Thoughts on Markets

Wednesday, July 08, 2009

Manipulation - No Free Markets

Casey's Daily Resource Plus pointed out another indication that there are no free markets, only intervention. Notice the similarity of the following three graph patterns. The precious metals are normally priced in dollars (for the time being). However, as the precious metals are capped and hammered downward by intervention, the same thing is happening to the dollar at almost exactly the same time. That is not free or normal market action. There is no doubt that it is strictly intervention. This is what is creating havoc in the market place today.

Much of the same action is taking place in the general market as the PPT (Plunge Protection Team) attempts to stop the free fall of the DOW, etc.

It is no wonder that we are confused about the market. It is a market place in which the buy and hold philosophy of investing is doomed to fail. Of course, I believe that long term the precious metals will retain value. In fact, there will be an eventual gold rush as the masses at last move to the last stronghold of value. When? That is known by God alone.

It is amazing that the bullion bank boyz are holding on to their shorts on the precious metals so long. They are unloading bit by bit as they manipulate the prices downward. It would be nice, if they would take ALL of their profit and leave the markets alone. Greed and larceny are never satisfied. Perhaps, the Lord is preparing a comeuppance for them at some time in the future. They could lose control and be stuck holding the empty bag.


This is the ino.com graph of the dollar for yesterday. The action of the dollar mimics that of the precious metals almost to the minute.
From MineWeb.com:

SAFE HAVEN REPLACEMENT FOR DISCREDITED DOLLAR

Gold price poised for spectacular and prolonged rally - Peter Schiff

Gold bullion and gold-related investments, especially gold mining stocks, will be the best bets in the protracted and severe inflationary environment likely to result from current global monetary policies.

Author: By Marc Davis
Posted: Wednesday , 08 Jul 2009

Vancouver, BC (BNW Business News Wire) -

Gold prices are poised for a "spectacular" and prolonged rally as the recession deepens and investors finally become disillusioned with the U.S. dollar.

So says renowned Wall Street financial forecaster and economist Peter Schiff, who loudly warned of the October 2008 stock market crash and accompanying recession as far back as 2006. Read it HERE.

More from MinWeb.com:

Yesterday's top story: Deutsche Bank mildly bullish on gold into 2H09, silver to outperform

As Deutsche Bank forecast the Central Bank Gold Agreement soon will be extended another five years, bank strategists advised the influence of gold ETFs on gold prices is starting to wane.

Author: Dorothy Kosich
Posted: Tuesday , 07 Jul 2009

RENO, NV -

In an analysis published Monday, Deutsche Bank predicted the IMF will become an associate signatory to the Central Bank Gold Agreement, which the bank's research team forecast will be extended another five years over the next few weeks.

Meanwhile, Deutsche Bank is maintaining "our mildly bullish outlook for gold into the second half of the year." Read it HERE.

The, above, seemingly contrary views on gold are interesting. Short term, I believe we are seeing a manipulated correction in gold. It is now at 916.90 down 7.20 and silver is 12.91 down 0.18. I did sell a substantial amount of my holdings in CEF yesterday to gain cash and to lock in profit. From the look of prices today, I am thankful that I did sell.

Here are the current last prices on our miners and ETFs: AUY 8.64; CEF 11.17 (I sold at 11.34-11.36); DROOY 7.75; GLD 90.10; HL 2.46; HMY 8.94; SLW 7.68; SSRI 17.51, and VGZ 1.65. While the miners are in very good buying range, I am not adding to my portfolio at this time since I believe the prices will languish for the immediate future, maybe all summer. Thus, depending upon your portfolio, available cash, and risk tolerance, make your decision. I am still holding a good number of shares in most of those, above, so I do not worry about the demise of the dollar as these will jump in value as the dollar continues downward.

New information on the housing bubble from The Daily Pfennig: "Do you know what "shadow inventory" is? Well, it's the new buzz-word that's getting quite a bit of attention... Shadow inventory comes in several forms. It includes homes in or close to foreclosure but not yet put up for sale - a number that's increasing. It also includes homes that owners want to sell but are waiting to put on the market until it improves.

Well... I told you a year ago that the housing problem was being made worse by all the inventory of houses that needed to be sold... And even our Mr. Magoo, former Fed Chairman, Big Al Greenspan, noticed the inventory as being a problem... Well, this shadow inventory could be adding to the already too big inventory... It's like this "inventory" is hanging over the housing market like the Sword of Damocles!

So according to the data I saw... 3.5 million homes are now for sale... This Shadow Inventory is larger than that! The result, as this inventory comes into the market? Well... It will continue to put pressure on home prices downward... Oh boy! Just what house prices need, more downward pressure!

As this housing meltdown drags on... (and I might add, for those that were drinking the kool-aid, and wouldn't listen to me when I kept harping about the housing bubble bursting, this has got to be very painful) you can see why there are those (and I'm one) that believe the housing recovery won't come for some time... Maybe not until 2012! But probably 2011..."

And the rosy reports have shown over the last few weeks that the housing bubble fiasco has ended. It has NOT! There is much more to come. Too bad we do not have free markets. Were our markets free, the fiasco would have ended painfully, but quickly. Instead, we are being treated to more of the actions which created it in the first place. That continues is spades!

I'm looking forward to see what God has in store for us in the immediate future. I know that He loves and cares for His people in the long run. He always balances the books in the end. That is why "Vengeance is mine says the Lord." We do not always have to take revenge or balance the books on our own, because He will and it will done 100% correctly. We would goof it up. Thus, we can be still and at peace and know that He is God. We are not. And, mostly certainly, the government is a false messiah.

Best to each, Doug





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