Gold is Showing Bullish Signs - For Real?

Look closely at the green curve (Jan. 9) and the blue curve (Jan. 7) on both the gold and silver graphs. All four are very similar and the fall occur at almost precisely the same time. Now examine the red curve (Jan. 8). Folks, these suggest significant intervention into the market place at precisely the time opening of the market in New York. This is not normal market activity, certainly not free market activity. The intervention is making our investing more challenging. We must be very cautious.
While it is absolutely certain that we do not have a free market in the precious metals, it is interesting to study the, above, graph on the price of gold. Notice that since just before the last week in October that gold has scored ever higher lows and higher highs. This is bullish and may well continue. Presently, gold is holding around the 200 day moving average. It will need to break through and stay above that level to go higher. The damage done and planed to be done to the dollar is very likely to cause this, possibly, in the near future.

Currently, gold is at 861.80 and silver at 11.40 with both on up ticks.

Labor Department reports that jobless claims fell by 24,000 to 467,000 which is the lowest in about 3 months. That is the "good" news, but here is the bad: Continuing jobless claims were up 45,000 to 4.47 million which is the highest since November, 1982. Of course, we must view the, above, good news with tongue in cheek, as it is likely to be revised upward very soon. Funny how this happens with almost every government report.

The Telegraph, London:

Merrill Lynch says rich turning to gold bars for safety

Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies.

By Ambrose Evans-Pritchard
Last Updated: 10:32AM GMT 09 Jan 2009

Rich investors are spurning gold exchange traded funds in favour of krugerrands.

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses. "They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said. Read it HERE.

Do you think these "rich investors" have gotten the following word before we heard it? Perhaps, they are just wiser. Of course, if they are rich, then they have the capital to buy up the supply of bullion coins. Could this be the early stages of the coming Gold Rush?

From The New York Times:

China Losing Taste for Debt From U.S.

By Keith Bradsher

Published: January 7, 2009

HONG KONG — China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.

The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.

On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.’s.The link is HERE.

Who indeed will begin paying for our excess spending? We are likely running out of dollars from our international "friends." That will mean faster printing presses or super speed computers to respond with more dollars than anyone can imagine. Thanks be to our God that He has provided gold and silver for security of wealth.

From Investment Rarities "The Best of James Quinn:"

January 7, 2009

WHAT HAPPENED TO THE AMERICAN DREAM

"The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

Historian and writer James Truslow Adams in his 1931 book Epic of America

Mr. Adams penned these words in the midst of the Great Depression, the worst economic crisis in our history. It is timely to reflect on these words, as it appears that the American Dream is slipping further out of reach for most Americans. If the dream of a better life for our future generations is lost, it will truly mark a turning point for our great Republic. The reason the American Dream is slipping away is due to the actions of politicians running our government and bureaucrats running the Federal Reserve. Those with ability who have earned a better life through their hard work, intelligence and integrity should be attaining a higher position in the social order. Instead, our government is rewarding those Americans who have taken unwarranted risks, made brainless decisions, and willingly chose the course of excessive debt to climb the social ladder.

As the politicians scurry to "save" capitalism through the use of communist measures, more Americans are becoming disheartened. The definition of communism according to Webster’s is:

A system in which goods are owned in common and are available to all as needed.

George Bush, Henry Paulson and Ben Bernanke have decided to seize money from the vast majority of Americans who lived within their means, utilized debt sparingly, and worked hard to get ahead, and give it to the most appalling failures in our society. They have shoveled billions to banks that operated their businesses like gambling parlors. They have shoveled hundreds of millions to people who bought houses with no money down, interest only mortgages and fraudulent loan applications. They are now rewarding automakers who made the wrong vehicles, pay 30,000 workers per year to not work, and have only been able to "sell" cars by giving them away with 0% financing to any schmuck who could sign on the dotted line. These acts fit the definition of communism. We are now more communist than China.

Read the entire article HERE then scroll down on the left side to The Best of James Quinn.

Mr. Quinn has hit the nail on the head. We are morphing from socialism into communism unless we can contact our national leaders (that is, politicians) and encourage them to desist. It is worth a try, but most in office and those coming to office are interested only in the power the have and the financial benefit for themselves. Pray that the Lord will raise up statesmen as our founders were. They sacrificed all for the sake of America. We only find this sacrifice today on the battlefield of ill conceived wars. This sacrifice is being made daily by our the young people in the nation's military.

From the Hindu Business Line:

2008 gold imports put at 720 tonnes

Our Bureau

Mumbai, Jan. 8 Information relating to gold imports into India has often been an enigma and the precise quantum of physical arrivals has been hard to ascertain quickly. For the year 2008 that just ended, several figures – ranging widely from 450 tonnes to 800 tonnes – are floating around.

One report suggested that imports were down by close to 50 per cent. While it is a fact that gold demand in the country is price elastic and to a lesser extent income elastic, there is little concrete evidence that the inflow of the yellow metal plummeted during the year that just went by. Indians continue to have a fascination for the yellow metal. To clear the confusion, the international consultancy GFMS told Business Line that India’s gross imports in 2008 were an estimated 720 tonnes as compared with 862 tonnes in 2007. The decline in physical arrivals to the extent of slightly less than a fifth should come as no surprise. High prices and volatile market conditions virtually the whole of last year disenchanted buyers. Also, a booming stock market made investment in the yellow metal less attractive.Read it all HERE.

All times are exciting in the financial markets. With the events so rapidly unfolding now, it is difficult to be certain of short term movements of the market. That must cause us to be very cautious and to concentrate upon preservation rather that profit. Let's do the best we can to keep what we have. It is also time to reduce spending at all levels to save. Once again, we need to be reminded that saving is the act of foregoing consumption. This must be the watchword for the present days and weeks ahead. A corollary is to reduce debt. Pay off the debts with the higher interest cost first, then work on the others. Pay cash or use debit cards if you have a propensity to misuse credit cards; that is, if you don't pay them off monthly and avoid additional charges which are often quite significant.

Make your plans carefully with fervent prayer, commit them to the Lord and put them into action depending upon Him to provide the success or to redirect you in another way.

The Lord's Day is coming rapidly again. It is the day after tomorrow. Scripture clearly demands that we join with other believers in corporate worship. Further, corporate worship includes the praise, thanksgiving, tithing, and fellowship of the joint heirs of our Lord Jesus Christ. Essential in the church life is the sound preaching of the whole word of God, the administration of the sacraments of baptism and the Lord's Supper, and the exercise of discipline. These are the mission of the church with the purpose being that we, the church, are to be the light of the world and the salt of the earth for the glory of God, the spreading of acceptance of His kingdom, and to enjoy Him forever. Let's get at it this Lord's Day. God uses the sound church as a means to grow His people into the likeness of His Son and to spread the gospel to the dying world about us.

Do not neglect the gathering together of the Saints the day after tomorrow.

Best to each, Doug