Dollar Rallies - Gold & Silver Hurting - God Rules

The dollar is still on a temporary rally while it remains in a long term downward trend. This is having a severe impact upon the precious metals. During this rally both the dollar and 10 Year Treasuries are showing life. But the general stock market is taking a big hit today with the DOW down triple digits: currently down 140. So, our BYD Company is also showing some weakness as seen in this graph.

From Kitco.com:

Outlook for 2010

Economic news in North America and Europe continues to focus on the fragile state of the recovery. The focus of discussion is whether the recovery is sustainable. Undoubtedly, there are serious problems remaining to be resolved, including high unemployment, massive and rapidly growing government debt, uncertainty with regard to a great deal of consumer and business debt especially in the United States, and countless other very real concerns.

Anybody who reads a newspaper or hears the television news can list off all of the problems facing the American economy. However, it is not a given that the presence of those problems will plunge the economy back into recession as some people would have you believe. The situation is improving, and growth in United States this year is forecast to exceed 2%. That level of growth is much less than most people would like to see, but certainly it is a movement in the right direction. Personally, I see growth in United States remaining at a slow pace for perhaps another couple of years, as the economy works through those various challenges. Read it HERE.

From MarketWatch.com:

Banks shouldn't be hedge funds, Volcker tells Senate

Federal safety net shouldn't cover speculators, Obama adviser says

WASHINGTON (MarketWatch) -- The federal safety net for commercial banks should protect depositors, not speculators, former Federal Reserve Chairman Paul Volcker told senators on Tuesday, urging them to pass the so-called Volcker Rule that would ban banks from trading for profit and that would restrict the size of the biggest banks.

Volcker, now an adviser to President Barack Obama, told the Senate Banking Committee that the banking system must be restructured to prevent a repeat of the bailouts of 2008.

The top Republican on the Senate Banking Committee, Sen. Richard Shelby of Alabama, initially said he was open to any idea that would prevent another "calamity," but, after the hearing, he said he was inclined to vote against Volcker's idea. He chastised the administration for "air dropping" its latest proposal months after debate had begun on rewriting the rules of the banking system. Read it HERE.

From Remarks of Chairman Gary Gensler, OTC Derivatives Reform, American Bar Association, Committee on Derivatives and Futures Law
January 29, 2010

Wall Street's interests do not necessarily reflect the broader interests of the American public. In maximizing their profits, banks are fulfilling their fiduciary duty to shareholders, but they do not owe a similar duty to taxpayers. Many of these banks have opposed essential components of reform. Now, I know that some of these banks may be represented by some of the lawyers in this room. On their behalf, some of you may have argued that particular regulations would hurt not just Wall Street, but the American public. I’ve heard many of these arguments, both over the last year and during earlier debates. While they are often well-articulated, I, for one, come to different conclusions. What’s good for Wall Street is often not what’s good for the American public. Thus, as we vigorously advocate for transparency and regulation in the derivatives markets, these positions may be at odds with what some of you advocate on behalf of your clients. But, as the saying goes, where we stand on a matter is often influenced by where we sit. You can read the whole speech HERE.

From Ed Steer's Gold and Silver Daily: "I note that there's a bit of action this morning in Far East trading. After a dip just after 10:30 a.m. in Hong Kong, both gold and silver began to rise a bit, but as a two gentle rises turned a little steeper, there was obviously a not-for-profit seller there to tap the price down both times... despite the fact that the U.S. dollar had just fallen off a cliff. The first occurred shortly before 4:00 p.m. in Hong trading... and the second, shortly after London opened for trading. The CME [at 4:52 a.m. Eastern time] is showing gold volume is already a healthy 31,572 contracts for April... and a very robust 5,008 contracts have traded in March silver already."

The bullion banks are a thorn in the side of all who pray for free markets. Their intervention into the precious metals continually keep the prices much lower than what the free market would demand. They are the ones who will oppose with all their wealth and influence in government against any revision or regulation of the derivatives markets as suggested in the previous article. The action can be observed in the following graphs.

Every attempt to rally is capped immediately. "How long, O Lord" will this last?

From MineWeb.com:

Gold to hit $1,350 - $1,400 by late Spring - John Embry

Speaking on the Mineweb Gold Weekly Podcast, Sprott Asset Management's chief investment strategist says while the yellow metal is likely to continue to consolidate over the next few weeks, the next major move will be up.

Author: Geoff Candy
Posted: Wednesday , 03 Feb 2010

GRONINGEN -

Gold should continue to consolidate over the next few weeks but, the next big move is likely to be up.

This is the view of Sprott Asset Management's chief investment strategist John Embry, who says he is looking for the price of the yellow metal to hit around $1,350 to $1,400 by late spring. This article is a follow on of the article from yesterday. You can read it HERE.

You may recall the must read article on gold by Embry I sent out yesterday.

From MineWeb.com:

The China bubble, gold and the markets

Could Chinese markets be heading for a fall as foreign manufacturers relocate, and if so what will be the impact on gold and the stock market?

Author: Clif Droke
Posted: Wednesday , 03 Feb 2010

VANCOUVER, BC (The Gold Report) -

The news spotlight recently was stolen by Google, the Internet search engine giant. A statement issued by Google a couple of weeks ago was greeted by dismay on Wall Street as shares retreated in response to the company's announcement that it no longer supports China's censoring of searches that take place on the Google platform. China has defended its extensive censorship after Google threatened to withdraw from the country.

Adding fuel to the controversy, the Obama Administration announced that it backs Google's decision to protest China's censorship efforts. In a Reuters report, Obama responded to a question as to whether the issue would cloud U.S.-China relations by saying that the human rights would not be "carved out" for certain countries. This marks at least the second time this year that the White House has taken a stand against China (the first conflict occurring over tire imports). Read it HERE.

This tracks with the drop of the Australian Dollar and the lowering of exports of minerals to China. What is really going on in China? We may never know for certain, but we do know that the economy has been built to a boom. Then as the U. S. and world demand for the Chinese products diminished there must have been an excess of manufacturing capability there. This mal-investment must always we adjusted, so it is possible that China is facing this at present. They remain a major player in international economics.

For fun check this out from About.com:

Super Bowl Sunday

Urban legends, myths of the Super Bowl

By David Emery, About.com Guide See them HERE.

It is a shame on America that so many people will make every effort to view the Super Ball while neglecting the worship of our Sovereign God. He does not take kindly to such neglect on the Lord's Day. This, too, may be one of the many reasons for His judgment falling upon us. Pray for a return to King Jesus for our leaders and citizens.

Here are the bleeding miners from Scottrade.com:
Here are the currencies from Kitco.com:
Here are some prices: FVITF 2.10; BYDDF 7.36; XDSL 0.027; GDXJ 22.33; DOW off 186 to 10087; Gold down 39+ to 1069.70; Silver off 0.79 to 15.57 (Silver Eagles should be available at very nice prices.

Folks, We are taking a beating for now, but long term we are on the right path. It is times like these that try men. The markets are not free and are subject to intervention from many sources. This makes it very difficult to make decisions. We seem to be facing more deflation/recession/depression which may well favor the dollar, but then the inflation must raise it head again with all the liquidity pumped into the world.

There is also the danger of an actual or very near collapse of the paper currency system which covers the world. These are exciting and challenging times. Hang tight, keep your eyes and trust in King Jesus, and enjoy the ride.

I still believe that the Lord has more use for America, but it may not be quite as affluent as it has been while we were being spoiled.

Best, Doug