Thoughts on Markets

Monday, February 08, 2010

Gold and Silver Still Correcting - Should we buy when blood is running in the streets?

The metals continue to languish and run the weak of heart out of the market. There is blood in the streets and it could be a good time to begin buying. They are likely to go lower, but who really knows. The dollar strength seems to be longer lasting for the near future, so beware. This will have a negative impact upon the metals. Long term the dollar will resume its downward trend and the metals will once again resume their bull market trend.


Here is an interesting graph from The-Privateer.com newsletter published in Australia. This gives a longer term view of the price of gold. It illustrates the bull market for gold. Bill Buckler, editor shows the strong "W" out of which the price has recently come. Notice that the correction approaches, but does not yet touch the first resistance at the closest green trend line. This is positive for Gold.


From MineWeb.com:

Silver stocks smashed and bloodied

It's seems to be a case of "who blinks first" in this USD 25bn equities subsector, where the king of volatility resides.

Author: Barry Sergeant
Posted: Friday , 05 Feb 2010

JOHANNESBURG -

What kind of investor gets mixed up with primary silver stocks, a global equities subsector that over time experiences some of the wildest gyrations in global markets? Take Hecla Mining, one of the top stocks in the group. During 2008, silver bullion traded above USD 20.00 an ounce early in the year, before falling, eventually, by about half towards the end of the year, after the bankruptcy of Lehman Bros. on Wall Street.

US-listed Hecla, the biggest silver producer in that country, and 119 years young, traded across 2008 from nearly USD 13.00 a share to as little as USD 1.33. Silver bullion recovered during 2009, making it above the USD 18.00 an ounce barrier, but has since retreated to a few cents above USD 15.00 an ounce. Investors, or more likely speculators, have fled in droves, leaving only puffs on the horizon. Read it HERE.

How low will silver go. Only our Sovereign God knows that. We rarely ever buy at the very bottom or sell at the top price of anything. However, close is great! Where is the bottom? That is the question which plagues us all.

From MineWeb.com:

China and U.S. heading for a cold war? What impact on gold?

Some observers feel that China may be looking to retaliate over recent U.S. political statements and moves and a recent Chinese poll suggests it and the U.S. may be moving towards a ‘cold war'. Such political uncertainties could have a positive impact on the gold price.

Author: Lawrence Williams
Posted: Sunday , 07 Feb 2010

LONDON -

Chinese and U.S relations are at a low ebb and continuing to deteriorate fast so it seems and an article in today's Sunday Times in London says many Chinese hawks are promoting a cold war. Indeed things appear to have got so bad that military leaders in China are preparing for the possibility of a limited armed conflict, possibly over Taiwan or Korea, although this seems very unlikely.

China has always been unhappy with U.S. criticisms over its human rights record, but a number of recent diplomatic disagreements have escalated the feelings within China that it should be taking more action against the U.S. if only to show its displeasure. Read it HERE.

This is an interesting article which discusses some of the saber rattling between the two nations. China will not be pushed very far. China can wreck the U.S. economy by pushing a portion of their vast dollar reserves into the market. That would sink the dollar. Of course, it would also tend to devalue the remainder of China's dollar reserves.

From MineWeb.com:

The recent sell-off in gold could mean the correction is nearly complete.

And, as the price of gold approaches the $1,000 we could see some renewed interest by central banks

Author: David Levenstein
Posted: Monday , 08 Feb 2010

JOHANNESBURG -

Sometimes markets seem to defy logic. Recently we have seen a "rush to safety" back into the U.S. dollar. But, what is safe about the US dollar when the national debt of the US is approaching 12 trillion, unemployment is at 9.7% and the economy is not booming. Whether or not this makes any sense, the fact remains that we have seen a strong rally in the dollar since the beginning of December 2009 and this has put pressure on the price of gold. Read it HERE.

From MineWeb.com:

Harmony Q2 earnings up on higher gold price

The gold miner says it is looking for growth opportunities but cautions that the rand price of gold is likely to be flat for the next 12 months

Posted: Monday , 08 Feb 2010

JOHANNESBURG (Reuters) -

Harmony Gold Mining Co. (HMY ADRs Here) second quarter earnings were lifted by a rise in the price of gold and declining costs despite a drop in production, the South Africa-based company said on Monday.

Harmony posted headline earnings per share of 49 South African cents in the quarter to December versus a loss of 12 cents in the preceding quarter, after the gold price averaged $1,100, up 14 percent on the September quarter.

Cash operating profit rose 44 percent to 800 million rand ($104.3 million), driven by the stronger rand gold price. Read it HERE.

This news is positive for HMY, one of our core stocks.

Here are the miners from Scottrade.com:

Here are the currencies from Kitco.com:

Here are some quotes: FVITF 2.15; BYDDF 7.25; CRWG 1.82; DOW off 19 at 9990; Gold up 1.70 at 1066.70, and silver off 0.12 at 15.14 (Silver Eagles for about 17.50+ look good to me.)

Best to each, Doug

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