Thoughts on Markets

Wednesday, October 27, 2010

GLD - COPPER - Silver - FVITF - SILA - BULM - DTOR - Austrian Economics


The Correction in precious metals continues as the dollar is strengthened. Fundamentally, the dollar has no where to go but down in purchasing power. However, it has been the reserve currency for the world for so long, that people trust it. We must remember that it is backed ONLY by the full faith and credit of the bankrupt U. S. How safe do you feel holding dollars? I know that I am shaky about that prospect. 

The dollar retains some value simply because it remains the reserve currency of the world. Think what will happen when/if it were to lose that prestigious designation. Would it drop 35%, 50%, 75% or what. Take your pick. That is uncharted territory. It would be devastating to the citizens here in America.

By the way, McDonald's is reported to be increasing their prices by 2% soon and then 3% later. This is part of the on going creeping price inflation we are experiencing as we do our shopping. Reports are coming out that food shortages are beginning to show up around the world. This will add to the cost of food.

I have discussed, before, some of the differences between Austrian or Classical Economics which has stood the test of time and quite accurately follows Biblical principles. A study of this economic theory reveals the results we will experience with every action under Keynesian Economics which is being widely used in the world today. One must study writing by sound economists; such as, Ludwig vonMises, Walter E. Williams, Tom Rose, Percy Greaves, Murray N. Rothbard, Hans F. Sennholz, Gary North and others to fully understand this economics. Of course, these are writings by fallible men, so the ultimate resource is a detailed study of Scripture which is infallible and 100% accurate. Remember, this school of economics is not only what should be, but it is the one that provides accurate predictions of the long term impact of man's (Keynesian) economics on economies of today. Thus, it is critically important for one to understand these truths.

Biblical principles properly applied to all of life will provide individuals and nations with truth. There is no other objective source of truth. Remember that even facts must be properly perceived to reveal the truth. For the day to day application of Biblical Law (God's Law) to all of life and government, I am partial to The Institutes of Biblical Law (Volume 1) by R. J. Rusdooney. I highly recommend this book.


Gold's latest dip, QE and the next 12 months - John Embry
"Everything that I look at suggests much higher prices over the next 12 months." This tracks with my thoughts, as well. However, I look for an early end to the present correction. Read and hear it HERE.

Below is our proxy for gold: GLD which is up to date while gold is updated only at close.


China should boost gold reserves massively to U.S. level - state media
A newspaper run by China's Ministry of Commerce cited a local researcher who says the country should significantly boost the amount of gold held in state reserves. This means a continued high demand for gold. Read it HERE.


US CFTC looking into JP Morgan's silver trading business - WSJ
The WSJ says the US commodity futures regulator is looking into claims by a trader that JP Morgan was involved in manipulative silver trading. We have known that silver, particularly, and gold,as well have been manipulated. Read it HERE.

Walter Williams from

Our Contemptible Congress
Walter E. Williams:
Most people whom we elect to Congress are either ignorant of, have contempt for or are just plain stupid about the United States Constitution. You say: "Whoa, Williams, you're really out of line! You'd better explain." Let's look at it. The Constitution is no longer taught in schools as it was in the past. Thus, citizens are ignorant about the Constitution, as well. The supreme court and lower courts have rewritten much of it. The White House and Congress have destroyed it, as well. Read it HERE.


All that glisters is not gold; copper looking good too
Investment demand in the form of a physical copper ETF could have strong effect on copper supply/demand patterns and prices. HERE.

`Uncontrolled' Dollar Is China Inflation Threat, Official Says
The U.S. Federal Reserve’s “uncontrolled” issuance of dollars is adding to inflation risks in China and creating difficulties for the nation’s businesses, Chinese Commerce Minister Chen Deming said. The saber rattling between the U.S. and China continues. This could get really serious. Read and hear it HERE.

The Miners from

The Currencies from

Some Current Prices: FVITF 3.57; SILA 0.435; BULM 0.93; DTOR 0.25; DOW off 98+ to 11070.31; SPX off 8.80 to 1176.84; Gold off 14.90 to 1325.40; Silver off 0.32 to 23.54.

Best to each, Doug


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