Thoughts on Markets

Wednesday, July 14, 2010

Saber Rattling Against Iran - Fortuna - Currencies - Mining Stocks

Yesterday was a strong day for the DOW and almost all markets. Strangely, the miners did not respond very much to the serious drop in the Dollar and rise in precious metal prices. Below, is a graph of the DOW Industrials. The volume was up a good deal. Is that a negative Head & Shoulders forming toward the end? It does not seem that the DOW is anxious to jump higher at present. It is up only about 1 and has been bouncing around that figure in the first hour of trading. 


Iran War Even Closer?

A three-front war? Strikes on Iran becoming more likely ... There is no better illustration of the futility of the $1 trillion Iraq war than news photos of a long line of gasoline tankers lined up bumper to bumper as they leave Iraq to enter Iran. The U.N. Security Council decision to strengthen economic measures against Iran, and President Obama's (left) signing into law draconian new legislative sanctions against Iran's nuclear weapons ambitions leave Iraq's defeated government unable to act.  Read the article HERE.


Chinese rating agency strips Western nations of AAA status

Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.
The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia. This was the big news yesterday. This action involves political activity on the part of the Chinese, but who can really say that we deserve AAA rating in view of our poor management of the reserve currency for the world, our deficits, and our staggering load of debt. Way to go China! Read the article HERE.


Weekly Market Events:

Wednesday 8:30 AM Retail Sales
Thursday 8:30 AM Core PPI
Friday 8:30 AM Core CPI

Most of these government calculated and massaged statistics fail to pass the test of accuracy, the perception of investors is swayed, often violently, by them.

Podcast from

Central banks and gold - Natalie Dempster, WGC
A look at the role central banks are playing in the gold market and why there are good reasons for them to continue to hold gold. Hear it HERE.


When the end-game began, gold was $35 per ounce. Today, gold is $1200.

When the end-game is over, gold will be far higher.

Midway through 2010 we are approaching the end of the end-game, the resolution of the
monetary imbalances that began in 1971. For more than 2500 years, gold was money:
but, in 1971 that changed. After 1971, money was no longer connected to gold. For the
first time in history, money had no intrinsic value. This is an important article which may be read HERE.


U.S. House committee debates miner workplace safety bill
House Democrats and labor unions want to move quickly to enact the Robert C. Byrd Miner Safety and Health Act. But House Republicans and industry representatives say it could make the situation worse.
What does the government do well? The Congress cannot manage mining well either. Thus, this will drive more of the mining out of the country. Most has already left, because of over regulation and taxation. Read it HERE.


Gold returns to monetary system as ultimate measure of value
There isn't enough gold out there for it to be a true means of exchange but it is still the ultimate measure of value in its deeply realistic monetary role.
While the banks denigrate gold as a monetary metal, they continue to hold the metal as part of their reserves. China has also put gold down by recent comments. China has very likely done this in  an attempt to lower the prices she has to pay to accumulate her target gold stock. Read HERE.


BIS swap transactions show creative use of gold - GFMS
GFMS Chairman PhilipKlapwijk says the operations validate gold's centrality to the financial system Read HERE.


By Frosty Wooldridge
July 12, 2010
An arrogant billboard exploded on the Los Angeles skyline a few years ago by a local TV station: “Los Angeles, Mexico: Your Town, Your Community.”

It was spelled out in Spanish. CA was crossed out with a red X and replaced by the word ‘MEXICO’. Two smiling Latinos representing over two million illegal aliens in the City of Angels smiled from their anchor desks. Behind them stood the LA skyline replete with skyscrapers. Most disconcerting was a statue, also in the billboard picture, that stands in the middle of Mexico City. HERE.

Miners from

Currencies from

Some current prices: FVITF 2.00; SSG 15.18; SDS 33.16; TBT 37.46; TLT 98.56; DOW up 9.23 to 10372; Gold down 3.10 to 1208.20; Silver down 0.06 to 18.19.

Here is a graph of Fortuna (FVITF) which I am following with interest. It has been in a narrow trading range and has not significantly dropped as other miners. This is a core holding for me and I look forward to adding more if the price drops to the support range.

 The markets are always exciting. Yesterday, the currencies were mostly up against our dollar. The Euro lead, but rest were right in there. The commodity currencies: Canadian and Australian were right in there. Even the pound was up a bit.

The U.S. Federal Reserve and Federal Government are rapidly leading us down the same slippery slope as Japan has been following for decades and is still not out of the woods. Either those in power are ignorant or they are on a course to so devalue the dollar that it will be worthless. Of course, their only answer is to manipulate all markets and to flood the world with unbacked dollars to "stave off" deflation, depression. 

When a nation devalues its currencies it is violating God's law and warnings about the use of unequal weights in transactions. Ever wonder why the coins resemble to a great extent the pre-1965 silver coins? How about the "green back" dollars which resemble the old gold and silver dollars which were redeemable for gold and silver? All are quite similar to the more real money which was the intent of our founders and Constitutional Law. This was for deception in violation of God's Law. No person or nation is exempt from God's Law whether it is acknowledged or not. God's Word and Law does not return void. 

Best to each, Doug


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