Thoughts on Markets

Wednesday, August 11, 2010

More Bailouts - US Dollar weak - Gold Strong

From The Washington Post:

'Buy and bail' homeowners get past Fannie, Freddie loan hurdles

By Kathleen M. Howley
(c) 2010 Bloomberg News
Tuesday, August 10, 2010; 12:40 AM

Real estate professionals call it "buy and bail," acquiring a new house before the buyer's credit rating is ruined by walking away from the old one because it's "underwater," or worth less than the mortgage. It's an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan. Read it HERE.


China, India and the price of gold - Jeffrey Nichols

Jeffrey Nichols explains why recent developments in India and China can only be good for the price of gold


The Indian gold jewelry love affair and its global significance

Unlike the West, Indians see gold jewelry as an investment and insurance against hard times, while the West sees it purely as decoration  HERE.

From Walter E. Williams on

What Handouts To Cut

Because of failure to heed the limitations of the U.S. Constitution, which has produced runaway federal spending, our nation sits on the precipice of disaster. Former Senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton, co-chairmen of President Obama's debt and deficit commission, in a Washington Post article "Obama's Debt Commission Warns of Fiscal 'Cancer'" (July 12, 2010) said that "(A)t present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries."

Below is the graph of the US Dollar. The dollar is sending mixed signals, but is in a downward trough. It could be looking toward another temporary upward move, but will have to stay well above the 200 Day Moving Average for any substantial advance. Then it would have to penetrate the 50 Day MA which I believe is unlikely. I would emphasize that any upward move would be temporary and short lived.

Let's now take a look at gold. Here we see a different picture - one that is much stronger.Gold is very near the 50 Day MA, and seems to be approaching it with strength. It has resistance at just above 1240 and very strong at 1260. These will have to be breached for a sustained rally. There is strong support at both the 1160 and 1180 levels, so any breach of this would indicate a much lower price. It is well to remember that September and the Fall are just around the corner, so higher prices are anticipated at that time of year. Gold is now at 1205.60 and on an up tick. 

More activity during the last three days as shown on the following gold and silver graphs.


A.M. Kitco Metals Roundup: Comex Gold Futures Prices Firmer on Some Fresh Safe-Haven Buying, but Strong U.S. Dollar Limits Upside
Read it HERE.
Miners from

Currencies from

We must always rest in the fact that King Jesus is in control. It is very likely that He has blinded the leaders of our nation that they would wreck our country and its currency. This is what they are doing and are now planning to penalize those who are thrifty and pay their mortgages on time to support those who do not. The latest plan is to allow those behind to obtain relief and then have the mortgage companies transfer the remaining bad paper to the Fed. Such a deal!

Some current prices: FVITF 2.18 (like the EverReady Battery, it just keeps going); SDS 32.529; TBT 35.41; SSG 17.6611; DOW off 183 to 10461; SPX off 22 to 1098; Gold up 2.30 to 1201.10 and Silver down 0.18 to 18.13.

Best to each, Doug


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