Metals Hit Hard on Strong Dollar Rumors
Well, folks, gold has been hit hard by the rhetoric from Russia and Japan that the dollar will remain strong. The jawboning for a strong dollar has been seen as fact that the dollar will be strong well into the future. I do not for a moment believe that to be true. The fundamentals of the dollar are all negative. In spite of the current talk, the dollar will continue to move down after this aberration has been forgotten.
For the dollar to get strong, the Federal Government would have to reduce spending and move toward a balanced budget. What is the probability that this will happen? NONE! NIL! I hope you get the picture. Will Congress stop the spending binge? Will Obama recall our far flung troops from across the world? Will our socialistic government stop the bail outs? Will our socialistic government reduce the welfare? Think about it! This will not happen in the foreseeable future.
Nevertheless, gold and silver have both taken substantial hits and are approaching longer term lows. Can you believe gold at 927.70 on down tick? I would not have thought that so little doublespeak would be taken so seriously by the currency traders. Guess doublespeak is their cue to jump in.
Here is GLD, our up to date proxy for gold over time. Note that the price remains above the 50 day and 200 day moving averages. And that the 50 day average is well above the 200 day. That is good news for the long term. Do not be discouraged! This is time for the bold to move forward and look into the possibility of adding the metal to the portfolio. What a great buying opportunity!
The miners are in similar condition with the 50 day average well above the 200 day and the prices above the 50 day average. Our miners are >> DROOY 7.90; HL 2.88; hmy 10.39; slw 9.43, and VGZ 2.06. All are in decent buying ranges. However, if you buy make your orders for small increments. I believe we are near or at lows for this correction. Buy with great caution, if you decide to buy.
Even the gold bugs are in the same position. All are over sold and ready for a rebound in the next few days or maybe weeks. Look at the RSI on the graph. Compare the current level of less than 50 nearly 40 with the movement in the past. When it has gotten this low, it is showing oversold condition which is usually followed by a rally reflecting a move above 50.
Silver at 14.19 on a down tick. Wow! Who would have thought? Another buying opportunity?
From Telegraph.co.uk:
Investors buy gold, as fears of inflation rise
From Bloomberg.com:
Gold Declines to Three-Week Low as Dollar Rally Curbs Demand
y Nicholas Larkin
NEW DELHI: The prospect of gold buying through Exchange Traded Funds (ETFs) is getting better as gold holdings on paper in the country has risen. Read it HERE.
I will not be unloading mining stocks and metals at this time. However, I will be looking to add to all as the opportunity of lower prices presents itself. The oversold condition on all can continue for some time. However, I believe we will see a rebound before the end of summer and possibly in the next 2-3 weeks. The downward move has been too drastic and too quick. The spring is once again being compressed for a strong rebound in the future as more of the fundamentals instead of rhetoric become clearer to the traders and masses.
By the way, Richard Maybury in his Early Warning Report has presented an idea on what the Chinese are up to these days. It would be rational for them to be doing this. He suggests that the Chinese purchases around the world in natural resources, mining companies, buildings, businesses have been contracted with long term debt payable in dollars. Think about it! If this is true, the wise Chinese have hedged themselves against a drop in the value of the dollar. They have insulated themselves from a drop in the value of the dollar in such a way that they will be paying off their debt in dollars which have lost value to the world. Leave to the Chinese to come up with such a scheme.
Well, we rest with patience and confidence in the Sovereign God of all. He certainly will be looking over and caring for His people. Thus, we may be forced to go through the coming financial storm, but have confidence in His providence. We know that all things are working together for the eventual good of His people. Nothing in heaven or on earth can change His plans. He is in control and nothing can separate us from His love.
Best to each, Doug
For the dollar to get strong, the Federal Government would have to reduce spending and move toward a balanced budget. What is the probability that this will happen? NONE! NIL! I hope you get the picture. Will Congress stop the spending binge? Will Obama recall our far flung troops from across the world? Will our socialistic government stop the bail outs? Will our socialistic government reduce the welfare? Think about it! This will not happen in the foreseeable future.
Nevertheless, gold and silver have both taken substantial hits and are approaching longer term lows. Can you believe gold at 927.70 on down tick? I would not have thought that so little doublespeak would be taken so seriously by the currency traders. Guess doublespeak is their cue to jump in.
Here is GLD, our up to date proxy for gold over time. Note that the price remains above the 50 day and 200 day moving averages. And that the 50 day average is well above the 200 day. That is good news for the long term. Do not be discouraged! This is time for the bold to move forward and look into the possibility of adding the metal to the portfolio. What a great buying opportunity!
The miners are in similar condition with the 50 day average well above the 200 day and the prices above the 50 day average. Our miners are >> DROOY 7.90; HL 2.88; hmy 10.39; slw 9.43, and VGZ 2.06. All are in decent buying ranges. However, if you buy make your orders for small increments. I believe we are near or at lows for this correction. Buy with great caution, if you decide to buy. 
Even the gold bugs are in the same position. All are over sold and ready for a rebound in the next few days or maybe weeks. Look at the RSI on the graph. Compare the current level of less than 50 nearly 40 with the movement in the past. When it has gotten this low, it is showing oversold condition which is usually followed by a rally reflecting a move above 50.
Silver at 14.19 on a down tick. Wow! Who would have thought? Another buying opportunity? 
From Telegraph.co.uk:
Investors buy gold, as fears of inflation rise
Private investors are buying gold in an attempt to protect themselves against a rise in inflation, trade figures indicate.
Read the article HERE.From Bloomberg.com:
Gold Declines to Three-Week Low as Dollar Rally Curbs Demand
y Nicholas Larkin
June 15 (Bloomberg) -- Gold fell to a three-week low in New York and London as a stronger dollar eroded demand for the metal as an alternative investment. Read it HERE.
From TheHinduBusinessLine.com:
Nearly 18 tonnes gold imported in May
NEW DELHI: India's gold imports stood at about 18 tonnes in May, nearly two tonnes less than that in April, on account of high prices and low demand in domestic markets.
“Gold imports stand at 17.8 tonnes in May, 2009,” Bombay Bullion Association President, Mr Suresh Hundia said from Mumbai.
Even as the prices have come down from Rs 15,000 per 10 grams-level, it is still ruling over Rs 14,500, impacting the demand negatively. Gold prices today ruled at around Rs 14,700 in Spot markets across the country. Read it HERE.
From IndiaTimes.com:
NEW DELHI: The prospect of gold buying through Exchange Traded Funds (ETFs) is getting better as gold holdings on paper in the country has risen. Read it HERE.
I will not be unloading mining stocks and metals at this time. However, I will be looking to add to all as the opportunity of lower prices presents itself. The oversold condition on all can continue for some time. However, I believe we will see a rebound before the end of summer and possibly in the next 2-3 weeks. The downward move has been too drastic and too quick. The spring is once again being compressed for a strong rebound in the future as more of the fundamentals instead of rhetoric become clearer to the traders and masses.
By the way, Richard Maybury in his Early Warning Report has presented an idea on what the Chinese are up to these days. It would be rational for them to be doing this. He suggests that the Chinese purchases around the world in natural resources, mining companies, buildings, businesses have been contracted with long term debt payable in dollars. Think about it! If this is true, the wise Chinese have hedged themselves against a drop in the value of the dollar. They have insulated themselves from a drop in the value of the dollar in such a way that they will be paying off their debt in dollars which have lost value to the world. Leave to the Chinese to come up with such a scheme.
Well, we rest with patience and confidence in the Sovereign God of all. He certainly will be looking over and caring for His people. Thus, we may be forced to go through the coming financial storm, but have confidence in His providence. We know that all things are working together for the eventual good of His people. Nothing in heaven or on earth can change His plans. He is in control and nothing can separate us from His love.
Best to each, Doug
posted by Doug @ 9:49 AM
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