Some Encouragement, but Fear Remains

The unusual pattern tonight as Hong Kong opens is almost identical to the curve of the night of January 1st. This does not seem to be normal market activity, and may well be an artificial capping of the price of gold. The silver graph below is following the same pattern, but notice that silver has moved and held a higher price. It will be interesting to see the pattern as the NY opens in the morning. Thus, far silver is percentage wise outperforming gold.
As this is written spot gold is 870.70 on a down tick and silver is 11.54 on an up tick. The mining stocks are in need of a breather. It would be good to see a small correction this week offering more opportunity for adding to our portfolios.

Note, too, that the DJI have had two good up days during the lower volume trading of the holidays. Is this the pre-Obama bounce which could follow through over the next few weeks? There are some signs that we may be at or nearing a bottom on the general market. I cannot discount this entirely. From a contrarian view, there is too much fear and rhetoric about the poor economy and the nasty markets we have experienced of late. We may be due for another upward bounce.

Beware that with the two very strong up days, we may be in for more correction in the general market. A follow through with another strong up day would be encouraging. The following are a few of the stories circling the globe.

From The Economic Times:

Abu Dhabi gold jewellery sales fall 40 pc in Dec

4 Jan 2009, 1347 hrs IST, REUTERS

DUBAI: The volume of gold jewelery sales in Abu Dhabi fell about 40 per cent in December from November as higher prices and the uncertain global financial outlookcrimped buying, the emirate's industry group said on Sunday.

Sales in January could pick up if prices retreat enough to make the precious metal more attractive to buyers looking for an alternative to investing in equities, said Tushar Patni, the chairman of Abu Dhabi Gold and Jewellery Group.

Read the article HERE.

From WA Today:

Gold wilts as greenback gains

January 5, 2009 - 5:10AM

Gold fell as the US dollar climbed against the euro, eroding the appeal of the precious metal as an alternative investment. Silver and platinum futures rose.

The euro slid after a report on European manufacturing indicated the recession is deepening in the 16-nation region, signaling that the European Central Bank may cut borrowing costs to stimulate the economy. Gold and other commodities often move in the opposite direction of the US dollar. In 2008, gold gained 5.5%, the smallest increase since 2004, as the dollar climbed for the first time in three years against the euro.

The article is HERE.

From Bloomberg:

Dollar Rally Fizzling as Fed Triggers Risk Appetite (Update1)

By Bo Nielsen and Ye Xie

Jan. 5 (Bloomberg) -- The dollar, yen and Swiss franc may weaken this year against 2008’s biggest losers in the currency markets as the global economy starts to recover, the largest foreign-exchange strategists and investors say.

The winners will be the Brazilian real, Indonesian rupiah and Polish zloty as investors return to higher-yielding assets, according to Bloomberg News surveys. The dollar may strengthen versus the euro and Japanese yen, while dropping against the British pound.

Read the article HERE.

From Bloomberg on the Mid-East:

Israel Troops Drive Deep Into Gaza; Sarkozy Leads Truce Effort

By Calev Ben-David and Saud Abu Ramadan

Jan. 5 (Bloomberg) -- Israeli troops drove deeper into the Gaza Strip yesterday in an offensive to rein in rocket attacks by Hamas, as efforts increased to find a diplomatic solution to the 10-day conflict.

Read the article HERE.

The Mid-East War is not showing many signs of slowing down. This is an unknown giving a great deal of uncertainty to the direction of the market. Mr. Market will speak on it in the next few days. However, the gasoline at the pumps is beginning to slowly creep up again -- very likely as the War threatens supply of crude from that particular area of the world.

The big concern for us in America is the willingness of the world to lend us the amount of currency we need to sustain our wars, spending, bail outs, and other forms of waste. There is likely to become a time when they will decide that the dollar is losing too much value by the vast increase in supply by Bernanke and company who are taking out all the stops in an effort to end the recession and save the world financial system. See how far they have already gone and yet the efforts seem only to prolong the misery and not correct our problems.

Thank the Lord daily that He is in control and working all things to His glory for the furtherance of His kingdom and for the eventual good of His people. Through the Lord Jesus Christ we have life and do not go the way of the world in darkness to eternal separation from Him.

Throughout Scripture one finds that God provides blessings toward His people and curses upon those who have not been brought into the light by the power of the Holy Spirit. We must earnestly pray that He will heal our land.

Praise Him daily for His blessing after putting Him first in your life. There is no other way but to trust and obey Him.

Best to each, Doug