Thoughts on Markets

Monday, May 17, 2010

General Mkt Fragile - Gold - Silver - Bailout


I apologize for being out of pocket last week. My business travel was just too hectic to get to the blog. Every time I travel, the markets move rapidly. This time it was upward for the metals which is less dangerous than the other unmentionable way. But I am back now.

The venerable Richard Russell has issued a "SELL ALL STOCKS ALERT!" I agree, but would modify the warning to stay in precious metals, mining stocks, and dollars for the time being. The mining stocks may be hit badly as the general market collapses; however, they historically have rebounded quickly, so for my own portfolio, I am staying with the miners.

There are rumors around that the precious metal EFTs; such as GLD and SLV are having trouble finding enough of the metals to back their shares completely. You might want to check this out.

If you believe the bailout of Greece has solved all problems of the Global Financial Crisis (GFC), you may have been deceived by the rosy Washington and world rhetoric. The GFC continues to worsen, not get better. One wonders how the elite powers seem to think that more debt will get them out of the debt problem. Particularly, the Western World is using the same shovel which created the crisis to dig themselves out. The 600 Billion to Trillion of bailout currency is but a tiny portion of what will be required.

You may have missed it, but our Central Bank has given Europe a virtual blank check to support further bailout. Isn't that great! We are not only involved in a failed attempt to police the entire world, but we now are offering to bailout the entire world. Doesn't that just make one desire to celebrate with a great block party?

Let's just vote all our Washington elite out of office ASAP, before we become a fascist nation. Of course, we are well on the road to that situation, as the last four presidents have managed to trash most of the important freedoms of our Constitution.

The boyz sprang into action on Friday hitting both gold and silver. They had stayed on the side line for most of last week, but whacked both on Friday. We must always remember that higher prices of gold threatens the monopoly that central banks and governments have in the unbacked paper currencies of the world. The higher prices tend to reveal to the public just how valueless the paper currencies are. The prices are not an increase in the price of the precious metals as much as they are a reflection of the loss of purchasing power by the currencies. Thus, gold and silver are one of the best means of preserving wealth.

I am a bit concern about the extreme upward spike of the price of silver. This could be another intervention which could end an instant as it did one time last week. It could be a number of placed order which could be immediately withdrawn to drop the price. Watch it carefully.

From the "So... In my mind, I say, OK... Maybe Gold backs off a bit on those numbers, with the thinking that if the U.S. economy is recovering (and that's a BIG IF), then the need to buy the "uncertainty hedge" is diminished... But... I think it was more than that! I think that seeing some weakness, the Gold price manipulators jumped at the chance to add to the selling... Folks... A $19 turn-around, when all looked well for the shiny metal was just too much in my opinion. Therefore, there had to be the "invisible hand" in there at some point... That's my story and I'm sticking to it!"
I say, "Amen!" There is simply no other rational explanation for such action as shown on the graphs, above.

Double dip - good for gold, bad for copper and base metals

If the recent recession returns as a double dip, which seems increasingly likely, the consequences for copper and base metals are not favourable while gold may maintain its current rating.

Author: Lawrence Williams
Posted: Friday , 14 May 2010


More and more mainstream economists are now predicting a double dip recession as the Eurozone, and the Euro itself, sink into disarray and there is the feeling that similar problems will rear their heads on the other side of the Atlantic too, with several U.S. states, with large economies of their own, threatening bankruptcy. Economic uncertainty remains very much a global problem. Read it HERE.


Gold dehedging continues to slow further in first quarter

No surprises in the latest gold dehedging report from VM Group, which shows the volume continuing to fall as hedge books are run down.

Author: Lawrence Williams
Posted: Friday , 14 May 2010


The latest report on gold hedging/dehedging from London's VM Group/Halliburton Mineral Services, on behalf of Fortis Bank Nederland, as expected, has shown that global gold dehedging slowed sharply in Q1 2010, given the much smaller size of the global hedge book after some huge dehedging programmes from gold majors. Data for the quarter shows the fall in hedge positions was just 0.8 Moz (26t) on a delta-adjusted basis, far below the 4.0 Moz reduction seen in Q4 09. Nevertheless the trend decline continues and this means the global hedge book total is now just 7.1 Moz (220t). Read it HERE.


Indian festival gold sales drop sharply on high prices

The low festival sales are an indication demand may remain subdued through the rest of the year if global prices continue to stay firm.

Author: Siddesh Mayenkar (Reuters)
Posted: Monday , 17 May 2010

MUMBAI (Reuters) -

India's gold traders and retailers said late Sunday they saw large falls in Akshaya Tritiya festival sales, in an indication demand may remain subdued through the rest of the year if global prices continue to stay firm.

The festival, which is more popular in south India, is the second-largest gold buying day in the world's largest market for gold.

"Sales are down compared to last year as prices have jumped in the last 10 days," said Lokesh Kumar Agarwal, chairman of Brijwasi Bullion. Read it HERE.


Who is governing America?
by Star Parker

Attorney General Eric Holder testified the other day before the House Judiciary Committee. Republican congressman Lamar Smith asked him what seemed to be a pretty simple question.

Regarding the perpetrators in the last three terror attacks (two, thank God, unsuccessful) on our homeland (Fort Hood, the Christmas day bomber, and the Times Square bomber), Smith asked our Attorney General “Do you feel these individuals…might have been incited to take the actions they did because of radical Islam?”

Holder feigned to not understand. “ Because of…?”

Smith: “Because of radical Islam.”

Holder: “There are a variety of reasons people do these things.”

Smith re-worded the same question and re-asked it six times, with Holder refusing to acknowledge what is as obvious as the fact that I am typing these words and you are reading them. That every major incident of terror of recent years has been performed by Muslims and that all of them associate their particular theology with their acts of terror. Read it HERE.


Gaming ETF Could Be Big Winner as States Consider Vices

by: Tom Lydon May 17, 2010

It appears that states are so strapped for cash these days that they have turned to vices – one of which is gambling – to bolster their budgets. A gaming ETF could benefit from the change of heart. Read it HERE.

From Kitco News:

A.M. Kitco Metals Roundup: Gold Trades Both Sides of Unchanged in Consolidative Trading to Start the Week

By Jim Wyckoff
17 May 2010, 8:34 a.m.

Comex gold futures are trading near unchanged levels and have traded both sides of unchanged in the early going Monday. The gold market is still being supported on safe-haven buying moves by investors worldwide. However, profit-taking pressure from recent gains is also taking place at present. This consolidative-type of trading action in not unexpected for a market that just last week hit a new all-time record high. June gold last traded down $1.50 an ounce at $1,226.30.

The Euro currency hit a fresh four-year low overnight amid ongoing worries about the European Union's sovereign debt crisis. The pummeled Euro keeps European traders keen to buy gold as a hedge against further weakness of their currencies.

With gold prices at record highs, it's believed that at some point scrap supplies will enter the market at a faster rate, which could act as a damper on the rally in gold. However, reports say that so far scrap selling has not significantly increased. Read it HERE.

The Miners from

The currencies from

Some early prices: BYDDF 7.87; FVITF 2.3231; TBT 41.831; TLT 94.82; BULM 0.80; DOW off 21 to 10599.15; Gold up 4.20 to 1235.60; Silver of 0.03 to 19.31.

We have to keep firmly in mine that our God is in control of everything including the markets. He continues to work everything that He does for His glory and for the benefit of His people. That is a blessing enjoyed by every believer who follows Jesus Christ and becomes more Christ like every day. Even when we sin, we are informed by the Holy Spirit that we have failed again. Then He leads us to repentance and forgiveness and strengthens us for our next challenge. We are strengthened by the hearing of the word of God, by participating in the sacraments, and by the fellowship of other Christians. We must thank and praise King Jesus daily.

Best to each, Doug


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