Thoughts on Markets

Thursday, July 15, 2010

China - Our Pretending "Leader" - Gold & Central Banks

From The "OK... No need to spend a day on that! Hey! The currencies are in rally mode again this morning, after a strong, but not a as strong GDP report from China last night. Chinese 2nd QTR GDP printed at 10.3%, which is quite a drop from the 11.9% they printed in the 1st QTR of this year... But, I've got two things to say about this...

1. This is exactly what the Chinese Gov't was attempting to do with their rate hikes, and reining in of bank reserves? There was also a printing of their latest inflation report, which showed a decline from 3.3% to 2.9%... AGAIN, this is what the Chinese Gov't was attempting to do! So... All those people that said China's economy was going to overheat and collapse... Well... They are plain wrong!

2. 10.3% from 11.9% is what I call "moderating", not "collapsing"... When you're talking about numbers this large, a 1.6% move isn't that big of a deal, compared with smaller numbers falling 1.6%! I prefer to look at China's GDP like this... For the first half of 2010, it grew 11.1%!!!!!

OK... So, I'm somewhat surprised by the reaction by the markets to the Chinese GDP number... So far, it's been positive! WOW! Maybe, they get it! Of course we have the boys and girls here in the U.S. this morning to impress, and you never know what direction they will go!

China is a power house of manufacturing and with their centralized form of government can take action more quickly than most. Their seems to be some wisdom in their style of management. I would not like to live under it, but the Chinese are becoming very productive and prosperous while the West is slowing and falling into recessions/depressions. Asia is the coming international source of many products at very reasonable prices.


The Great Pretender

The Marxmeister in the White House now says he takes full responsibility for ending the oil mess in the Gulf. He also says he wants to “know whose ass to kick,” that he “can’t suck it up with a straw,” and… well, you know… the ongoing narcissistic spiel—“I, me, my… blah, blah, blah”… day after day, week after week, ad nauseam. Read about the pretense HERE.


Sprott files registration statement for new physical silver trust

Toronto's Sprott Inc. has filed a preliminary prospectus for the launch of the Sprott Physical Silver Trust, aimed at giving investors the liquidity of an ETF combined with silver bullion exposure.
Read it HERE.


Central Bank structural shift key to gold's strong performance

While not the only reason for the strong price performance, the shift from net sellers to net buyers has had an impact. And, it is likely to continue to do so
Read it HERE.


Yesterday's Top Story: The world's biggest mine rush

Billions in iron ore mining investments continue to pour into West Africa, but logistics and capital costs slow actual developmentWho would have thought that we would have an iron rush? Read it HERE.


Don’t let anyone fool you about gold

He uses several interested graphs silver, gold, dollar, etc.. Listen to the video HERE.


Option Traders Bet on Sell-Off in Gold Miners

The Gold Miners have rallied more than 20% since February 1st as Gold prices rallied from $1,050/oz to highs of $1,266.5/oz, recently pulling back to around $1,200/oz. While Gold prices are only 4.5% off highs, the miners, represented by the Gold Miner ETF (GDX), is 9% off highs. The long term trend support in Gold prices comes in at $1,175/oz, and it appears that Gold could be ready to take out that support level in the coming month.
If he is correct, we will see a new buying opportunity soon. HERE.


Bretton Woods Inertia and the Coming End of an Era

To understand the seismic change I believe is ahead of us, we must go back in history where a single event sheds much light on the cornerstone of the prosperous six decades we have enjoyed and the trade imbalances this has fostered. As we all know, at the end of World War II, the European continent was in total ruins. The US, on the other side, emerged with an industrial might significantly larger than before the war started.
We may well be experiencing an end to the FIAT paper currency world. This is a good read to understand a bit of recent history. HERE.


14 July 2010

Gold Has a Determined Seller Over 1215: the Pressure Under the Price Capping Continues to Build

There is a determined seller of gold over 1215.

This is not profit taking. One does not smash price rallies down to obtain profits from selling actual positions.

This is price manipulation, pure and simple, from hedge funds and bullion banks in not only in the gold and silver markets, but in stocks and most other dollar denominated financial instruments. See the great graph and read the article HERE.


Jim Rickards was outstanding in his CNBC appearance today which covered a variety of topics. Wilbur Ross was also on air with Jim, and together they were a voice of reason.  A portion of the interview is below including a link.

The following is Jim’s piece for the King World News blog that discusses China in more detail and it is a must read:
Read and hear some important insight HERE

The miners from

The Currencies from Notice that the price of gold is mixed among the currencies.

Some current prices: FVITF  1.9985; CEF 14.81; GDX 49.79; GDXJ 26.501; SDS 33.70; DOW off 82 to 10286; Gold off 1.90 to 1203.60; Silver off 0.01 to 18.27. Gold/Silver Ratio 65.93 to 1 when the historical average is 16 to 1. Silver is still lagging, but should catch up.

Our God is in control and I am content to have Him take us where ever He wants, because I know it is for His glory and for the eventual good of His people. King Jesus rules! Praise Him daily.

Best to each, Doug


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