US Dollar UP - Gold Down - King Jesus Reigns

The Story yesterday and today is found in the US Dollar and the precious metals. Yesterday, there was intervention as reported in the Gold and Silver Daily article, below. I missed it, because of the follow on selling by many investors. The intervention continued today as options have/are expiring. That always makes things interesting. The 1040 level for gold seems to be holding fairly well though the price has penetrated that level several times. The price keeps bouncing around 1040.
Silver has been well below 17 and remains there.
The pressure on the metals has spilled over into the miners. The GDX has turned rather nasty. The price moved below the 50 Day Moving Average. I have shown three support levels in black. There is rather strong support at just below 37, but I do not believe we will see the price down to that level. The RSI shows some hope of leveling and possibly turning positive, but the MACD is definitely negative. There was an increase in trading (selling) on the down move yesterday which is negative. By the way, I am not selling and have no trailing stops. I am trying to find a buying spot in this down move as both metals and mining stocks are moving toward an over sold condition.
The story is in the US Dollar. It moved upward strongly yesterday and has continued into today. Both the RSI and MACD are strongly positive. The index must move above the 50 Day Moving Average for this to continue. Lacking that, we will see the downward trend resuming. For the time being the move will continue upward.
From fmgr.com:

GOLD
by James Turk

October 25, 2009 – Gold’s ongoing consolidation in the $1045-to-$1060 area is very constructive to its ongoing bull market. However, end of months are always very tricky because of option expiry. The gold cartel writes a lot of calls in their market interventions aimed at capping the gold price. As a consequence, they often bomb gold at month-end so that as many of their calls as possible expire out of the money, thereby enabling the gold cartel to earn the entire premium.

Even though October expiry is not a big month (compared to November expiry, for example), it is normal to expect some selling pressure this coming week. In fact, the selling pressure to drop the gold price before option expiry has already started. Read it HERE.

Worth a thorough read.

From MineWeb.com:

Coming copper supply crunch supportive of strong prices - VM Group

In its latest analysis of metals supply and demand the VM Group, on behalf of BNP Paribas and Fortis Banks, takes a hard look at copper and its price prospects as the month's featured metal.

Author: Lawrence Williams
Posted: Tuesday , 27 Oct 2009

LONDON -

The BNP Paribas Fortis/VM Group Metals Monthly for October has just been published giving the Group's analysts' views of the short and longer term outlook for precious and base metals and price forecasts, as well as an update of hedge fund performance.

While there is relatively sparse detail on most of the specific metals covered, the latest report takes a particularly close look at the copper sector and concludes, primarily, that copper prices have been supported by continuing strong import figures from China, the key driver of the markets since the bottom dropped out of the metals sector a year ago.

China likes to surprise, say the analysts, and with unwrought copper and copper products imports increasing month-on-month in September, against consensus forecasts of decline, the copper rally received a welcome boost. While they feel that OECD demand recovery is still crucial for the copper price to continue its march, at least Chinese demand will likely cap declines as long as the speculative element in Chinese consumption remains under control. Read it HERE.

I am looking into Dr. Copper now. Hopefully, we can find some good investments in it for the near future. There is only so much time in a day and my cup is full.

From MineWeb.com:

Harmony Gold looks to tough times ahead

Despite a bullish long term view directors divided on short term gold price prospects

Author: Geoff Candy
Posted: Monday , 26 Oct 2009

GRONINGEN -

Despite the 2009-2010 financial year moving quickly to gold trading at over $1,000 per ounce and R2bn in cash on its balance sheet, Harmony gold remains cautious in its expectations.

The first major caveat to the group's "enviable position" is the rand price of gold which, as a result of the strong domestic currency, slumped from R320,000/kg to R231,000/kg in the last five months of the reporting period.

Which CEO, Graham Briggs explains, served both to undermine the operational gains made by the group during the year and also testing its cost control measures.

Nonetheless, he says, "Our operations have largely delivered a solid performance which is based on three pillars: We have a better understanding of our orebodies, a result of exploration drilling and development, and have reinterpreted our geology and developed credible geological models."

But, he adds, "overall operational underperformance in terms of throughput and grade resulted in Harmony being down marginally from the 1.6 million ounce production target for FY09."

The second concern raised by the group is the increasing pressure on its cost base. In FY2009, overall costs rose 9.8% of which labour, which represents, 55% of its cost base, grew 4.5% while electricity, which makes up 11% of costs, rose by 28%. And, it does not look like these costs are likely to come down. Read it HERE.

That is not the best news for HMY, but it remains a solid company. It is sensitive to the price of gold.

From MineWeb.com:

Overcapacity a problem but, not disaster for China

The six sectors targeted in the latest government drive to curb blind expansion which include steel, cement, flat glass, chemically processed coal account for just five percent of total fixed asset investment

Author: Alan Wheatley, (Reuters)
Posted: Tuesday , 27 Oct 2009

BEIJING (Reuters) -

At the start of the decade, perhaps only one family in three in Oufang village was growing citrus trees. They earned a good living until five years ago nearly all their neighbors piled in and started planting.

The result has been predictable.

"There are too many oranges here. Nobody wants them and we can't sell them," said one of the growers, Peng Xiaomin.

Peng, 27, who has posted an advertisement on a fruit website to try to sell his oranges, said the villagers were now just scraping by.

"The farmers have planted too many citrus trees," he said. "Development has just been too fast."

Oufang, in southern Jiangxi province, is a microcosm of China's economy: overcapacity blights an array of sectors, notably in heavy industries that are dominated by state-owned enterprises. Read it HERE.

China will come out of this financial mess in good shape, because it came into it will a surplus of dollars. There must be some pain from the mal-investment in manufacturing. However, we are seeing China moving to first in many areas; such as, automobile manufacturing. Our BYD will profit handsomely from this development.

From Ed Steer's Gold and Silver Daily:

I also note that the U.S. dollar began a rally at the precise moment that gold and silver were at their price zenith at the London p.m. fix. Coincidence??? Not bloody likely! It wasn't much of a rally, but it was enough for the purpose required. However, the usual N.Y. gold commentator remarked... "Although the brief dollar rally triggered gold's slide, there was real selling, as gold lost 7 Euros intraday."



This was typical bullion bank action at the usual times. Today is options expiry for the November contract... so, after yesterday's fireworks, I'm expecting more down-side action today. I knew that last week, and should have mentioned it, but didn't... as November is basically a nothing month for delivery in either metal. I thought it would pass without much fanfare, but I was wrong. Options expiry for December [23 November] should prove to be far more interesting... as December is a huge delivery month for both metals.

He is right on here. Yesterday, I sent out an email showing the difference between normal market action and obvious intervention which was overall correct. However, yesterday the intervention started a land slide joined by many almost completely hiding the bullion banks manipulation of both metal prices and the dollar. I will try to be more attuned to such action in the future.

From the Telegraph.co.uk:

Gold gives a precious insight into economy

What a strange and fascinating commodity gold is – a store of value that is no one's liability, which cannot be printed or debauched by governments but which, with no income stream, has no objective value. A simultaneous hedge against both deflationary slump and inflationary spiral, it is little wonder gold should be the investment of choice for the Armageddon crowd. Read it HERE.

From FGMR.com:

A True Picture of the US Dollar

by James Turk

October 25, 2009 – Because people generally calculate the price of goods and services only in terms of the national currency of the country where they live, it is not easy for them to recognize what is happening to the value of the currency. To truly understand what is happening to the currency, they also need to calculate prices in terms of gold, which today is one of the world’s most misunderstood asset classes. For this reason, gold’s traditional and rightful role in finance and commerce is not fully appreciated, with the result that gold is undervalued. Read it HERE.

James Turk always includes great graphs and charts with each article. There is a lot of insight presented in every article. They are always worth a thorough reading.

The following two tidbits are from the Daily Pfennig this morning: "

OK... Dr. Marc Faber was in the news last night, as he was giving an interview on Bloomberg TV... This is Dr. Faber's words folks...

"The dollar will become worthless when people eventually realize the fiscal situation in the U.S. is a disaster. It will go to a value of zero eventually, but not right now. Looking at Mr. Obama's administration, it should already be there." He went on to say...

"In my opinion, about 50% of tax revenues will be used just to cover interest payments on the government debt. That's unsustainable. Then you'll really be forced to print money. The best investments right now are foreign currencies, commodities, and equities." And then when asked about Fed Chairman, Big Ben Bernanke, Dr. Faber said, "He's a money printer. He's nothing else."

Whew! That's taking the whole shootin' match of the Gov't and the cartel, I mean the Fed, to the woodshed, eh?" AND

"Hmmm... And then there was this... PIMCO's Bill Gross, who is known as the "bond king" admitted that he "has some concern on owning Treasuries"... If Bill Gross has some concern folks, shouldn't we? I recently did about a 20 minute video for our friends over at the Sovereign Society on the Treasury Bubble... Sure wish Bill Gross would have said something like this when I was putting that video together! Imagine what I could do with a statement like that when I'm doing a video on the Treasury Bubble!

OK, to recap... The dollar came back with vengeance yesterday, after some rumors on the street led people to believe that things in the U.S. won't be free and clear after all, which led to risk aversion... We've seen this risk aversion before, and each time it hasn't lasted too long... Dr. Marc Faber checks in with some comments on the dollar, and Bill Gross has some concern about owning Treasuries!"

My son, Doug must be right about the bonds. I have neglected this bit of advice and should not have. He is on the negative side and I am not in or out of anything to do with the treasuries.

Here are the miners from Scottrade's streaming quotes:
Here are the Kitco.com currencies:
BULM is 0.85; BYDDF 10.86; DOW is +73 @ about 9940; gold is 10.39.40 and silver 16.83. The silver eagles are about 18.93 which is low for about 5-6 weeks or so. Use caution about any buying. I am ready to jump on the silver Double Eagles, but am watching the price of silver closely.

We must be patience and trust that the Lord is working for the eventual good of His people. Investments in the precious metals try the patience and endurance of many. As we trust King Jesus and rely upon Him for His providential care and love, we know that we are safe. Precious metals are not our God. He is and we can depend totally upon Him. However, as Proverbs tells us "The horse is prepared for the day of battle, but victory (and safety) or of the Lord." Thus, we must not sit idly by, but obey and do our part. Then trusting in Him, we rely upon Him for the victory.

Best to each, Doug