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