Thoughts on Markets

Wednesday, September 29, 2010

Dollar - Gold - Silver - FVITF

Our Constitution requires the use of coined money, meaning gold and silver money. More importantly, the Bible reports the use of gold and silver by weight as money for many centuries. Thus, by implication, this is God's way. Gold was mentioned in the book of beginning: Genesis. 

The use of paper currencies is a method of fraud and deceit which is an abomination to God in violation of His demand for honest and equal weights. He, also, warns of the use of silver containing dross or impurities. Let's return to honest money which is stable and allows men to better plan for the future. Let's use God's way and not the ways of unbelieving men. His ways are the best for all.

All governments and central banks of the world, today, use paper currencies for control of the economies. Many people are oblivious to the impact of this. Though a growing number of people are beginning to understand this, few are interested in currencies. It is true that there is a world-wide struggle for having the least expensive currency in the market place to favor cheaper exports. This is Keynesian Economics which is false. 

While a cheaper currency may, for a short time, favor exports. The longer term impact lowers the purchasing power of the currency making both domestic and foreign imports more expensive for consumers. It also encourages retaliation by other nations and trade wars. Too often trade wars end in shooting wars. A nation should compete in the international market place by producing better quality and greater variety of products to meet domestic and international consumers at reasonable prices. That is the message of the true economics of the Austrian School. When a nation cannot compete on this basis, it should turn to other products or services which will be internationally competitive.  

The emphasis is on the dollar this week. It is true that as the dollar goes, so goes these United States of America. Currently, the dollar continues its downward move and failed to hold on to 80 in the Dollar Index. Below is the Dollar Index graph from StockCharts.com. It is in a technically very sad shape.
By contrast, look at the Gold vs. Dollar graph, below, also from StockCharts.com. This is a technically very strong graph showing clearly that gold is very much stronger than the dollar. It appears to me that gold is becoming more widely recognized as the monetary metal it truly is. 
Now let's take a look a silver. Remember that silver has a great number of commercial uses in electronics and other. So silver is a commodity metal with ties to being a currency metal, but without the strong currency ties of gold. This is also a very strong technical graph. I believe that silver will percentage wise out pace gold in the final run. Even at $21+, the coins are within my reach, whereas, gold at $1300+ makes it a bit of a reach on my budget.
I did not sell any Fortuna yesterday and I am rejoicing today. It came back quite strongly and is now at bid 3.14, ask 3.18, and last was 3.14. Would have sold about 3.08-3.10 yesterday. Often this is the case. Since we do not know the future, it is well to be slow to sell in bull markets. Always be careful and cautious on purchases. "Buyer Beware!"  Seller, too. Here is FVITF.
Miners from Scottrade.com:
Currencies from KitCo.com:
Some current prices: FVITF 3.14 (up nicely); SILA 0.795; TLT 105.8218 (bonds down a bit today); DOW off 27+ to 10830.1; SPX off 3.75 to 1143.92; Gold up 2.10 to 1311.10; Silver up 0.12 to 21.86.

Best to each, Doug

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