Thoughts on Markets

Tuesday, November 17, 2009

Gold & Silver in Range - See ObamaCare Warning

Here is the miners streaming quotes from Scottrade.com:
Our miners are showing weakness today as is the Dow which is off about 7 to 10400. There will be an uncoupling between the miners and the general market at some point in time.

Here are the currencies from Kitco.com:
Gold has moved much higher than last week and seems to be holding well. There is much news about central banks adding more gold to replace some dollars in their reserves. This is likely to continue, and we should hope and pray that the exit from dollars will be gradual. That is in every one's best interest. Note the new trading range established since Sunday night.
Silver, after being contained i n a $0.50 trading range from about 1983 to 2002 regardless of supply and demand forces is beginning to feel its oats. It is much like containing a spring with outside pressure until one hold it no longer. Perhaps, this is the early move in the release of this silver spring. Time will tell.

Silver is trading in a much higher range, and percentage wise is gaining on gold. While the normal ratio of gold to silver is about 15, it is currently above 60. Silver has a long way to go if it is to catch up any time soon.
From Gold-Eagle.com:

GOLD IS BUSTING OUT ALL OVER
Howard S. Katz
November 16, 2009
The gold stocks caught on fire over the past fortnight. They have lagged behind the metal in relative strength, but, since they are more volatile than the metal, bigger profits are the result. For example, gold is well above its early September levels, but the XAU and the HUI have only broken above their corresponding levels just last week.

Measuring from May 22, 2009, when I last resumed a full bullish-gold position, the metal is up 16.5%. My Model Conservative portfolio is up 33.6%. The further back you start, the prettier it gets. For example, starting with the beginning of the grand cycle gold bull market (early 2001), the price of gold has multiplied by 4.4 times. The HUI has multiplied by 12.4 times. Pretty it is, and pretty it will continue. During the same time period the S&P is down 7%.

Yet all I hear from the establishment is the same mantra: "Buy stocks. Stocks must go up. They always have. Don't buy gold. Gold is a collectable." Sad, very sad. Beating these people is like taking candy from a baby. Read it HERE.

Though the miners have been hit today, we will see them much higher soon. I still believe that we will see gold go much higher around the end of THIS YEAR.

From the Daily Pfennig: Late last week, I came across a story on the dollar that I totally forgot to talk about yesterday... So, here you go... Oh, by the way, strap yourself in for this one, and keep your arms and legs inside during the ride...

The German government's 5-person council of economic advisers issued a report that said, "After the massive global increase in U.S. dollar reserves in the past years, an "uncontrolled exit", especially in emerging economies from the U.S. dollar as a reserve currency is a possible trigger of instability in currency markets." The went on to say...   "Countries holding "high" dollar reserves should consider committing to selling their dollar holdings in a coordinated way over a longer period of time."   The folks over at the Royal Bank of Scotland (RBS) think that Bernanke's speech yesterday, basically gave the green light for a further, slow, gradual decline of the dollar... And, quite frankly, that's what traders would prefer to see too, given that they don't like getting whipsawed day in and day out by the Risk on, Risk off game... When assets go to fast one way or the other, it just causes strong corrections, and people get hurt by the movements... But a slow, gradual decline I would think would be the preference of the U.S. Gov't... That way, no one notices... It's not like a bubble that grows and everyone notices it..."

Announcements, such as this, are becoming more frequent. Where there is smoke, and you know what that means. The dollar is being slowly burned by those seeking escape.
From Bloomberg.com:
Touradji Buys Barrick Gold Shares, Sells Gold ETF 
Nov. 13 (Bloomberg) -- Touradji Capital Management LP, the New York hedge-fund firm that oversees about $2.7 billion, bought 2.23 million shares of Barrick Gold Corp., the world’s biggest gold producer, while selling shares in SPDR Gold Trust, the largest exchange-traded fund backed by bullion. 
“In a gold bull market, you can expect the equities to outperform gold, and in a bear market you would expect the stocks to get beat up more than the gold,” said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California. “I would say it probably means Touradji is increasingly bullish on gold.” Read it HERE.

I see this action as a watch tower guard blowing a trumpet of warning, and shouting "Mining Stocks are better than ETFs." Possibly, this is also a warning that ETFs are not as they would like investors to believe. Is there a shortage of metal to back the number of shares? Are they playing the hedge game with the bullion banks and have over extended? I do not know, but here is a major player changing strategy. We should look into this and decide if we should follow suite.
From Gold Anti-Trust Action Committee GATA.org:

When it comes to gold, history itself wears a tin-foil hat


Together the two articles suggest that gold is the secret center of the world financial system, the ultimate power in the system, a power provoking among governments an irresistible urge to try to get it under control. Anyone who asserts as much today is likely to be derided as some sort of nut case by the financial establishment. But as it turns out, when it comes to gold, history itself is wearing a tin-foil hat.

Go HERE to get the web sites for the two articles referenced. These are essential reading.

So, we gold nuts are not really as nutty as many would try to have us believe. Even the bankers are returning to gold.

From Reuters.com:

BlackRock says c.banks to be net buyers of gold


By James Regan

SYDNEY (Reuters) - Central banks will be net buyers of gold this year as they diversify away from the U.S. dollar, marking a reversal of a decades-old trend, global commodities investment fund BlackRock said on Monday in comments that helped drive bullion to fresh record highs. Read it HERE.

From The National Center for Policy Analysis:

Under ObamaCare, Democrats will control health care spending by imposing a "global budget" on Medicare. This will have radical implications for U.S. medicine, says the Wall Street Journal.

Like most of Europe, the various health bills stipulate that Congress will arbitrarily decide how much to spend on health care for seniors every year -- and then invest an unelected board with extraordinary powers to dictate what is covered and how it will be paid for:

As envisioned by the Senate Finance Committee, the commission -- all 15 members appointed by the President-- would have to meet certain budget targets each year.

  • Starting in 2015, Medicare could not grow more rapidly on a per capita basis than by a measure of inflation.
  • After 2019, it could only grow at the same rate as gross domestic product (GDP), plus one percentage point.

The theory is to let technocrats set Medicare payments free from political pressure, as with the military base closing commissions. But that process presented recommendations to Congress for an up-or-down vote. Here, the commission's decisions would go into effect automatically if Congress couldn't agree within six months on different cuts that met the same target. The board's decisions would not be subject to ordinary notice-and-comment rule-making, or even judicial review. It is essential that we understand and oppose this anti-God heart of Obama Care. Read the details HERE.

Gold is now 1138.70 and silver is 18.39 with both on down ticks. DOW is up about 5 to 10411.42.Bulm is 0.80; BYDDF 8.75; AMNP 0.71.

We should all rest in the fact that our King Jesus is in control, loves His people, cares and sustains His people and has a wonderful future for each one of them as he prepares wonderful places for them for eternity. His people know how the world as we know it will end when He returns. What a glorious day that will be. Until that time, He has commanded that we work to His glory and for bringing all people and institutions into conformity with His word. That is our task and we can go about it knowing that this is His will and He is working all things for His glory and our eventual good. Praise Him daily!

Best to each, Doug





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