Gold Remains in Long Term Bull Trend In Spite of This Drop

Wow! That is a nasty graph. I consider it to be an opportunity to add to my holdings. This may well be one of those over corrections. Let's ride through it for a time. At present, it looks as though we will have better prices in the immediate future. My order for more of Everbank World Markets Metals Select was executed at opening this morning. I am comfortable with that purchase. Let's move to the long term trend of gold. Silver is generally following gold, so today, we will concentrate on gold.

The 5 year graph of gold shows that we have been in a correction since the high of 1000+ in the first quarter of 2008. Notice that this graph reveals a long term bull market in gold. Now let's move to the 10 year graph.

The 10 year graph reveals a more distinctive long term bull picture. I am confident that gold will continue to rise over time. There are too many forces building against a strong dollar in the very near future. With our Fathers Bernanke, Paulson, Bush, and soon Obama throwing out all the stops to avoid a depression, we will see the dollar resume its fall BIG TIME, likely by the second quarter of 2009. A forecast of timing is always tenuous, but that is how it looks to me. Using Biblical Economics which is reflected in the principles of the Austrian School of Economics, one can define the potential result of actions, but the timing is never very clear.

Never before has the world faced the level of debt and vast volume of unbacked FIAT currency that is sloshing about the globe. That volume of paper guarantees inflation, and very possibly hyper inflation. This is particularly true in the case of the dollar. Today, foreigners are beginning to see that the dollar is not as safe a place as it once was. When backed by and redeemable in gold, nothing in the world aside from the precious metals was sounder. Now, there are paper currencies which are relatively sounder than the dollar.

Nevertheless, high rollers, sovereign wealth funds, and central banks are holding trillions of dollars in issuances of the U.S. Treasury. These debt securities are backed by the full faith and credit of the U.S. Government which by all commercial standards is bankrupt. This is becoming more apparent with each new bailout. How long will this resulting bubble in Treasury securities last? The answer to that question will give us the time the dollar takes another shot to the heart.

Then we are very likely to see another Gold Rush which will dwarf the one in 1979-1980. The lemmings will be climbing aboard the train of gold like never before. That , folks, will be the time to sell mining stocks and to purchase the bargains which will be available in physical assets and businesses.

At this writing gold is 811.80 and silver 10.40 with both on down ticks. Gold has been a bit lower today. On the other hand, the DJI in currently down 273.27 at 8173. Not nice on for the general market. My trading stocks: DROOY is @4.96; HMY @ 9.09, and VGZ @ 1.30. I consider all of them in buying range. However, depending upon your cash situation, present portfolio, and propensity for risk, they may not be suitable. I did add a good bit of HMY yesterday and am looking for the approaching opportunity to get deeper into DROOY and VGZ. I would like to see DROOY closer to 4.00 and VGZ to 1.00.

We must trust in the Sovereign Lord of all. It is wise to pray to Him for guidance in every area of life. He is sovereign in the financial arena, as He is in all of man's life. After all He is the God of the whole man - mind, soul, and body. He cares for our physical as well as spiritual needs. Pray diligently, continually, and seek His guidance on the use of your dollars.

Best to each, Doug