Thoughts on Markets

Tuesday, June 29, 2010

Is this the expected crash? We may move into a time for buying.

From Ed Steer's Daily Gold & Silver Report:

"As I mentioned earlier, yesterday's New York action in both gold and silver was an obvious bear raid to stop the upward momentum of the gold price that began last week after last Monday's hammering.

Nothing has changed in the over-all world economic, financial and monetary situation... except that the outcome is now becoming even more well defined... with the BIS and Krugman both stating the obvious.  It's inflate... or die a horrible death by a deflationary collapse.  It's the Keynesians vs. the Hayeks of the world... and no matter which side wins, gold will [sooner or later] become king."


Gold Prices in Tug of War

NEW YORK (The Street) -- Gold prices  Tuesday were under pressure as the U.S. dollar gained strength and investors dumped gold and stocks for cash.

Gold for August delivery was slipping 50 cents to $1,238.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,242.50 and as low as $1,230.10. The U.S. dollar index was adding 0.37% to $86 while the euro dipped 0.56% to $1.22 vs. the dollar. The spot gold price Tuesday was losing more than $1, according to Kitco's gold index.
Read it HERE.


1983 magazine profile shows BIS constantly intervening in gold market in secret

Thanks to our friend W.G. for pointing out a fascinating article written for Harper's magazine in November 1983 about the Bank for International Settlements by the veteran journalist Edward Jay Epstein, who seems to have been given unusual access to top BIS officials. Epstein's article shows the BIS running the world financial system almost entirely in secret and, in the process, frequently intervening in the gold market or making gold available to arbitrageurs as part of a general system of currency market regulation -- and swapping gold particularly as part of a policy of supporting the U.S. dollar. There is a link to the complete article HERE.


The very fabric and the seams of the financial system are coming apart. Who knows what the timetable is for the implosion of the current monetary system? We are witnessing the greatest wealth transfer in history, and the horrors of the aftermath of this tragedy will not be forgotten for decades.  Keep in mind that the stark warnings from today’s annual BIS (Bank for International Settlements) report are the very reason why it is so important for all readers globally to protect themselves and their families by owning gold. HERE.


A.M. Kitco Metals Roundup: Comex Gold Lower as U.S. Dollar Strengthens, Crude Oil Sells Off

29 June 2010, 8:20 a.m.
By Jim Wyckoff
Of Kitco News
Comex gold futures prices are trading modestly lower Tuesday morning, amid a stronger U.S. dollar index and solidly lower crude oil futures prices. August Comex gold last traded down $3.80 an ounce at $1,234.80. Spot gold was last quoted down $3.80 at $1,235.00.
The greenback has strengthened Tuesday and U.S. stock indexes are under selling pressure following overnight news that China's leading economic indicators have been revised downward. There was also some weak economic data coming out of Japan overnight. China has been a major consumer of raw commodities, and any slowdown in its economy will have negative implications for the other major economies of the world.
There are concerns over some European bank debt coming due to the European Central Bank later this week, via the ECB bank-funding program. This has pressured the Euro currency early this week, amid some worries about those payments being made on time and in full. Read HERE.


Silver Posting Best Streak Since Hunts No Matter Which Way Economy Turns

Silver, the precious metal most used in industry, is attracting investors betting on both faster and slower economic growth as prices extend the longest run of quarterly gains in three decades.
Doubling as a store of value for buyers concerned about the economy and as an industrial material for those bullish on growth, silver is outperforming metals from copper to zinc this year and keeping pace with gold. It will rise as much as 15 percent to $22 an ounce before December, from $19.145 today, according to Daniel Brebner, an analyst at Deutsche Bank AG whose fourth-quarter outlook was accurate to within 0.7 percent. HERE.


RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve

Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy.

The speech is best known for its irreverent one-liner: "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost."

Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).

Investors basking in Wall Street's V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing.

The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era. HERE.

Miners from

Currencies from

Some prices: GBG 1.76 (SPECULATION down from where I bought at 1.83+); FVITF 1.9663; BYDDF 7.62; TLT 100.22; TBT 36.61; DOW off 230.50 to 9906.92; Gold off 2.20 to 1236.40; Silver off 0.21 to 18.50.

Things are beginning to drop precipitously now. Could be the beginning of the big correction or drastic collapse of the general market. This type of activity takes the precious metals and miners with it. However, both seem to correct before the other side of markets. The metals and miners are getting into buying levels for my portfolio. However, you must decide on your own whether it is right for you or not. When I buy into this negative market, I am always buying in smaller increments. I may well add to the GBG if the price gets much lower, and am looking toward more FVITF, DROOY, and HMY. I will be very cautious on any purchases and would like to wait for until we are nearer the bottom. 

For the time being, I am concentrating more on silver than gold and am thinking about more silver Eagles and Maple Leafs.

Timing is only known by God, Himself, but we must make decisions trusting in Him. However, we must educate ourselves as best we can. The education should be centered and guided by Scripture which is God's revelation of Himself and His will for each and every one of us. Our beliefs do not alter the truth and power of His words, but have everything to do with our present and future live. Whether we choose to obey King Jesus and live or chose to ignore Him and die.

Best, Doug


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This was from the annual report released today by the very secretive and extremely powerful BIS: Three years after the onset of the crisis, expectations for recovery and reform are high but patience is wearing thin. Policymakers face a daunting legacy: the side effects of the ongoing financial and macroeconomic support measures, combined with the unresolved vulnerabilities of the financial sector, threaten to short-circuit the recovery; and the full suite of reforms necessary to improve the resilience of the financial system has yet to be completed.”


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