Thoughts on Markets

Thursday, August 19, 2010

Iran Problem - Gold strong - DOW Down Big Time

From MineWeb.com: 

Junior gold stocks ripe for takeovers now?
As in-house discoveries of the really big gold mining targets become rarer and rarer, the likelihood of majors taking over juniors who have already outlined significant deposits will surely increase. This is a potential for the junior miners in addition to the bang they will be getting from the eventual "Gold Rush." Read it HERE.

From MineWeb.com:

Indian diamantaires to source own roughs, take on mining giants
In a bid to augment profits and cut out the role of the middleman in the diamond business, diamonds traders have decided to team up and form a new company to source roughs directly. This could be significant to the diamond industry. HERE.

From TownHall.com:

Dismantling America: Part III 
One of the few campaign promises that Barack Obama has kept was this: "We are going to change the United States of America!"
As in many other cases, those who were thrilled by the thought of "change" seldom seemed to consider whether it would be a change for the better or for the worse. True believers in the Obama cult assumed that it had to be a change for the better.
Now it is slowly dawning on more people that it is a change for the worse. . . Thomas Sowell makes many good points in this discussion. HERE.

From Speigel.de:

Tensions Rise in Greece as Austerity Measures Backfire

By Corinna Jessen in Athens 
The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.  Citizens are wary of anything that governments do. This particularly true when the economy stinks as it apparently does in Greece. The pictures are interesting, too.  HERE.

From GATA.org: 

Alasdair Macleod: Central banks in deep trouble for their gold manipulation
Section: Daily Dispatches 5:40p ET Wednesday, August 18, 2010
Dear Friend of GATA and Gold:
In his latest commentary, published this week, economist and former banker Alasdair Macleod quotes GATA's Adrian Douglas in support of his forecast that the latest central bank gold price suppression scheme is "on the verge of the most spectacular failure." Is this wishful thinking or reality? The bullion banks have had their fingers on the precious metals for decades. They have capped the prices which each higher move. However, each successive high plateau worked against them in the long run. Perhaps, their actions are about to catch up with them. I say, "It is about time." They are well over due a comeuppance. HERE.

More on the Iran situation in the following two articles which were referenced in Ed Steer's Gold and Silver Daily:

The first from UPI.com: 

Commentary: Guns of August?
WASHINGTON, Aug. 17 (UPI) -- For the first two weeks of August, the Internet buzzed with "inside knowledge" of an Israeli airstrike against Iran's nuclear facilities before the end of the month. One of most quoted warnings came from Philip Giraldi, a polyglot former CIA operative who writes for the American Conservative and is no friend of Israel. HERE.


The second from MEMRI.org:

Saudi Daily: Military Option May be Best Solution to Iranian Nuclear Crisis
An editorial in the Saudi daily Al-Madina, published in the wake of announcements in Iran and Russia regarding the imminent activation of the nuclear reactor in Bushehr, took a hard line vis-à-vis the Iranian nuclear program, claiming that the military option may be the best way to deal with it. The article reflected the Gulf states' growing tension and concern regarding Iran's nuclear program, and mentioned their proximity to the Bushehr reactor. HERE.

From SeekingAlpha.com: 

China Gets Nervous About U.S. Spending
China decreased its holdings in U.S. Treasuries by a record amount, according to a U.S. government report issued Tuesday. Treasuries at the moment are experiencing a steep rise as the U.S. is financing its staggering debt level by offering its obligations to other countries. China has historically been the largest holder of U.S. debt as a means of promoting a strong dollar, but the unattractive yield along with reckless government spending seems to be causing the Chinese to rethink the risks and benefits of holding U.S. government bonds. On one hand, they need to make sure the U.S. currency does not devalue, but on the other hand they need to protect themselves from a treasury bubble. Seems as though China is nestled uncomfortably on the horns of a dilemma of their own choosing. However, I do not believe this is new, but rather a growing concern which has been addressed by China in the past. Our concern should be who, if not China, will buy our debt instruments and for how long will they do it? HERE.


From SeekingAlpha.com: 

Could Gold Miners Be Ready to Shine?
Gold mining stocks have been mired in an ugly slide, losing over 12% from their June 18 closing high. The unwinding of risk averse trades is being credited with the decline in gold and the gold miners. Much of that thought is predicated on the sanguine view over European debt and the 'stress tests' recently completed on the European banks. Anyone with half a brain knows that those stress tests were nothing more than cheap propaganda pieces meant to deceive investors into believing that the worst has indeed passed. If things are all of a sudden so rosy, why are Euribor rates continuing to tighten? Something is up here and I think we are a long way from the end of risk aversion, in fact, we are still in the early stages. Risk aversion may return to this market much sooner than many pollyannas want to think, and the gold miners look ready for some fresh inflows. This is an interesting take on risk aversion with a good bit of merit. I urge you to read it. HERE.


Let's take a look at GOLD today using the following graph from StockCharts.com. This is a very positive graph. Gold is presently rushing toward the 1240 level. If that is achieved and held, gold will go much higher. The Fall rally could already be in process. A break above 1260 would be quite significant. Note that the supports are well above 1100 which held strongly during the last "correction." Gold is taking a more significant place in the media these days which may be an early prelude to the world wide "Gold Rush." The Lord knows, and we can only make educated guesses.

The Miners from Scottrade.com:

































Note that currencies from Kitco.com indicate that gold is up in relation to virtually all currencies:



















Some current prices: FVITF 2.17; GBG 2.14; TLT 106.34; DIA 103; DOW off 153 to 10262; SPX off 17 to 1077; Gold up 5.50 to 1234.80 (may have been capped about 1237 before); Silver up 0.08 to 18.47.

Almost all miners were up a bit earlier, but are mixed now. All is in the hands of King Jesus.

Best, Doug

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