Thoughts on Markets

Friday, August 20, 2010

Doug Casey on Junior Miners - Potential Hyperinflation - Yamaha Gold

From Thomas Sowell in

Dismantling America: Part IV
How did we get to the point where many people feel that the America they have known is being replaced by a very different kind of country, with not only different kinds of policies but very different values and ways of governing?
Something of this magnitude does not happen all at once or in just one administration in Washington. What we are seeing is the culmination of many trends in many aspects of American life that go back for years.This is insightful. The real reason is that we, as a people, have left the God whose providence founded our nation through men such as George Washington. -- HERE.


The Myth of the Great Bond 'Bubble'
There is increasing chatter of the great “bond bubble” as U.S. Treasury bonds surge ever higher and deflation fears rise. This is just one more myth that has persisted in recent years (decades really) due to mass misconception of the way the bond market actually operates and this propensity to label everything as a “bubble”.
Before we dive into the real meat of the argument it’s important that we define what a market “bubble” is. A “bubble” occurs when market forces combine to generate a highly unstable position. He could be correct about the lack of a true bubble; however, it will play out like a bubble bursting when interest rates go up. HERE.


Silver - historical pointers to better things ahead 

Rick Mills revisits silver's history and the silver:gold ratio and looks for an upwards re-rating in this time of fiat currencies. I, particularly, like silver. HERE. My partiality toward silver is due to the out of historical balance of the Gold/Silver Ratio. Below is a graph of SLV, a proxy for silver.


Gold juniors might rise by "an order of magnitude" - Doug Casey

Casey Research Chairman Doug Casey sees default on the U.S. national debt as inevitable and, he'll shy away from equities-except perhaps in favored sectors such as gold. Gold Report interview. Doug has been correct on many aspects of international investing and in the precious metals. HERE.

From CNBC:

Western Economies Face Hyperinflation: Gold Bull
The decline of the Western economic model will bring about hyperinflation and decades of painful readjustment, Egon von Greyerz, founder of gold investment intermediary told CNBC Thursday.
Fear of inflation causes investors to take refuge in gold. However, another analyst told CNBC that buying gold now is as pointless as the rush to buy tulips was in the 1630s. Gold "ain't" tulips, and we, at least some of us have seen a "Gold Rush." It is a response to hyperinflation and fear from financial and other disasters. Truly, it is a thing to see. We must be prepared for it, because it has come in the past swiftly catching many folks by total surprise. HERE.


Gold gearing up?  
Commentary: Gold bugs see a renewed rise
Wednesday may prove to have been a very important day in gold. Gold broke early in the day, but then metal reversed, closing higher than Tuesday's high. For technicians, this amounts to an outside reversal.
The Wednesday close put gold back to the level of June 30 and some $73 higher than the July 27 low.
Back then, almost the only cheerful group was what I have call the "radical gold bugs" mustered around Bill Murphy's banner at LeMetropolecafe.
I quoted Murphy saying: "As long as the physical market holds up, it is only a matter of time before gold and silver go back up and make new highs". HERE.

Ed Steer's Gold and Silver Daily included a reference to article HERE: As Ed said and I agree. This is a long (12 pg.) article with great graphs which should be printed out and studied over the weekend.

A warning was issued on AUY today by at least one. Below is a graph on AUY which I have annotated. It does show some questionable signs. Any down move in gold could result in a correction in AUY. There are mixed signals; however, the volume on up days is encouraging as is what seems to be an upward slanting wedge. I hold AUY, but am becoming wary and will be watching it more closely. You might want to do the same. Make your own decisions.

 Miners from
Currencies from 
Some prices: FVITF 2.11 (Down but holding above 2.10); GBG 2.01; BYDDF 5.95 (Tempting, but I am not buying yet - You decide); TLT 106.65; Gold down 7.90 to 1224.50; Silver down 0.30 to 18.01; DOW off 85 to 10186; SPX off 8.29 to 1067.34.

Looks to be another general market down day. Even the precious metals and miners are suffering, as well. We will have to wait and see what the Lord is doing with all today. 

Best to each, Doug


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