Thoughts on Markets

Thursday, July 01, 2010

Very Bad Day in All Markets - Swiss Franc Hangs Tough - Gold and Silver Down

The DOW industrials have a horrid technical report. We are almost in free fall territory. I hope that you have taken Richard Russell's advice and gotten out of general stocks and concentrated in precious metals, possibly mining stocks, and enough cash to tide you over. 

It is really time to get out of debt, reduce spending, and start saving. For decades now, we have been big spenders through the use of easy money (debt). Now we have a mountain of debt which is pushing us from a time of "plenty" to a tide of austerity. Get prepared ASAP.

The only way to survive is to learn to live beneath your means. You will find very soon, that this is a nice, comfortable way to live. It can become a debt free life which is free from a life of robbing Peter to pay Paul. There is great peace in having an emergency fund from which critical needs may be satisfied without an increase in debt. This will be essential for survival.

Contrasted to the very poor graph of the DOW, below find the stronger graph of gold in the form of GLD which is a proxy for gold. What a difference. We should expect gold to perform well as a store of value in depressionary times as well as inflation. Gold has been recognized of value since the beginning of time. It is mentioned early in the Bible and was used as currency throughout history until the paper trash, we currently call money, we developed. Think 1/4 ounce or 1 ounce Krugerrands, Sovereigns, Maple Leafs, etc.

Silver, as represented by the proxy SLV, shows similar long term strength with that of gold. In this case I always think of U.S Silver Eagles and Canadian Maple Leafs. 


IMF’s Gold Assets Shrank in April as Russia’s Rose

June 30 (Bloomberg) -- The International Monetary Fund’s gold holdings fell by 15.25 metric tons (490,286 ounces) in May, according to figures from the Washington-based lender. Russia’s assets expanded by 22.46 tons.
Reserves of gold at the IMF were 2,951.58 tons at the end of May compared with 2,966.83 tons at the end of April, data on the IMF’s website show. Russia increased holdings to 703.1 tons in May, from 680.64 tons, and has added gold every month since at least February, the data show. HERE.


Foreclosed Homes Sell at 27% Discount as Supply Grows

Homes in the foreclosure process sold at an average 27 percent discount in the first quarter as almost a third of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.

A total of 232,959 homes sold in the period had received a default or auction notice or were seized by banks, RealtyTrac said in a report today. That’s down 14 percent from the fourth quarter and 33 percent from the peak a year earlier, the company said. The average price of a distressed property was $171,971, according to the Irvine, California-based data seller.

“The discount will probably stay between 25 percent and 30 percent as lenders carefully manage the number of new foreclosure actions in order to avoid flooding the market,” Rick Sharga, RealtyTrac’s senior vice president for marketing, said in an interview. HERE.


The Euro Crisis

In 1998, four renegade German professors tried to stop the introduction of the euro with a legal challenge in Germany's highest court. Now, 12 years later, they are fighting against a German bailout for Greece -- and this time around, people are listening to them.
Wilhelm Hankel is sitting on the stage at a meeting of the Kiel Institute for the World Economy. He is beaming with joy. The 81-year-old professor has just explained why the euro has always been a monstrosity, and why it will and must fail. Although the current plans to "get a living corpse to walk" are touching, he scoffed, one thing is already clear: The euro bailout package will only save the banks.

Surprisingly enough, his presentation was met with long and enthusiastic applause from his audience of economists. For Hankel, it was about time. The recalcitrant professor has been waiting for what has seemed like an eternity for this recognition. Since Jan. 12, 1998, to be precise. HERE.

Miners from
Currencies from

 Some current prices: FVITF 1.85 (nearing a good buying range, but it could get better in the near future); BYDDF 7.28 (not bad, but it would be great below 7 and could go to around 5 if the free fall continues); SSG 19.26 (ETF ultra short on semiconductors going great guns in the fall - I have call options on this one); SDS 38.94 (ETF

All in all, a bad day in virtually all markets. Our King Jesus is in control and working all things to the eventual good of His people.

Best to each, Doug




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