Thoughts on Markets

Wednesday, December 02, 2009

Gold Above 1200 & Silver Above 19 - Precious Metals Bull Rages

Gold is holding above 1200 currently. That is exciting, but remember the flip side of this is that the dollar is losing purchasing power. The precious metals are a means of protecting wealth from the FIAT currencies of the world.
Silver is the real performer. It is holding above 19 now.

From Bloomberg.com:

Gold Rises to a Record on Stronger Demand for a Dollar Hedge

Dec. 2 (Bloomberg) -- Gold surged to a record for a second day in New York and London as investors stepped up purchases to protect their wealth against a slumping dollar. Other precious metals climbed. Read it HERE.

More on the Australian Dollar from The Daily Pfennig: "Yesterday, I told you about how the Reserve Bank of Australia (RBA) had hiked rates once again by 25 BPS, but the statement following the rate announcement left a lot to be desired, if we were looking for indications of further rate hikes by the RBA... That tempered the move higher by the A$ initially... But as the day wore on, I think many observers of this currency and Central Bank, realized just what I said yesterday, that the RBA would take the next two months to see what their 75 BPS of rate hikes have done so far... Here's the key, right here, right now, for their next meeting in February 2010...

Australian inflation data will print about a week before the RBA's scheduled February meeting... If inflation pressures are rising in the face of 75 BPS of rate hikes, we could very well see the RBA opt for a 50 BPS rate hike... If inflation pressures are nowhere to be found, then you can pretty much be assured that the RBA will take a flyer at the Feb meeting... But, here's the key to take for all of next year... Unless China falls flat on its face, the RBA will be hiking rates throughout 2010... Probably 25 BPS each quarter...

This outlook bodes well for A$ out-performance of other currencies, folks... It doesn't take a rocket scientist to figure that one out!"

From Yahoo.com:

NKorea revalues money, causing black market chaos


Another country revalues currency, this time 100 to 1, and you can read it HERE.

From Newsweek.com:

An Empire at Risk

We won the cold war and weathered 9/11. But now economic weakness is endangering our global power.

Read it HERE

As ED Steer reports in his GoldandSilverDaily.com: That Barrick Gold and AngloGold Ashanti are reporting to have reduced/closed out their hedge books. Ed does not trust their reports in total from the experiences of the past. But hedging with gold rising is a dangerous tactic. It robs stockholders.

From Reuters.com:

UPDATE 1-DRDGOLD sells 60 pct of Blyvoor mine to Aurora

JOHANNESBURG, Dec 2 (Reuters) - South African miner DRDGOLD said on Wednesday it had agreed to sell 60 percent of its troubled Blyvoor gold mine to Aurora Empowerment Systems for 296 million rand ($40.54 million), effective Dec. 1.

DRDGOLD said Aurora will provide Blyvoor with a capital facility of up to 80 million rand, of which the mine will be able to draw down 10 million rand by the end of December and up to 14 million rand each month-end thereafter until the end of May next year. Read it HERE.

This could be good news for DROOY, but it is best to use caution in any trading until all the results are in on this sale. DROOY was having a good bit of trouble with this mine. The cash should put them in a better position to recover from the recent strike and damage to the mine.

Below, is a graph of DROOY. From a technical perspective, all is good on DROOY. I believe that I will buy some today. Remember to do it in small bites. Use caution, do not go overboard all at once.

From Reuters.com:

PREVIEW-China's appetite for high-flying gold to dominate

SHANGHAI, Dec 2 (Reuters) - Gold's successive run-ups to record highs are underpinned by hopes for central banks to further diversify reserves, particularly China's, a topic set to dominate a two-day industry gathering in Shanghai from Thursday.

News that the central bank of India bought 200 tonnes of gold from the International Monetary Fund, about half of what was on offer, reinforced views that gold has established its status as an investment asset, as well as an alternative currency. Read it HERE.

God Reigns supreme over all. Commit your plans to Him and rely upon Him for the results. Blessed is the nation whose God is the Lord: King Jesus.

Best to each, Doug





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