Thoughts on Markets

Monday, September 27, 2010

Markets Volatile - Gold - Silver - Currencies - GLD

Well, I am back from my business trip and taking a closer look at the markets. I am looking for a near term correction in gold which should provide a brief buying opportunity for me, as have cash ready. The correction could be very brief and not very deep, because there remains a strong demand for the precious metals as even larger investors are moving into gold as protection for their wealth. Banks have begun to join the parade into the metal, as well.

It is hard to realize that September is almost gone. I always rejoice that the Lord has given us seasons, months, and weeks upon which we can depend. Each should give us a new start with a time for reflection and a time for planning ahead. King Jesus has provided His word which never changes, as He is the same yesterday, today, and forever. This provides us with a stable rock upon which to hold during life's storms and challenges. In fact, He always brings these challenges to us for the purpose of building our faith and our dependence upon Him. Without Him, there is only death, but with Him there is abundant life in the temporal world and throughout eternity. I pray that each of you know this and follow His way which includes weekly corporate worship and fellowship with believers. That can be a great permanent joy for all. 


U.S. House may vote on Rare Earths Act this week
China's rumored threat to ban rare earth minerals exports to Japan last week may spur the U.S. House to vote on a domestic REE program this week. Japan & China are stewing over the capture of a Chinese boat captain by the Japanese on September 7. HERE.


QE return positive for gold investors
The statement from the U.S.Fed that more Quantitative Easing could lie ahead is good for gold investors because it means there could be more dollars chasing a finite amount of resources, further devaluing the U.S. dollar. HERE.

Below is the graph of GLD which is a current proxy for gold. The graph shows a fairly strong technical support for further higher prices. The lower volume indicates that the run could be interrupted with a correction in the near future. I would welcome this as a buying opportunity. I will hold on to my core of mining stocks even though a correction could be in the offing. One can get too easily "priced out" of the market if he sells all in anticipation of a correction which could be very slight with a stronger moves upward. You consider the potential and make your own decisions. 

 Below are the graphs of silver and gold. Here we see a difference in the volatility between gold and silver. Silver is still behind gold percentage wise, but seems to be making an effort to catch up. Both are holding well, though likely overbought. A correction is certainly on the table, but has yet to appear.


A technical view of gold after record breaking run
After hitting new highs consistently over the past week technical analysts give their views on where the yellow metal is headed next. HERE.


Gold and Silver Breakout: Is $5000 Gold Realistic?
In recent weeks gold and silver have broken through their multi-month consolidation levels, and investors are wondering where the precious metals are headed. On a short term basis both gold and silver are overbought and due for a correction that may retest the breakout levels of $1250 on gold and $20 on silver.

On a longer term basis, gold is at an all time high and silver is at a 30 year high. These breakout levels were key because they removed any supply of sellers wanting to sell near their previous purchase prices.  HERE.


Gold the final refuge against universal currency debasement
States accounting for two-thirds of the global economy are either holding down their exchange rates or steering them lower. Nothing like this has been seen since the 1930s. Of course, gold can go higher. HERE.

Hear Red Skelton on the The Pledge of Allegiance to the Flag in 1969. Today, this would not likely be allowed.  HERE.

Miners from

Currencies from

Some Prices: FVITF 3.22 (down from 3.30+ last week, but still holding well); SILA 0.0819 (Holding, but down from 0.88 recent highs); TLT 104.84 (Treasuries are up a bit today - Likely due to investor borrowing at low interest rates and lending the funds (or collateral) in higher interest rate currencies); DOW off 10.98 to 10846; SPX off 2.05 to 1146.62; Gold off 0.60 to 1297; silver off 0.03 to 21.43. With gold and silver at these levels it is interesting that the miners are not going through the roof. Just evidence that the Gold Rush is yet to get going. I believe we will see gold above 1300 this year. There are predictions of around 1500.

Best to each, Doug


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