Thoughts on Markets

Thursday, July 23, 2009

Precious Metals Higher - More on the Great American Bubble Machine

Nothing terribly exciting on the precious metals, except for the fact that they are trading on a new plateau above the immediate past. The bullion banks still have the deep pockets to shut out the free market and they will do it again. They may be planning to act before the new regulations that are floating about become fact. However, they are likely to be able to avoid the regulation after or even kill them before they are passed. Do not underestimate the power of these banks and Goldman Sachs. Pay particular attention to the video referenced below adding more insight into "The Great American Bubble Machine."

The miners seem to be tracing a large lop sided "W" which normally means bullish follow on action. On Monday there was a set back, but over the last two days indicated with the red circle, the miners seem to be working toward restoring the bullish move. It would take a strong upward follow through to restore the up trend, and the market will tell us in good time. That is, its time. I have checked several of the graphs for the individual miners and the traces are very similar to that of the GDX. Here are the current prices of some >> AUY 9.67; CEF 11.86; DROOY 8.26; GLD 93.74; HL 3.14; HMY 9.56; SLW 9.35; SSRI 20.07; and VGZ 1.83. They are all up a bit this morning during the first hour of trading.

From MineWeb.com:
YEAR ON YEAR GOLD INVESTMENT POSITIVE

WGC study shows gold outperforms other traditional inflation hedges

The Word Gold Council has released its latest Gold Investment Digest and a report on gold as an inflation hedge.

Author: Lawrence Williams
Posted: Wednesday , 22 Jul 2009

LONDON -

The World Gold Council, in its regular quarterly appraisal of the gold market, noted that the yellow metal increased modestly in the second quarter, supported by, among other things, ongoing inflation fears. Traditionally an inflation hedge, gold was sought by investors who had growing concerns about central bank's exit strategies and the implications of a reversal in quantitative easing measu

On gold's inflation hedge credentials, Natalie Dempster, Head of Investment, North America, World Gold Council commented:

"Fears of future inflation drove investor interest as seen by the continued demand for the ETFs during the quarter. Traditionally, gold has been an effective inflation hedge, and as our recent study shows, also performs well during low to medium inflationary environments." Read it HERE.

The precious metals have historically been the preferred inflation hedge, and have proven themselves over and over again. Of this there can be no doubt in any thinking mind. The actual metals are a great means of preserving purchasing power as we face unbacked FIAT paper currencies. While paper currencies of the past have become worthless, the precious metals always have a value.

From MineWeb.com:
GOLD MARKET

Gold holding steady but ETF holdings decline

Traders are positive we could see another move toward $1000 in the medium term.

Posted: Thursday , 23 Jul 2009

TOKYO (Reuters) -

Gold steadied above $950 per ounce on Thursday as the dollar stayed near a seven-week low against a basket of currencies marked the previous day, maintaining bullion's allure as an alternative asset.

Earlier this month economic worries encouraged investors to buy the dollar and U.S. Treasuries instead of gold, dragging the precious metal's prices down toward $900.

Now with signs of economic stability, market players' appetite for other assets including gold and equities is returning, traders said.

"Investors have a feeling that equity markets are on course for a recovery from recent lows... They are less risk-averse than before," said Dick Poon, manager of precious metals at Heraeus Ltd in Hong Kong.

"Now that they are buying stocks again, their focus is back on commodities markets as well," he said. Read it HERE.

For the immediate time being, this article may be a bit optimistic. The unwinding of all of the trash in the mortgages must continue until the books are again balanced. However, there is inflation waiting in the wings off stage for it to spring into the center of the stage. I believe that it will not be too long waiting. There is just too much liquidity that must flow somewhere, and currently it seems to have been going into the general stock market. Of course, much of it is being held in "reserve" by the banks, too. How long can the banks sit on that without rushing to lend it for profit?

From MineWeb.com:

Saudi retail gold sales plunge

Higher prices and fewer visitors force sales down 30%

Author: Amena Bakr
Posted: Wednesday , 22 Jul 2009

DUBAI -

(Reuters) - The volume of gold jewellery sales in Saudi Arabia has fallen as much as 30% in the first six months of the year, as the economic crisis and high gold prices deter buyers, gold retailers said on Wednesday.

Gold has risen around 39% to trade at over $945 an ounce from a low near $680 in October as investors buy the metal as a safe haven in a time of economic uncertainty. Read it HERE.

I would expect that the price of jewelry would be a bit high enough to begin to curtail sales. I have never thought of jewelry as a good store of value. There is too much cost in the manufacturing and marketing of it. The precious metals, in the form of coins, are a more efficient store of purchasing power than jewelry. Of course, there are significant special pieces of jewelry which have maintained value, and there are rare precious metal coins which have more than done the same as opposed to bullion or bullion coins.

From George Will on TownHall.com:

Cold Shoulder to Climate 'Urgency'

WASHINGTON -- Unfortunately, China's president had to dash home to suppress ethnic riots. Had he stayed in Italy at the recent G-8 summit, he could have continued the Herculean task of disabusing Barack Obama of his amazingly durable belief, shared by the U.S. Congress, that China -- and India, Brazil, Mexico and other developing nations -- will sacrifice their modernization on the altar of climate change. China has a more pressing agenda, and not even suppressing riots tops the list. Read it HERE.

More on the hoax of global climate change caused by man. I am glad to see that China is against it while our president and environmentalist are pushing it. However, I would suspect that China is opposed for selfish reasons. China is beginning to flex its international muscle to become more of a global influence.

Comments on the new "national unhealthy care" proposal from The Daily Pfennig:

"I have a friend who has been the leading doctor in the attempt to discredit the National Health Care Plan... I heard last night that the President said that if we didn't implement National Health Care we wouldn't be able to deal with our deficits...That's a bunch of malarkey! Here's my good friend, Doc. Dave..

So... You can side with the President, speaker Pelosi, and others when they try to jam this down the throats of Americans... Or you can side with a doctor that has fought against this from the beginning because of the inhumane way it treats American citizens in need of health care!"

Folks, the line in the sand has been drawn. We, Texans understand that particular phrase. The government is moving to force down the citizens throat the most abominable health care program ever conceived against the health of man. It will be disastrous and extremely costly. As many doctors have retired early or left the health industry over the present government plans, many more will see the injustice and rebel against the new travesty. Hopefully, we can put sufficient pressure upon the Congress to stop this at the starting blocks. However, it will take a great public protest to have any impact, because we have a government which ignored the Constitution and pushes for ever increasing power. I urge you to make your wishes known to Congress. Further, it is important to push the governors of the every state to demand that the Federal Government back off from getting into unconstitutional areas and into the sovereign states territories.

From Bloomberg.com:

Fed Has Become ‘Embroiled’ in Politics, Poole Says

By Vincent Del Giudice and Max Raskin

July 22 (Bloomberg) -- The Federal Reserve is “embroiled” in politics and has “stretched beyond reason” its authority to make loans, said William Poole, who served as president of the St. Louis Fed from 1998 to 2008.

“ I don’t think independent can mean the Fed can do whatever it wants under any circumstance,” Poole, a senior economic adviser to Palo Alto, California-based Merk Investments LLC, said in an interview today on Bloomberg Radio. “The Fed has chosen to make loans to certain firms and not others.”Read it HERE.

Over the last few months, the Federal Reserve has taken much greater power than was ever envisioned by many. It is one of the driving forces behind the present financial chaos along with Goldman Sachs. I imagine that both are sharing the bed in all of the fiascos which are causing great pain among our citizenry.

Lastly and very important is this from the reporter, Matt Taibbi, for Rolling Stone Magazine who gave us the "Great American Bubble Machine." This video entitled "Government by Goldman Sachs" is very important. Each of you should listen to this video. By the way, I hope that you know that you can log on to it through your browser and then minimize it and go about your work listening to the presentation. It is a series of five separate sections. We must be fully informed by what the government and big bankers do. All of this impacts our lives and investments. You can view it HERE.

I strongly urge each of you to take these matters and present them to our Lord and seek His intervention. Of course, for Him to bless us, we must repent as a nation and turn back to His law for our land. This repentance must be at the individual and family level initially. Then it must grow to our churches which have watched from afar and "supported" the false concept of the separation of church and state while our nation has turned away from God. In fact, they have stood aside as Jesus Christ and all reference to Him has been forbidden in our schools, government property, and monuments which before gave recognition to the providence of God in the founding of our nation. The prophets of all never hesitated to shake their fists in the face of kings and warned them, "Thus, saith the Lord!" Churches must again awaken and speak out to the evils of our governments and prepare the people by giving them sound education into the will of God by presenting the whole word of God.

Best to each, Doug






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