Thoughts on Markets

Tuesday, July 06, 2010

Gold - Gold Bugs - Copper - Learn to Live Debt Free

There was another poor day in the general market with the Dow closing out with a small gain after being down triple digits for some of the day. The price was very volatile and bounced up and down throughout the day's trading.

Gold has dropped a good bit, but remains above 1100 for the time being. The graph, below, is very technically sick.




















However, the central banks and many investors have begun to add gold as a safe currency. The precious metals ETFs (EverBank.com's World Markets Metal Select Funds and  GoldMoney.com, too) have made purchases much easier for investors and the funds are growing over time. Some are short on the needed stock of silver as there is a great demand for silver and deliveries are lagging.

The miners represented by the Gold Bugs' Index is equally poor. I have stopped further purchases of miners as it seems that prices are likely to go lower in the near future. The long term prospects for the precious metals and miners is very promising, but near term we are facing a recession/deflation which is most likely to be stagflation with rising prices and lower to dropping wages with high unemployment.





















Dr. Copper as Richard Russell calls it has been putting on a poor performance. When China announced they were allowing the Yuan to rise, it provides them with greater purchasing power. This, one would think would allow them to purchase raw materials at better prices. Thus, there was dome expectation that copper would be in higher demand. However, except for the last few days, it has had no recovery and is languishing badly among the commodities. Here is a graph of Copper. 





















Thus, we are seeing that the economy is not doing well at all. This is a world wide phenomenon. Even China is not without problems though it may be one of the strongest economies in the world today. Jim Rogers still believes that Asia is the next real economic powerhouse of the world.

I have been doing little in the market these days, as I am waiting to see what the market will tell us in the next few days. This is, as you will recall, a short trading week. We will have to take what we see this week with a grain of salt and hope for the best.   

It is only in the Lord that we should put our trust. It is important to realize that King Jesus is ruling as Sovereign in everything. Our next breath depends upon His grace. He is to rule until all nations are under His foot and then He will deliver them to His Father and we will all appear before the great white throne. 

By the way, I am considering purchasing more silver Eagles and some 1/4 ounce Gold Sovereigns in the near future. It would be nice to get a very low price, but will seriously consider buying if gold goes much lower. In the meantime, I am keeping my powder dry to be ready buy when the time seems right.

In the meantime, it is well to remove as much personal debt as possible, store up an emergency fund, and be ready to buy precious metals and miners when prices drop further.

Best to each, Doug

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