Thoughts on Markets

Tuesday, March 09, 2010

Oil May Go to $100 a Barrel - Where to for Gold?

Long Term Bonds will suffer market price loss as interest rates creep upward. It seems wise to follow an ETF such as TBT which represents a short on long term bonds. I have been investing in Call options on TBT. Most have moved up slightly since I bought in to them. With rising interest rates in long term bonds, these should reward handsomely. Remember, make your own decisions based upon your knowledge and forecast of the future and your risk tolerance.

From TownHall.com:

Stimulus or Sedative?
by Thomas Sowell

Abraham Lincoln once asked an audience how many legs a dog has, if you called the tail a leg? When the audience said "five," Lincoln corrected them, saying that the answer was four. "The fact that you call a tail a leg does not make it a leg."

That same principle applies today. The fact that politicians call something a "stimulus" does not make it a stimulus. The fact that they call something a "jobs bill" does not mean there will be more jobs. Read it HERE.

From TownHall.com:

Low-Tax Texas Beats Big-Government California
by Michael Barone

"Stop messing with Texas!" That was the message Gov. Rick Perry bellowed on election night as he celebrated his victory over Sen. Kay Bailey Hutchison in the Republican primary for governor. In his reference to Texas' anti-littering slogan, Perry was making a point applicable to national as well as Texas politics and addressed to Democratic politicians as well as Republicans.

His point was that the big government policies of the Obama administration and Democratic congressional leaders are resented and fiercely opposed not just because of their dire fiscal effects but also as an intrusion on voters' independence and ability to make decisions for themselves. Read it HERE.

From Telegraph.co.uk:

China ready to end dollar peg

The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual.

At the annual session of the legislative National People’s Congress in Beijing, Zhou Xiaochuan, governor of the People’s Bank of China, said that the days of the “special yuan” policy were numbered. He described the dollar peg as a “temporary” response to the global financial crisis, but gave no timescale for any change in policy. The currency has been pegged at about 6.83 yuan per dollar since July 2008. Read it HERE.

From NYTimes.com:

The Swaps That Swallowed Your Town

AS more details surface about how derivatives helped Greece and perhaps other countries mask their debt loads, let’s not forget that the wonders of these complex products aren’t on display only overseas. Across our very own country, municipalities, school districts, sewer systems and other tax-exempt debt issuers are ensnared in the derivatives mess. Read it HERE and wonder how much such activity is active right here in "River City."

From MiamiHerald.com:

Desperate condo, homeowner associations thrown a lifeline

A new maneuver called reverse foreclosure helps condo and homeowner associations collect badly needed overdue maintenance fees.

Revenue-starved condominium and homeowners associations struggling to keep the taps running and the lawns mowed have found a novel way to squeeze money from units that don't pay what they owe. Read it HERE.

From Ed Steer's Daily Gold and Silver Report: "One of the things that I neglected to mention on Saturday was the silver short position of the four biggest bullion banks... led by JPMorgan. In Friday's Commitment of Traders report, if you subtract the total Commercial long position from the total Commercial short position... you come up with a 'net short' position of 40,940 contracts... which is 204.7 million ounces of the stuff. The '4 or less' bullion banks hold about 47,950 short contracts on the Comex... which is 239.8 million ounces. In percentage terms, the 'four or less' bullion banks in the Commercial category are short 117.1% of the Commercial net short position... and, when you take out the b.s. spread trades, these same four bullion banks are short about 53% of the entire Comex silver market. And it's about 65% of the silver market when you include the '8 or less' traders. And I think those percentages are on the conservative side as well."

This may well explain the recent activity in our precious metals. These are not free market moves. The precious metal graphs seem very suspicious.




From OnLineBarrons.com:

"Oil Can Top $100 a Barrel Soon Enough

THE FUNDAMENTALS IN THE crude oil market got a boost in recent weeks with renewed hopes of a swift recovery in the global economy (demand increases) and ethnic violence in oil rich Nigeria (supply disruptions). This pushed crude prices above $82 a barrel.

There's nothing new about this fundament argument for rising oil prices. What is new, however, is that the technicals agree and indeed look rather rosy. A run to the $100 per barrel mark over the next few months is quite possible."

If oil can hit $100 a barrel, then gold at 1500 or so is no real hill. Have you noted that gasoline at the pump is up a good bit from last week?

Miners from Scottrade.com:

Currencies from Kitco.com:

Some prices: BYDDF 8.55; FVITF 2.42; XDSL 0.0232; SNWT .11; TBT 48.561; DOW up 16.17 to 10566; Gold 1116.90 off 6.80; Silver 17.14 off 0.11.

Rest in the Lord Jesus Christ and be free of worry. He cares for each one of His people, and He is the Sovereign King of all. He is the Creator along with His Father and the Holy Spirit. Not only did they creator, but they sustain us as well. Praise Him daily.

Best to each, Doug






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