Thoughts on Markets

Thursday, January 28, 2010

No Free Markets Only Intervention - Correction in Metals & DOW Continues

Both metals have been severely capped several times during the last three days. Silver seems to have been the main target. Thus, we are in a time of precious metal limbo. We are at the mercy of those who move the dollar and precious metals. Most of the attacks come at almost the exact same time each day. That is suspicious at least! We must be patient during these times. Perhaps, even step aside and rest for a time.

The Dollar has been showing strength and moving upward since the middle of January. One wonders how long this move will continue. However, it is still showing strength during this week and should continue for a while. Long term there is little doubt that the dollar will lose value. It has to for the U.S. to be able to service its mountain of debt. The Bernanke Federal Reserve is on a path to do anything necessary to end the recession. The FOMC kept the interest rates at near zero for the time being. That is positive for bonds, but beware that there will come a time when the rates must rise for the U.S. to finance new debt. Recognize that the Federal Reserve has little influence in the interest rates of long term bonds and that has been up a bit.

From MineWeb.com:

Silver bullion, stocks, on walkabout

Is the high beta some associate with listed silver stocks finding purchase?

Author: Barry Sergeant
Posted: Wednesday , 27 Jan 2010

JOHANNESBURG -

The relatively high beta associated by a number of specialist investors with dollar silver bullion, and also listed primary silver miners, may be digging its heels in. The beta factor in markets refers generally to a security that tends to overshoot an underlying benchmark during positive moods, and, on the slip side, to amplify falls.

During 2009, listed primary silver stocks, led by London-listed Mexican miner Fresnille, outperformed all other mining equities subsectors, measured on 12-month stock price returns. The information may be of limited use, given that primary silver miners, explorers and developers comprise a relatively small part of the equities universe, with USD 25bn of available investable market value, compared to USD 4.2 trillion for resources stocks as a whole. Read it HERE.

Maybe we should go on a walkabout until the markets settle down back into the fundamentals for a time. If you haven't enjoyed the fun of Crocodile Dundee, you should. It is a fun movie. Then you could learn about "walkabout."

From MineWeb.com:

Gold price trend here to stay - Barrick Chair

Peter Munk, speaking in Davos says while there may be some short term volatility ahead, the trend is "here to stay"

Posted: Wednesday , 27 Jan 2010

DAVOS (Reuters) -

While the gold price may be volatile, its upward climb is not over, the chairman of Barrick Gold Corp (ABX.TO), the world's biggest gold producer, said on Wednesday.

"It may fluctuate, (but) to us and I think to our investors, the key criteria should be that it's got a secular tendency now to move up year in and year out, Peter Munk told Reuters Insider television from the World Economic Forum in Davos.

"While it may trade off in the two-week or three-month period, I think the trend is here to stay."

Last year was the tenth straight year that the gold price XAU= ended higher than the previous year, he added. Read it HERE.

I believe the trend of the last ten years will not be broken this year, so hang tight and keep the powder dry for the resumption of the bull trend.

From Bloomberg.com:

Gold Fields Says Mine Law Should Be ‘Sustainable’

Jan. 28 (Bloomberg) -- Gold Fields Ltd., Africa’s second- biggest producer of the metal, said any changes to South African mining law to encourage black investor participation should be “sustainable” to avoid damaging the country’s industry. Read it HERE.

From NYTimes.com:

Two at Fed Had Doubts Over Payout by A.I.G.

Weeks after rescuing the American International Group with an $85 billion taxpayer loan in late 2008, Federal Reserve Board officials rejected a proposal that would have forced the insurer’s trading partners to return $30 billion in cash that they had received from A.I.G. in the preceding months. Read it HERE.

Statistics from Chuck Butler's Daily Pfennig:

New Housing Sales off 7.6% in December; Months to sell a house Nov. 7.6 months, Dec. 8.1; Euro Zone consumer confidence up to 95.7 from Dec. 94.1; German unemployment up 8.2% from 8.1%.

Chuck sees gold <$1100 and Silver <$17 as "Blue Light Specials."

From ZeroHedge.com:

Zerohedge discussed a month ago the disastrous prospects of what would happen if the new proposal contemplated by the SEC, which would allow the suspension of redemptions from Money Market Funds, were to pass. Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares." Too bad investors' hardships considerations ended up being completely irrelevant. Read it HERE.

The new Ford Fiesta from MyRide.com: The report says that the new compacts and sub-compacts are greatly improved.
Check out the full report HERE.

Here are the miners from Scottrade.com:

Here are the currencies from Kitco.com:
Here are some quotes: FVITF 2.18; BYDDF 7.33; Silver off 0.04 to 16.55; Gold up 0.70 to 1087.90; DOW off 61 to 10175. By the way, have you noticed how the DOW has been jumping upward during the last 30 minutes of trading most days this week. That is strange as if some one is pulling the string on a puppet. Could be, you know!

Praise the Lord for His daily provision for us.

Best to each, Doug








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