Thoughts on Markets

Friday, October 01, 2010

Austrian Economics -Gold & Silver Up - Dollar Collapsing - Miners Strong - SIL

Folks, I suggest that you pay particular attention to the article from Mises.org, below. It is very important to understand that the Bible speaks to all areas of life. It contains many economic and political principles upon which the sound Austrian Economics is based. Do not neglect reading, studying, and sharing this with your children and grandchildren. It is vitally important.

From SeekingAlpha.com:

5 Reasons Why Goldbugs Are Right; 6 Reasons Why 'Bubble' Is Years From Popping
Whenever I read cheap-on-analysis articles by the likes of Cullen Roche, Vahan Jinjigian, Henrique Simoes, or any of the other fallen heroes of the anti-Gold movement, my face shrivels up like I just ate 8 lemons and I stammer something out loud in response that probably makes me sound like Harland Williams from There’s Something about Mary. Their analysis usually is summed up along the lines: “gold is really expensive guys”. To which I usually respond “compared to what, you idiot?” with admittedly, a few of my favorite four letter words spliced in between. While I believe that gold is a bubble (all exponentially increasing assets usually find their way into one), by any measure, gold is still years from popping. Read it HERE.

From SeekingAlpha.com:

The Next Phase of Gold's Meteoric Rise
Now that gold is muscling its way towards $2,000/ounce, the forces of ignorance embodied by post-secondary-accredited yet nonetheless clueless commentators are being given voice by government sponsored media outlets such as CNN. Tokyo Rose was the generic handle accorded to any of a dozen women who, during World War 2 broadcast programming designed to undermine the morale of American troops over the radio.
Coverage such as stories like “The Case Against Gold” on CNN Money are designed to undermine the determination of gold accumulators who are genuinely frightened about the purchasing power of their dollars as their government ‘quantitatively eases’ the economy back onto its feet. HERE.

From MineWeb.com:

Gold hits new high for sixth successive session
The yellow metal touched a peak of $1,317.10 at 10h13 GMT while US gold futures for December delivery rose $8.20. HERE.

From MineWeb.com:

Silver could be pointing to end of gold rally
The price of gold seems to have no limit, but recent movement in the price of silver points to a potential end to gold's rally. The next report is a contrast to this one. HERE.

From MineWeb.com:

The recent move in silver just a preview
While technical indicators suggest an overbought scenario, suggesting that a pull back is on the cards, there is a lot of momentum that could take silver to higher levels before we see some consolidation. HERE.

Here is the Silver graph from StockCharts.com.
































Silver remains in a very strong bull market and I have been emphasizing silver and silver miners in my core holdings. I still have both Fortuna (FVITF), Hecla (HL), and Silver Wheaten (SLW) in among my holdings

Here is graph of the world silver miners (SIL) which is showing a similar graph to that above:
This, too, shows a very strong continuing bull market. Silver and its miners have an important place in my portfolios.

From VisiontoAmerica.com:

Bakery Won't Bake Homosexual Cookies, Now Faces Eviction
Welcome to Amerika, Comorade! Here is yet another taste of lost freedom. Of course, this seems to be in the private sector, but often government has intervened in similar situations. Should not a private business be able to operate without interference from the outside. A free market can handle all such complaints. Shoppers, so inclined, can go to other shops if they desire. HERE.

From Gary North's Reality Check (subscribe free at DailyReckoning.com):


"The House of Representatives overwhelmingly passed a bill this week to allow the President of the United States to impose tariffs against any nation that the President decides has been tampering with the exchange value of its currency. This is a direct attack on China. If the Senate passes this bill, the President will undoubtedly sign it. The question then arises: Will the President actually impose tariffs against imports from China? The political logic of this bill is simple: it gets votes.
The economic implications of this bill are catastrophic. The law could start a trade war. The last time that we had a major trade war was during the early years of the Great Depression.

The infamous Smoot-Hawley tariff was imposed in 1930, raising tariffs against imported goods from around the world. Other nations responded by passing tariffs against imports from nations that had hiked tariffs against them. So it went, tit for tat, sales tax by sales tax, until trade collapsed, taking the world economy with it." In this blog, I have tried to warn that trade wars have often led to shooting wars and I don't think that any of us want such to expand. They also lead to higher prices for all goods and services over time. Thus, the consumer is punished by such. This we do not need, but politicians, as well as voters often see only the short term "benefits" of such actions without considering the longer term implications. The politicians are only interested in being reelected. Let's vote them out in November.

From Mises.org:

The Meaning of Gold in the News

In the last week there have been several interesting developments involving gold. The price of the yellow metal set a new record, breaking through the $1,300 barrier. Meanwhile, a German firm is preparing to install gold vending machines in the United States. The German firm won't be stocking the machines with gold purchased from European central banks, however, because they have halted a decade-long policy of gold sales.
No doubt sensing the danger of the public's growing recognition of the superiority of gold over paper fiat currency, the US government has been stepping up its regulation of the gold market. Last week a House subcommittee hearing investigated the allegedly underhanded practices of a major gold dealer — all in the interests of protecting the consumer, of course!
In this context, it's worthwhile to review the basics of Austrian economics regarding money and the special role of gold. This is a worthwhile, though long read. It is particularly important for those who are still schooled only in Keynesian Economics. Austrian Economics is closer to Biblical economic principles, and therefore, much more accurate in analyzing financial and political implications. It is a must read for anyone interested in true economics. I highly recommend it for study. Also, the Mises.com organization has much excellent reference material. HERE.

Miners from Scottrade.com:







Currencies from Kitco.com:






Some Prices: FVITF 3.22 (Still happy that I did not sell any); SILA 0.83; TLT 104.87; BYDDF 8.16; DOW 10790 up 4+; SPX up 0.04 to 1141+; Gold 1317.20 up 7.70; Silver 22.06 up 0.32.

Best to each, Doug

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