward

Metals are on the move as the dollar is under greater pressure.
GLD is performing very well today. If it goes a bit higher, there will be a very positive showing. Contrasting to the move in precious metals is the 326+ drop in the DJI today. Are we headed for another 500+ down day? The general market seems to be in crash mode with brief dead cat bounces from time to time. We will have to check on the volume of the down days to see if there is massive selling. Thus, there seems to be a decoupling of the general market from the precious metals. This is to be expected as the the dollar is hit hard.

I wonder when the Plunge Protection Team will jump in to save the general market. Have they given up? I doubt it!

The Fed left the rates the same this week. The committee was reluctant to cut rates to once again attempt to bolster the market or raise rates to curb inflation. Lower gas prices at the pumps is helping the consumer to some extent. However, we should look for the consumer to slow discretionary spending as prices in virtually every necessary area are rising. Employment is showing dismal figures, as well.

From Casey's Daily Resource Plus this morning:

"If Monday was incredible...Tuesday was astounding. On Monday morning Paulson said that there would be no help for AIG, but less than 36 hours later, the Fed became 80% owner. I would suspect that former CEO "Moe" (Hank) Greenberg had a say in that. From now on, every trade by AIG is a trade by the government. I see that Reserve Primary Fund, the oldest money fund in the US, became the first money market fund in 14 years to expose investors to losses after writing off $785 million of debt issued by bankrupt Lehman Brothers. The decision hasn't yet been made if the fund will be wound up or not. Russia stock exchanges halted trading yesterday after a 17% share price fall. Pakistan's military has ordered its forces to open fire if U.S. troops launch another air or ground raid across the Afghan border, an army spokesman said Tuesday. And LIBOR (the London inter-bank offered rate) that financial institutions charge each other to borrow, soared 3.33 percent points to 6.44 on Monday!

Here's another story from The Twilight Zone...via Bloomberg this time. "Lehman Brothers, the securities firm that filed the biggest bankruptcy in history on Monday, was advanced $138 billion this week shortly after the pre-dawn filing by JPMorgan to settle Lehman trades and keep financial markets stable, according to a court filing. The first advance was repaid by the Federal Reserve Bank of New York, Lehman said. The bank didn't say if the second amount was repaid. Both advances were ``guaranteed by Lehman through collateral of the firm's holding company, the filing said. The advances were made at the request of Lehman and the Federal Reserve, according to the filing." Unbelievable!"

I have highlighted two sections of the above report. There is a true joke about politicians which is too often true. "How can you tell if a politician is lying? His lips are moving." This also seems to be true about Bernanke and Paulson. We are being lied to daily by this twosome.

We are on the path a inflation of the currency which is beyond belief. Such creation of dollars, if continued, is bound to discredit the dollar completely. How long will it be before there is a mass exodus from the dollar by international central banks? The leak has already started and there seems to be no one to put his finger in the dike this time.

Precious metals have rebounded as the should in the face of such debasing of the dollar. As this is written gold is up to 830.60 and silver to 11.21. We did well to hold on to the mining stocks, as all are very strongly up today. The trend may continue as the bullion banks and the rest of the boyz seem to be on the positive side of the futures markets.

By the way, I am buying puts on the financial industry and selected banks. Many banks and other financial institutions are in deep trouble and we should see many more failures. All can not be bailed out!

Folks, we are facing one of the most dangerous elections in our history. Neither of the major candidates will be good for America. Both are for more spending and likely more taxes upon currently overtaxed citizens. Either one will freely violate the Constitution after being sworn into office. They differ only to some extent on certain issues and the type of spending. There will be change for the worse when either one assumes the office of President of These United States.

We must pray that the Sovereign Ruler of all will raise up statesmen as magistrates for our nation before it is too late. We must work to bring our families in submission to King Jesus, then do the same for our churches, then work in our local communities, then the states, and finally to the federal level. It will take time without a miraculous intervention by the Lord. In the end, He will balance the books, but there will be struggles and challenges on the way. Rest securely in the knowledge that He is in control.

Best to each, Doug

The Financial Industry is Crashing and Taking Markets With It

Both silver and gold performed well today. However, both are off a bit overnight. The mining stocks were mixed, but began to take hits as the DJI plunged down 500+. That sizable drop put a drain on the whole stock market. The culprit is below.
The XLF graph reveals the sector which was impacted. The collapse of Lehman and the pending collapse of others in the financial sector are dragging the market down now. We will see much more of the same in the future.

From Martin Weisman

"Here's What's Happening and
What We See Coming Next ...

The financial failures you've seen so far are just the tip of the iceberg ...

• Lehman Brothers is merely the first to fail. Expect more in the weeks ahead, possibly starting with those that have the smallest capital cushion.
  
  
• Bank of America is making a horrendous mistake. It's already bogged down with its earlier purchase of Countrywide Financial, a classic pig in the poke. Now, on top of that bad move, it's taking on all the debts and risks of Merrill Lynch.
  
  
• AIG, the biggest insurance firm in the country, is desperately trying to shore up its balance sheet after suffering $18.5 billion in losses over the past three quarters. It's planning to dump assets, raise capital, and asking the Federal Reserve for a $40 billion bridge loan. Don't be surprised if AIG is taken over by insurance regulators in the days ahead. And don't be shocked if more insurance company failures follow.
  
  
• Look out for bigger financial troubles in the banking industry, including not only the names that are in the news, like Washington Mutual and Wachovia, but also at Citicorp, HSBC ... and yes ... Bank of America."

These are the financial giants which profited handsomely during the mortgage binge from sub prime lending to sub standard borrowers who were unable to service the fancy financing. These companies acted irrationally, because they believed that they would always be able to get bail out funds from Uncle Sugar or the Federal Reserve. All thought they were too big to be allowed to fail. I wonder if the CEOs will be rewarded for their foolishness with big severance benefits, as were those of Freddie and Fanny. It is likely! It would be much better to charge them with negligence at the least and put them in prison for acting without considering the risk to shareholders and the entire financial system. This sure seems like criminal activity to me!

How many more will fall? There are some 117 banks on the troubled list now. If you are a risk taker, buying puts on some of the suspects or the XLF seem rational at this point in time. Take a look at the October and December puts on them. Put options are less risk than shorting the stocks, because you know exactly what your risk is whereas in shorts you have virtually unlimited risk. The cost of the puts is the only monetary risk you take with the puts.

The precious metals are a true long term safe haven as they have been for centuries. The paper currencies are getting riskier every day. There could be a major default on some of the currencies.

We must always remind ourselves that this is a temporal and will pass away. Only the eternal life is the safest security. This is available only through Jesus Christ our Lord. No many comes to God, the Father except through Jesus Christ. We must daily thank Him, obey Him, give Him the glory, and enjoy the peace He provides His people in the midst of storms of any type.

Best to each, Doug

Big Financial Casualties - Dollar Down - Metals Up

Both silver and gold appear to be on a path of recovery. The mining stocks which have held up fairly well are responding nicely today. It is early in the day, but the precious metals are moving higher. They have a long way to go if they are to recapture the recent highs. The dollar is under pressure as Lehman collapses, Merill Lynch stumbles and AIG seeks a bail out, as reported in the Daily Pfennig today.

"Good day... The financial storm claimed another victim this weekend as Lehman Brothers Holdings Inc. filed for bankruptcy after being unable to find a buyer.  Bank of America, who was rumored to be bidding on Lehman ended up buying Merrill Lynch & Co and AIG Inc. is asking the fed for an emergency loan.  All of this financial turmoil has sent the dollar lower vs. most of the major currencies as investors are beginning to realize the situation in the US markets is worse than the rest of the world".

This simply emphasizes that there is trouble right here in River City. Can you believe it a pool table, er major financial catastrophes now and on the horizon? All is not rosy as some would have us believe.

This is putting a good deal of pressure on the general stock market with the DJI down 277+ and the dollar losing ground again. The rose colored glasses cannot hide the facts.

It is very likely that we will see the precious metals shine amidst all of the gloom and doom. They are the physical safe haven here on earth. Of course, the ultimate safe haven is our Lord Jesus Christ. We must know Him through His word and trust in His promises for real security.

By the way, the losses from Hurricane Ike have yet to be fully assessed and they continue with many folks out of electricity and many homes and businesses damaged beyond present use. While we are thankful that it was not the magnitude of Katrina, it was a very powerful storm and losses will range in the high millions. Thankfully, there were not many lives lost as most people took precautions. Let us join in prayer for those who have losses in lives and property.

San Antonio was not hit at all by the storm as it was far East of us. We are currently being blessed with a wonderful cool temperatures, but no significant rain as yet. The Lord continues to bless us in many wonderful ways, and it is important for us to express our gratefulness to Him and give Him the glory for each and every blessing.

Best to each, Doug

Gold and Silver Up Overnight - Economics of Losses

The trading in Asia shows higher prices for our precious metals. Silver and gold at trading a good bit higher.

The shortage in silver and gold in smaller sizes continues. Check out www.kitco.com for a disclaimer revealing longer delivery times. This is typical of most of the outlets for the metals.

The currencies in relation to the prices of the metals is mixed.

The destruction from Hurricane Ike is quite large. From an economic perspective, the losses in the wealth of our nation will be great. Thought the damage will be repaired, it will be repaired by the use of funds which could have been better spent adding to our wealth, not restoring what was lost. Think of all of the aging infrastructure of America that could have been replaced and added to increase out wealth. That would have been much better use of the repair dollars which will be spent.

God in His wisdom has brought Ike and similar "disasters" upon us. Perhaps, these are His warnings for us to return to Him. He sent numerous disasters in the past upon ungodly nations to call them to repentance. We must heed these warnings and turn back to the God of all, before it is too late.

In the up coming election, let us vote for the candidate who exhibits a fear of the God of Abraham and has shown, by his actions, that He is following the way of the Lord. Let us not simply vote against what we perceive as the greater evil, but for true men of God.

Best to each, Doug

Precious Metals Sill in Crash Mode - More on Christion Economics

Gold seems to be following a path very similar to that of the last few days. Narrow trading range until NY opens, then down. Silver is virtually the same.
Here we see the graph of GLD which is a daily proxy for gold. On the weekly graph it is below the 50 day moving average, but remains above the 200 day. The recent "correction" would require a lowering of the trend line. While I believe that gold is over sold by a wide margin, there is little indication of an end to the correction. Both physical gold and silver are in great buying ranges if you can find some. Perhaps, an alternative to the physical metals in hand are the Metals Select Accounts of www.Everbank.com World Markets or metal holding accounts of www.GoldMoney.com. You can easily check out either or both on the internet.
The US Dollar has shown great strength since mid August. I believe it is over bought, but it is not wise to buck a strong trend. The dollar is a bit off today, but the graph shows a good deal of strength. It seems that dollar bulls are rushing into dollars in preparation for deeper recession or just as a "safe" haven.

Insurers and banks face huge CDS losses By Aline van Duyn in New York
Get the full story at this link:

http://www.ft.com/cms/s/0/59477edc-7f5f-11dd-a3da-000077b07658.html

From the Daily Pfennig:

"OK, the Big story I brought you the other day about the Credit Default Swaps and all the bad stuff that could have come from a "default event" just didn't pan out that way, and I guess we can thank our lucky stars... Yes, $1.4 Trillion in Credit Default Swaps were settled, but in a far different manner than originally thought. Once again the Gov't stepped in, and "took care of the matter" so that Wall Street didn't crumble to the ground.

The problem here folks, is simply that $1.4 Trillion that was Credit Default Swaps on the books of investing financial firms is now a government guarantee for Fannie and Freddie debt. So, they bailed out the "boys" that had booked BIG FEES on these Credit Default Swaps... I guess when one looks at it closely, it's probably a good thing that the catastrophic event didn't happen... But... You know me, and I'll always find a chink in the armor...

And here it is... Guess where the money came from to pay for all of this? Remember that printing press in the basement at the Federal Reserve that Helicopter Ben Bernanke told us all about a couple of years ago? Well... It got a work out! So... More debt is being put on the books of the Gov't... And more dollars are being printed, so that those loans can be paid back in the future with cheaper dollars!

I want to make something perfectly clear here... I, in no way, want to see the financial markets ruined. But, what I would like to see is a Gov't that didn't feel as though every market event is something they need to take on their books... Which in turn are OUR books! And, I'm writing a letter to my congressmen and asking them why... Was it that people who are elected to represent me on issues like debt, were not involved in this decision? Was it legal? Was it constitutional? Ron Paul doesn't believe it was constitutional, the bail out of Fannie and Freddie.. I heard him say so on the Glenn Beck show Wednesday night! I would think tax payers would all be contacting their representatives and asking them about this!"

For the record, our international debt and propensity to protect financial institutions at any cost leads to more inflation. There is no other way for America to even begin to pay its world debt. Thus, we should look for more dollars in circulation leading at some time to greater price inflation.

From a biblical perspective, I would like to consider the following from Deut. 25:13-16 "You shall not have in your bag differing weights, a large and a small. You shall not have in your house differing measures, a large and a small. You shall have a full and just weight; you shall have a full and just measure, that your days may be prolonged in the land which the Lord your God gives you. For everyone who does these things, everyone who acts unjustly is an abomination to the Lord your God."

This is one application of the eighth commandment of our God which is "Thou shalt not steal." The unequal weights were often used by individuals and merchants to defraud one another. This was and still is theft.

The commandments of our God apply to every person who has ever lived or will live. Though we do not often consider, the same apply equally to governments. When governments debase their currencies, this is theft. Governments and banks are masters at this deception and use of unequal weights. They employ unbacked paper currencies for the express purpose of defrauding citizens. God will not hold a government guiltless when it violates His Law-Word. God's word does not return void, but accomplishes what He desires.

Think and pray about this. We should thank God that He has given us His word to judge all of our own actions and those of the government. We must daily study His word to gain the wisdom necessary to guide all aspects of our lives.

Best to each, Doug

The Precious Metals in Dangerous Territory

Gold broke through support at 750 and is now736.70. Silver is at 10.29. Faced with the currently strong US Dollar, precious metals are crashing. While I believe we should hold the physical metals, I am undecided about the mining stocks. The big move now is toward the dollar. This is likely to be temporary as the fundamentals in support of the dollar have changed very little. Temporary can translate into weeks, months, and even years. It seems that America may be on the road to recovery more rapidly than the rest of the world, particularly, Europe. This is a confusing time in the markets. This time, there are differences never before faced at such a magnitude.

America has a debt of such size that it will never be repaid. We are occupying well over 300 military bases (occupation sites) in well over 145 countries of the world. There seems to be no end to government spending. The deficit continues to grow. Financial institutions are in deep trouble (11 banks gone under, so far, and more on the way). Theses are just some of the negatives which are being pushed aside in the rush into the dollar. However, the rush to the dollar is very strong now.

GLD is pressing hard on 74.83 at present showing a great deal of weakness. This is ominous. Our question is how long will this "correction" last? I see no good news on the precious metals horizon at present. All seem to be headed lower, in fact, it could be much lower.

The only positive is the high demand at these prices and the shortage of the smaller bars and coins. We are moving into the fall/winter buying season when prices have normally risen. Prices seem to be headed lower now.

One of the fundamental concepts undergirding the free market is a stable currency. A stable currency enables businesses and individuals to more accurately plan for the future. Historically going back into biblical times gold and silver were the only money. Products and services were paid for in these precious metals by weight. Since the supply was limited, there was little possibility for significant changes in value. On the other hand, with unbacked paper currencies, this is not true.

The paper currencies have as their source of value (1) the coercive power of government to force their use, and (2) the acquiescence or preference of the people for their use. However, the relative value of these paper currencies is a political matter which is decided by the politics of governments and central banks. These are ever changing.

When a nation or a people reject the Law of God, they no longer have a stable standard by which to live. God's Law reflects the character of a God who is the same yesterday, today, and forever. One can depend upon this stable standard equally as well as he can depend upon the word of the God who cannot lie. The opposite of this is man's law.

Man's law is ever changing. Even constitutions, such as ours are politically changed to gain power of the rulers over the citizens. While under God's Law ignorance of the law is now excuse for violation thereof. However, with an ever changing law, ignorance of the law is reason for misunderstanding. The more complex the law, the more reasonable is a defense as ignorance of the law.

When man's politically changing law replaces God's Law, the result is always chaos. That is presently where we find ourselves. Never is this more true than in the investment arena. Folks, it is virtually impossible to forecast the financial future under such conditions.

I am not attempting to make an excuse for not seeing this severe correction in metals and extra strong upward sprint of the dollar. But we must remember that we live in a time of intervention into markets to the extent that none are allowed to work freely.

If I were pinned down, I would say that the current conditions are very likely to continue until after the election. It is very possible that the strong dollar is strong in an attempt to sway the outcome of the election.

I continue peacefully rest on the promises of our Sovereign God, His love for His people, and His merciful care for each of us. Study His word daily, make your plans prayerfully and cautiously, commit them to Him, and depend upon Him for the results.

Each of us must make consider the facts and make our own decisions. Remember, the person most interested in your success in finances or any other area of life is you.

Best, Doug

This is a Gut Wrencher! Gold headed for 750.

Silver and gold a really taking a severe beating again today. Hopefully, all of the short positions will be covered soon. The metal buying around the globe is exhausting the supply as refiners are holding back delivery at the prevailing prices. Demand remains very strong. It could be that pent up demand caused by the prior higher prices delayed buying and many are only now beginning to catch up by building their personal and business supplies. I understand the large blocks of gold and silver are available, but the coins are rapidly disappearing from shelves and have long time delays between purchase and delivery.

In the GLD proxy for gold, we send the strong downward move. The red numbers on the scale indicate support areas. GLD has dropped dangerously close to the 74+ one. A drop below that would be significant.

The detraction of the up coming election is taking a good bit of emphasis from the markets. This election, more than most in the past, has attracted a good bit of interest. In my opinion neither of the major candidates would be good for our country, so most people seem to be voting for what they see as pragmatically the lessor or the offered evils. What many seem to avoid facing, that regardless it is a vote for evil. For some time now we have been offered ever more poorly qualified candidates but both of the major parties. How or whether to vote is a dilemma. Does one vote for the lessor of the evils, withhold his vote to avoid giving credibility to a corrupt system, or write in a third party candidate which is much more in tune with the biblical world and life view? How many voters even consider the character and moral values of the candidates?

From the heart or soul of a person come the presuppositions which drive the person to act in a certain way. Thus, the moral character reflects the true person. The God he worships and obeys direct his life and how he will act in any elected position. This is important and critical to America and every other nation in the world. Blessed is the nation whose leaders and people who have the Lord as their God. All others will come under God's wrath in His time.

Whoever is elected in November will be the leader chosen by God for America. However, we must always remember that God's reason for choosing a particular leader can be for a blessing to the nation or a judgment upon the nation. A review of the history of Old Testament Israel clearly indicates that God often sent leaders and other nations to carry His wrath upon His chosen people of Israel. Will He not do the same for nations today? We should constantly be aware of these facts and we must get on our knees in repentance, seek His way for each of us, our churches, our communities, and our governments, and then and only then will He bless America again.

By the way, Gold is at 762 and silver at 10.94. That is dangerous territory for both precious metals.

Best to each, Doug

Precious Metals Hammered Again (Still)

Gold is certainly under pressure. It is not overbought by any means, but we are not involved in a free, but controlled market. Therefore, we should expect more of this. With the great and increasing demand for gold, such prices would seem unbelievable. It is hard to imagine the broad preference for the paper dollar as a "safe haven." But it seems to be true in view of the strength of the dollar. Many assets are being sold to obtain the FIAT currency.
The downward move in silver with the severe shortage is simply unbelievable except for intervention which must be massive. The following quote from Casey's Daily Resource Plus gives the perspective which I believe it totally accurate. We are being had!

"Yesterday was another low in silver for this move. Ted Butler says that everything that the boyz are doing now shows that they are only after the silver market. They are desperate to cover their shorts...by forcing the price lower and getting as many spec longs to cover as possible. The boyz have lots of gold they can get their hands on if they absolutely have to deliver bullion...but the cupboards are virtually bare for good delivery silver. All we can do is watch, because the authorities will not help save us from these criminals. We're all being raped, and even the mining companies won't lift a finger to help themselves...let alone us! How can they help when they're all bent over like that?

So...until the boyz are through doing whatever they have to do...and doing it in whatever way they have to do it...the silver chart will continue to look like this in the short-term."

From Daily Pfennig:

"Let's get to this Credit Default Swaps stuff, because this is important stuff folks... There will be a meeting today to discuss how this is going to all fall out... But here's some perspective on the situation... First and foremost, there's a question as to whether the Gov't's conservatorship constitutes a "CDS event", which would force the settlement of the CDS contracts that are outstanding... Fannie and Freddie have roughly $1.5 Trillion in debt outstanding... But that's chickenfeed compared to the notional amounts of CDS contracts that could be multiples of that $1.5 Trillion!

If the Gov't's conservatorship does constitute a "CDS event" there won't be enough debt to settle the contracts, which will lead to a need for cash... And that could lead to major problems, with the least of them being the holders needing cash, might have to sell other assets to raise the cash needed...

I know this all is confusing, it took me a time or two before I fully understood these Credit Default Swaps... But in essence they are simply an insurance policy, as it can be used by a debt holder to hedge, or insure against a default under the debt instrument. This would be under the heading of "derivatives" that you've heard all about. When the "credit event" or "default" occurs, then these contracts get unwound, and Peter pays Paul, and Paul pays Robert, and so on... In other words... It could get very ugly out there! The Association that governs the Credit default swaps, ISDA, will meet today to discuss how this will all come down or fall out..."

It will be interesting to see this play out. At the very best, it should provide a temporary band aid for the finance industry. Paul Volker said recently that our finance industry is broken. That seems to be true, but it is always amazing how it can be patched together by the government and the Federal Reserve.

It looks as though Houston will not receive a direct hit from Ike. Corpus Christi and Houston will be on the north eastern side of the hurricane which is the side most likely to get a lot of the storm which will hit south Texas. Of course, the direction could change.

As of now both precious metals are pushed lower - Gold to 781.70 and Silver to 11.65.

We are reminded once again that physical wealth is not forever, as is the soul. We are to "Seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you." (Matt. 6:33) We are also reminded that "The love of money is the root of all evil: . . ." (1 Tim. 6:10) Note that it is the love of money and not money. Thus, it is the attitude of the heart which is addressed. We must be born again as the Holy Spirit brings us to be a new creature who serves the Lord Jesus Christ. He is the answer, sustainer and only way to reconciliation with God the Father.

Best to each, Doug

Gold Above 800 and Silver above 12

Unfortunately, both gold and silver seem to be following the trend of the last few reporting days. That is, up in Asia, down in London until near London close, up early in NY and then down the rest of the day. Is the demand really that different from hour to hour? Are markets that different? Certainly, the traders are different and their goals may differ, as well. Nevertheless, it keeps us guessing. The article from Mineweb.com asks questions about the 45% increase in Indian demand.

Mining stocks are mixed almost even up and down. DROOY is down to 4.90. However, I am not buying at present. Gold is currently at 810.40 and silver at 12.41. Both are now on an up tick. I believe caution is the watch word until an upward pattern on the price of precious metals becomes evident.


Using GLD as a proxy for gold, the graph from StockCharts.com shows a possible double bottom. This bottom is interesting, because there was a gap up after the first bottom and then a gap down toward the second bottom. From the graph, a move to about 85 would be quite bullish.

Editorial from Mineweb.com this morning:

"The physical gold market has been immensely strong since the middle of August, with India in the vanguard. There has been regular evidence of Indian jewellers having to pay high premia for physical metal and more than one investment bank has been reporting that gold sales to India have rocketed due to the substantial restocking that has taken place in the local market over the past year. Now the numbers are starting to filter through.

The latest (provisional) figures from the Bombay Bullion Association show imports of approximately 100 tonnes of gold during August, a rise of 45% over August 2007 - although the year-on-year comparison is probably less important than the fact that this increase is a very substantial jump over the first half of the year, when imports were very considerably lower as jewellers drew down on inventory. India typically imports upwards of 700 tonnes of gold in any one year and until the August surge it looked as if imports this year would be down by at least 200 tonnes.

This may yet prove to be the case, but for the next few weeks demand is likely to remain extremely strong and, with physical demand rebounding also in the Far East, as well as the rampant demand for gold Eagles in the US, the refineries are likely to be flat out for some time to come. Heraeus GmbH for example, one of the larger refineries in Europe, has been reporting a two-week waiting list while a large order for Krugerrands emptied the Rand Refinery's vaults last week and the refinery expected to take up to a week to replenish inventory.

Dubai is also reporting strong gold trade, with consumers taking advantage of the fall in prices to start their buying for Eid and Ramadan earlier than they would normally do. The key question for the medium term, therefore, is whether these buyers will continue to buy gold right the way through to the Festivals themselves, or whether their appetites will be sated earlier in the year than usual."

Well, the Federal Government took over Freddie Mac and Fanny Mae over the weekend. The meat is in the details. From the reports we have been able to find, the government will have senior preferred convertible stock which has first claim to 10% dividends. The other holders of preferred stock will have secondary claim to dividends and will thus lose some of the value of the shares. The holders of common stock in the two mortgage giants are likely to wind up with zip. This bailout is reported to cost some $300 Billion, but I suspect it will be much greater as the foreclosures have escalated upward this year and more are on the way. Foreclosures and falling value of real estate has greatly reduced the capital of both of these entities. This is the bailout of bailouts with taxpayers socked with the cost. We will have to watch and see the impact of this on the relative value of the dollar and the reaction of foreigners. Both should see the dollar at greater risk now if they are not viewing the action through tinted glasses.

Ike is scheduled to hit the Galveston, Houston area of Texas about 2 pm on Saturday. The current forecast is that it will hit as a Category 3 with winds 111-130 mph. It will likely cause damage to oil rigs enroute. Thus, we would expect the price of oil to jump up today. The northest side of the hurricanes is normally stronger than the northwest. Therefore, Louisana Gulf coast is likely to get hit very hard, as well.

It has already caused servere rain storms in the Caribbean, particularly Haiti. Ike is scheduled to rake the northern side of Cuba as it moves toward Texas - Louisianna. We must keep the people in its path in our prayers for mercy and a greater appreciation of the God of all.

When we see the power of hurricanes, we should see it as a demonstration of the a small portion of the power of the Sovereign God. He controls all. Often He sends such challenges to teach us more appreciation of Him and His grace. We are too often rejoicing in what we have accomplished and fail to give Him the credit He deserves. Let us thank Him daily for His blessings and ever strive for more obedience to his word. We can only know His law by daily studying His word.

Best to each, Doug

Gold and Silver are Up in Asian Markets

Upon opening of the Asian markets for precious metals, both silver and gold a putting in a better performance. This may change over night or when the NY market opens. It may be that the boyz have unloaded most of their shorts in the metals and are on the long side now. We will have to see in the morning; however, it is about time.

Silver is at 12.70 and gold at 814.90. Both of these are encouraging compared with what has been our news since the middle of August.

We are moving into the fall season which is normally good for the precious metals. India has been gobbling up gold at the bargain prices. Their purchases are up about 45% in spite of the large premiums being charged. This is the season when the Indians buy gold for themselves.

Impacting upon the new prices of petroleum will be the prospects of Ike hitting Houston and Texas where it appears to be headed. That will likely threaten some of the gulf rigs. Most certainly, it will cause shutting down of operations in Ike's path at the very least. Damage to the rigs is quite possible. I would expect petroleum prices to rise this week.

Gold is up against all of the major currencies, except the British Pound, Australian Dollar, and South African Rand at this point in time. A bit earlier it was up against all currencies except the Australian Dollar.

Blessed is the nation whose God is the Lord. America was certainly blessed in the her first century on into her second. However, since we have boasted about our accomplishments and failed to honor our God, we may well be under His righteous judgment. He is patient and long suffering, but there comes a time when He will discipline nations as He did Israel when they forgot that He was the source of all their blessings. Let us as a nation turn back to the living Sovereign God of all and honor His only Begotten Son: Our Lord and Savior. We honor Him by being obedient and being a thankful people.

Best to each, Doug

Intervention is the Name of Game

Both silver and gold are showing signs of life today and have moved a bit higher. Neither is off to the races, but the move is encouraging. Maybe the intervention has lessened a bit. I bet that has not and will raise its ugly head again. Will the boyz try to stop the fall rally? I would not put it past them.

The intervention and the shortage of small coins and bars indicates that more folks are beginning to climb aboard the precious metals train. The physical metals should be a high priority in our investing for today. That is, if you can find and afford them.

The, above, is Jim Rogers commodity index which is worth following. There is massive infrastructure building in Asia, particularly, in China and India. Both of these countries have seen massive movement of their large populations toward urban areas. This has placed a great overload on roads, bridges, mass transportation, and all utilities. There are significant amounts of funds being used to relieve the shortages. Thus, it would seem that commodities, though presently depressed by intervention, will remain in a bull market. The current orchestrated "correction" should remain only temporarily. The bull market is still in tact over time. The market will reveal this as time passes.


The following is from http://www.timesonline.co.uk:

"President Yushchenko 'coup' claim

Mr Yushchenko appeared to accuse Moscow of interfering in Ukraine’s politics

Tony Halpin in Moscow

The shock waves from the Russian invasion of Georgia sparked a new crisis in Ukraine yesterday as the pro-Western Orange coalition fell apart in acrimony.

President Yushchenko accused his former ally, the Prime Minister Yuliya Tymoshenko, of forging a pro-Russian alliance to curtail his powers, claiming that a coup was under way a day before Dick Cheney, the US Vice-President, was due to visit Kiev, the Ukrainian capital."

The unrest in the Ukraine is escalating and may well be the source of more international concern. There is a growing distrust between Russia and the U. S. Actually, between Russia and the West, particularly, America. We must be aware of this new "Cold War," in spite of the lack of coverage by the mass media. This will have a great impact upon our finances as it continues and grows.

And this is from Sprott Management Analyst August 2008 report entitled Phony Express:

"If an unsuspecting investor didn’t know any better, he would be inclined to believe that a new trend has taken hold in the financial markets during the months of July and August. The “winning trade” now seems to be to go long financials and short commodities. Although this trade certainly would have made money over the short time period just mentioned, we would continue to posit that this trade is wrong over the longer term. Investors are having the wool pulled over their eyes courtesy of the Phony Express – outside forces that are trying to orchestrate the markets to instill a false sense of optimism. Although the evidence may be circumstantial, the motive and the means are quite clear. As the old saying goes, if it walks like a duck and quacks like a duck, then it is a duck.

Call us conspiracy theorists if you will, but we cannot help but see the visible hand of
government in the machinations of this latest phony market rally. There is certainly nothing in the fundamentals that has changed over these two months to indicate that the malaise in the financial sector is nearing an end. Quite the contrary, the financials are as sick as ever and things are only getting worse. To claim that the financials have bottomed is, we believe, to ignore the obvious. In a recent note to clients, Richard Bernstein, chief investment strategist of Merrill Lynch, wrote that the credit crisis is “broad, deep, and global” and “far from over” for financial companies. He further wrote: “Investors are significantly underestimating [our emphasis] both the scope and the extent of the credit bubble and the consequences of its subsequent deflation” and that “the problems are not confined to large institutions that are overexposed to U.S. subprime loans.” He further opined that stocks are unlikely to rebound soon, adding: “We are skeptical that trying to bottom-fish will prove profitable.”

This from Chuck Butler in today's Daily Pfennig:

"You can't have it both ways... You can't say, the U.S. is outperforming the rest of the world, and there won't be an collateral global growth because of it.

But, I don't believe it... Which would mean the dollar buying is all being done with smoke and mirrors... And that leads me to my latest conspiracy theory... If you don't like it when I go into these conspiracy theories, just skip ahead to the paragraph that starts with a *...

Let's go back to mid-July... The euro has hit $1.60 again and there's just not a lot of love going around for the dollar. And the reasons for that lack of love are numerous. One, BIG reason, is the debt problem... But that's one that a lot of people feel we can deal with (yeah, right, and I'm a young Bruce Willis!) So, let's put the debt on the back burner for this one... What the markets are feeling (in July) is the weight of the world on their shoulders, because of the rot on the vine with financial institutions...

Then, almost miraculously the dollar got up from its death bed... And the weight was lifted, but by whom, and why? Well... We found out just last week that it was a coordinated intervention by the Central Banks of the U.S., Japan, and Eurozone to prop up the dollar. And once the dollar buying got up some momentum, the Big Boy Brokerages were all touting the return of the greenback! But why did the U.S. feel it needed to intervene? OK, here's what I think...

"The Boys" saw the list of banks and brokerages on the "dead man walking" roster... And they saw the dollar circling the bowl... If the you know what hit the fan with financial institutions, it could have, no wait, it would have, sent the dollar down the drain, and who knows, it could have been the end of the greenback as we know it. So, they intervened to prop up the dollar in "preparation" of what was to come, which would allow it to begin its decline from a higher level.

That's my story and I'm sticking to it! It's like last fall when the Fed started cutting interest rates... They knew there was going to be hell to pay, and they wanted as much liquidity in the markets as possible... Did interest rates really need to be cut at that time other than to provide breathing room for the Fed's buddies on Wall Street? I don't think so, Tim! But, I knew the Fed's thinking on that, and I immediately called for a series of rate cuts, that the media or the markets didn't see coming... But I did... And I think I see the conspiracy thought here clear as day...."

These folks are in the know and I believe that their revelations about the intervention are accurate. It is true as has been stated before: "We no longer have markets only intervention."

And this is from one of my favorite newsletters:

According to the Pentagon's 2008 “Base Structure Report” (its annual unclassified
inventory of the real estate it owns or leases around the world), the US maintains 761 active military “sites” in foreign countries. The United States has 510,927 military service personnel deployed in 151 foreign countries. - Bill Buckler, the-privateer.com, September 1, 2008

To me, this sounds like an empire. However, it is an empire which has overextended and can no longer be financed. We're broke! There is little doubt that the Federal Reserve and Federal Government will use all means at their disposal to remedy the situation in the only way they know -- the dollar will be inflated and we will be greeted with higher prices for virtually everything and stable or lower incomes.

Folks, it is wonderful to serve and rest in the Sovereign God of all. Without the comfort He provides to His people in the Bible and by the in working of the Holy Spirit in our lives, we would be fearful at all times. We can be still and know the He is God. There are obligations which He covenantally places upon us, but He helps us to keep up our responsibilities and gives us grace to persevere in peace when others are panicking. Praise be to King Jesus!

Best to each, Doug

Precious Metals are Oversold and Due for Fall Rally

This GLD graph from www.stockcharts.com shows that gold is attempting to form a bottom. The double bottom (Middle of August and first of September) is a positive technical graph formation. A negative is that the 50 day and 200 day moving averages are reversed from the normal - the 50 day should be above the 200 day). Gold is without a doubt over sold and should be in for upward move as we move into the fall and winter season of the year. Typically, the precious metals move upward at this time of year. The recent "correction" was way overdone. We will be watching to see how this plays out.


Both silver and gold moved higher in the Asian trading. Both are down some at present, but hopefully will regain some strength as the dollar weakens today. The DJI are down over 223 at present and that is having a dampening effect upon the mining stocks. Currently, the mining stocks are mixed. Earlier, they were mostly up, but many have moved into negative territory. Gold is at 801 and silver is at 12.79. Thus, both are still under pressure. Gold must climb above 845 before it can really get underway again.

From Monday Morning Report (www.mondaymorning.com)

"Gloomy Beige Book Report; Weak August for Autos; Layoffs at GMAC; Fraud Charges for Former Credit Suisse Brokers; Factory Orders Rise; Staples Profit Squeezed; United Technologies Lands $80m Jet Deal; Liberty Spins Off DirectTV

• The U.S. Federal Reserve released its Beige Book report yesterday (Wednesday), which looks at the economic conditions in the 12 Fed regions. "The pace of economic activity has been slow in most districts," the report said, Bloomberg News reported. "Wage pressures were characterized as moderate by most districts amid a general pullback in hiring."

• August was another weak month for auto sales as most major carmakers reported declines. Ford Motor Co. (F) reported 26.6% decline, while General Motors Corp. (GM) sales fell 20.4%. Toyota Motor Corp. (ADR: TM) fared better with a 9.4% decline, but Japanese rival Nissan Motor Co. Ltd. (ADR: NSANY) had a surprising 13.6% increase, Reuters reported.

• GMAC Financial Services (GMA) announced yesterday that it would close all 200 GMAC Mortgage retail offices and reduce and its Residential Capital LLC unit in an effort to cut costs and streamline operations, The Wall Street Journal reported. Approximately 5,000 employees, 60% of Residential Capital staff, will be let go.

• U.S. government officials charged two former Credit Suisse Group AG (ADR: CS) brokers with fraud and conspiracy yesterday (Wednesday) concerning sales of subprime-related debt, the International Herald Tribune reported. The two brokers gave clients the impression the debt was secured by federally guaranteed loans. "In September 2007, these former employees resigned after we detected their prohibited activity and promptly suspended them," the bank said. "Credit Suisse immediately informed our regulators."

• Orders to U.S. factories rose by a larger-than-expected amount in July, the Commerce Department said yesterday (Wednesday). New orders increased by 1.3%t in July, much stronger than the 0.8% increase economists expected. The July advance follows a 2.1% increase in June and represents the fifth straight rise in orders, The Associated Press reported.

• Staples Inc. (SPLS) the world's largest office supply company, reported profit of $150.2 million, or 21 cents per share, for the quarter ended Aug. 2. Down from $178.8 million, or 25 cents per share, a year ago. Sales climbed 18% from $4.29 billion to $5.07 billion.

• A division of United Technologies Corp. (UTX) received a $78.1 million contract from the U.S. Navy for parts and materials to build propulsion systems for a variant of the Joint Strike Fighter, The Associated Press reported yesterday (Wednesday). United Technologies' Pratt & Whitney will also build 10 propulsion systems for the U.S. Air Force, two of the same for the Royal Netherlands Air Force and three for the United Kingdom's Royal Navy.

• Liberty Media Corp. (LMDIA) will spin off its stake in DirecTV Group Inc. (DTV) and other assets into a publicly traded company called Liberty Entertainment Group SA, according to Reuters. Liberty's 50% stake in DirecTV will be the dominant asset in Liberty Entertainment, accounting for more than 80% of its value."

A quote for the day taken from Casey's Daily Resource Plus: "Once a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear. - Harry S. Truman, 33rd US President (1884-1972)"

It does not seem that we have arrived at that place yet. However, there are moves toward it and without the people speaking out against such moves, we will arrive.

While our economy continues to be under a great deal of negative pressure, it is amazing that the precious metals have not gone through the roof and that the dollar is able to be propped up from time to time. There seems to be no end to the power of those who intervene in our markets.

The world financial systems are based upon Keynesian Economics, but the classical or Austrian Economics point the way of truth in how markets react. This remains true even in the managed Keynesian markets of today. However, at some time in the future (Maybe even the immediate future.) the books will be balanced and truth will once again rule.

Knowing this gives great comfort to the people of the faith of Abraham. Those of us, not fleshly descendants, but descendants of his faith, rest in the assurance of truth that God always balances the books. He is our Father and Sovereign and He cannot lie. We are thankful for His covenantal promises which He always has and always will honor. It is a joy to be of the faith of Abraham and I pray that each of you are.

Best, Doug

Why is the Dollar Up?

Dollar up and the precious metals are down again. We are waiting for the historical fall rally. When will it materialize? There is still a very large number of futures options out there which are owned by very few of the bullion banks and major players. This tends to keep a cap on the prices. There are a very large number of shorts which represent large amounts of risks to rising prices and are more comfortable as long as prices remain low. This has a major impact on precious metals.

India is going into the major time of purchasing gold. Sales there are quite high, particularly, with the lower prices. The extra premiums do not seem to be any deterrent to the Indian buyers. They are still flocking to the market for physical gold.
The mining stocks are taking more hits. I would suggest you hold off buying and continue to hold until the situation changes. Almost all of our mining stocks are in nice buying range, but I am not buying until we see the eventual direction of the prices as the fall moves forward.

The following is from Casey's Daily Resource Plus:
Analyst Dan Norcini, writing on jsmineset.com, thinks so. “Foreign Central Banks are behind the rally in US Treasuries,” he writes, “and as a consequence, the rally in the US Dollar. How much longer they remain willing to ply this gambit is unclear but one is not at all murky, someone is going to get stuck holding the bag.”

The news is that the dollars bulls have bid the dollar upward again extending the move from August. Our questions are two fold: (1) Is this simply more of the foreign central banks move to push the dollar?, or (2) Is this the result of the perception, possibly true, of investors that as bad off as our economy is, others may be worse? To tell the truth, I do not know, but the markets will reveal the answer and, likely, quite soon.

China does not seem to have as much trouble as some would have us believe. They are still searching for commodity companies around the world for purchase. Recall that they are using their Sovereign Wealth Fund for this purpose. This relatively new player in the international arena continues to move forward. Perhaps, we are witnessing a change from Western to Eastern dominance in international markets in which direction Russia is also moving. Times are always interesting and this is a great one in which to be alive.

Long term, I believe the paper currencies will fall in relation to precious metals. When is the one aspect of which we can, at best, have only educated guesses. However, we know the One True God has this under His control. Therefore, it is incumbent upon us to rest in this knowledge and to know that He is working all things together for the long term good of His people. We know that ultimately we, as children of King Jesus will rejoice forever in His presence. That is the sure hope that He offers. What a lasting joy that provides in times of challenges and struggles He brings upon us for our growth in Him.

Best to each, Doug