Precious Metals in Correction Mode

Both gold (825.10) and silver (10.70) are currently on up ticks. They are offering another day of opportunity for those who are not yet on board and for those who want to add to their portfolio. With the drop in prices of the precious metals this week, it is time for an upward bounce. We will have to see how the prices play out today.

My trading stocks at this point are as follows: DROOY 5.44; HMY 9.54, and VGZ 1.40. I particularly like HMY below $1o. Most mining stocks are enjoying an up date so far. By the way, the DJI looks to be experiencing another down day off only 3.00 to 8470 now. It was lower earlier, and with the recent down days is due for another dead cat bounce this week, maybe today.


Here is a part of Mogambo Guru's letter I sent out yesterday. It is important to understand, so I am including it. "This is all, apparently, part of the new Targeted Investment Program, which is government-speak for 'new giveaway program that will end up costing the nation whole multiples of actual dollars expended when measured in the sheer tonnage of misery and suffering, or its equivalent; inflation/loss of buying power that all that new money and credit will create, which is not to mention the further cancerous distortion of the economic fabric by the government being an even bigger piece of the economy, especially now that the total amount of government (local, state and federal) spending is already over half of freaking GDP to start with!'"

From MineWeb today:

Mining stock picks - but not for the fainthearted

Barry Sergeant ventures a global resources "stock picking" list for 2009, covering both traditional and speculative categories.

Author: Barry Sergeant
Posted: Monday , 12 Jan 2009

JOHANNESBURG -

Stock pricing patterns of nearly 900 resources stocks - mainly in mining and oil - around the world show that the group is currently trading at its best levels in nearly six months. The mining group ranks as the best performing equity subsector globally, with an aggregate increase of 60% from trough stock prices, struck in most cases around mid-October 2008. The MSCI Barra dollar index for all global equities, by comparison, has risen by a more modest 22% from its low point.

The world's 100 most valuable mining stocks have added an aggregate USD 298bn in market value, from the bottom, and are currently worth a combined USD 793bn. Within the global mining sector, there is no question that listed gold stocks have recorded the best performances, followed by listed silver, and then uranium, stocks. At the physical commodity level, gold bullion has least underperformed in dollar terms, while uranium prices have been recovering for some months. Gold currently trades about 20% below its highs (seen in March last year), while silver is off nearly 50%, and platinum by 58%.

Read the article HERE. It has a number of recommendations of specific stocks which may be of interest to you. I like most of the speculative recommendations, because it is from these that the Gold Rush will particularly favor.

From Bloomberg yesterday on currencies:

Euro Falls Versus Dollar, Yen on Speculation ECB Will Cut Rates

By Anchalee Worrachate and Ron Harui

Jan. 12 (Bloomberg) -- The euro fell for a second day against the dollar as the International Monetary Fund’s Managing Director Dominique Strauss-Kahn said Europe is “underestimating the needs” of fiscal stimulus for the economy.

The currency also dropped to a one-month low versus the yen as traders increased bets the European Central Bank will cut its main interest rate to the lowest level since 2005 this week to help pull the 16-nation economy out of a recession. The yen rose against all 16 major currencies tracked by Bloomberg as falling Asian and European stocks damped demand for carry trades.Find the article HERE.

Gold falls from Report on Business:

Gold hits 1-month low on firmer dollar, weak demand

ANNA STABLUM Reuters News Agency January 12, 2009 at 10:02 AM EST

LONDON — Gold shed 3.6 per cent on Monday dragging the other precious metals lower as oil dropped and the euro extended losses against the dollar, while physical demand was seen softening.

“Once gold breached the key support at $840 (U.S.) an ounce, it was quickly dragged to the next support at $828,” said analyst Pradeep Unni at Richcomm Global Services.

By 1447 GMT gold had trimmed losses to trade at $829.55 an ounce, down 2.8 per cent from $853.60 in New York late on Friday.

Earlier it hit $823.30, the lowest level since Dec. 15. Read the article HERE.

From Casey's Daily Resource Plus: "So, are gold and silver going to get hammered from here? Well, the bullion banks (mostly JPMorgan) are sitting on a pile of short positions they've accumulated from all the tech funds and small traders that have gone long over the last month or so. If they figure they have all the mice they can get in the trap at this time, they can pull the lever whenever they want. Yesterday could have been the start. How far down we go will depend on Paulson and Bernanke...as the laws of supply and demand no longer apply in these markets."

An interview with Eric Sprott from The Gold Report:

Eric Sprott: Gold: The Go-To Asset in any Environment
Source: The Gold Report 01/09/2009

A 40-year, spectacularly successful veteran of the investment industry, Eric Sprott (the "Energy Guru") needs no introduction. Sprott's steady stream of strategic, entrepreneurial and global performance awards often end in the words: "of the year." Sprott's investment abilities and knack for seeing opportunities where others don't have earned him a spot among the most successful investors in the country. Managing $4.8 billion worth of hedge and mutual funds for Sprott Asset Management, the financial sage is also an esteemed art collector. Referring to his color-blindness in a recent interview, Eric Sprott said: "It's not the color that does it for me. It's probably the contrast in the colors." One might say the same of his investment strategy.

Eric Sprott: Since 2000, I’ve believed we are in a secular bear market. We had a modest cyclical bull from ’03 to ’07, which was brought on by the lending mania. That’s obviously over, despite the fact that we’re another leg down in the secular bear market.

We essentially remained bearish throughout that period. The concerns that we expressed back then and our reasons to own gold are the same now except that there has been greater play-out in the meantime. This would suggest that having owned gold, and continuing to own gold, looks even more propitious today than, perhaps, in 2000 when we first got involved in the gold area.

First of all, I think we’re in a depression today. All data points suggest we are. The fundamental problem of the world’s financial system is an over-leveraging of the banking system. The average bank is probably leveraged 25 or 30:1. As you look at these banks’ balance sheets, the liabilities never go down. They must be paid despite the corresponding volatility in assets. We have seen so many of the asset classes come under incredible evaluation adjustments. It is hard to imagine that, in a true mark-to-market, any banks would have any tangible capital left.Read the article HERE.

An interesting article in the Economist:

Lords of finance Jan 8th 2009

The central bankers of the Great Depression were obsessed with a single idea, rather like their successors today

CENTRAL bankers were compelling figures in the 1920s, not least because they preferred to operate in secret. The cloak was peculiarly attractive to Sir Montagu Norman, governor of the Bank of England (pictured above, right), who adopted a false identity when he travelled, though this sometimes attracted attention rather than deflecting it. Asked for his reasons for promoting a policy, Norman replied: “I don’t have reasons. I have instincts.” Benjamin Strong, Norman’s principal collaborator, ran the Federal Reserve Bank of New York, which was responsible for America’s international financial relationships. In the mid-1920s, Strong decided the American economy was sufficiently prosperous that he could widen his brief to promote economic stability. Liaquat Ahamed suggests that Strong more than anyone else “invented the modern central banker”.

Norman and Strong were wedded to the gold standard. Emile Moreau, the less clubable governor of the Banque de France, was an obsessive hoarder of gold and tended to do his nation’s own thing. The arrogant Hjalmar Schacht (above left), a spiky German nationalist who headed the Reichsbank, had, by a remarkable sleight of hand, ended Germany’s hyperinflation in 1923, but he was unable to persuade his fellow central bankers to forget reparations, even though they all appreciated that heavy post-war payments were “bleeding Germany white”. Read the article HERE.

From the August Review:

Chorus call for New World Order

In economic and financial desperation, leaders around the globe are openly calling for the creation of a "New World Order," including prominent "old guard" members of the Trilateral Commission. Is the baby about to be born?

The return of the Trilateral undead

It's not accidental that so many of the original members of the Trilateral Commission, all of whom are now well into their 80's, have returned to dance in the limelight once again.

TC Members like Henry Kissinger, Zbigniew Brzezinski, Paul Volker and Brent Scowcroft, for instance.

On January 5, 2009, Henry Kissinger was interviewed by CNBC on the floor of the New York Stock Exchange. His voice still raspy and spoken with a thick accent, he responded to a question about President-elect Obama's first actions as President:

"he can give new impetus to American foreign policy ... I think that his task will be to develop an overall strategy for America in this period, when really a 'new world order' can be created. It's a great opportunity. It isn't such a crisis."

While the rest of the country slips into depression and financial collapse, to Kissinger "it isn't such a crisis."

And, of course it isn't -- for him. Kissinger has been patiently waiting since at least 1973 for his New World Order egg to hatch.

And remember, in July 1971, Kissinger was the very first diplomat (under Nixon) to visit Communist China in order to open up trade relations with that brutal dictatorship. Oh, and that was an absolutely top-secret trip. Read the article HERE.

What a wonderful God we have! He blesses His people so abundantly above what we can imagine. Perhaps, we do not ask Him for what we really need or we ask amiss as James tells us. We must ask in the confidence that He will provide all of our needs and many of our wants, but we must ask in faith. Recall how He cared for the nation Israel during their wandering in the wilderness after they refused to go directly into the promised land - He provided water where there was none, bread from Heaven when they asked, and meat, as well. In spite of the fact that they were disobedient, He cared for them for His own glory.

He does the same for His people today. Study the Bible diligently to know this wonderful God through His Only Begotten Son by the power of the Holy Spirit. As the Holy Spirit gives one insight and wisdom through the word of God, one is led to the only Lord and Savior, Jesus Christ. Praise Him daily!

Best to each, Doug