Thoughts on Markets

Tuesday, October 05, 2010

Gold New High - Silver UP - HL - FVITF - Currencies - Miners

Remember that our Sovereign King is in control of everybody and everything. Therefore, His people should always be comforted by this assurance. Rest in Him and give Him the glory for everything, even His loving discipline which daily calls us to repentance for disappointing Him. King Jesus has reconciled us to His Father. He is the only way to salvation.

Over night gold has moved to a new high 1329.30 and it is now 1327.30 up 12.20 while silver has moved to 22.26 up 0.39 which is pushing to a new recent high. The metals seem to be on fire over night. However, one must remember that the night trading is very light,  so any buying often exaggerates the price movement. Close of New York trading is the more stable of pricing. The demand for the metals continues to be very strong. I checked at the US Mint and they were suspending the production of Silver Eagles until they could obtain more silver blanks.

Everyone agrees that we are headed into a deflation, contraction of the dollar and other currencies supply. Thus, the balance of speculation is in that direction. However, when the preponderance of thought goes in one direction, it is time to consider contraian views. Consider the amount of stimuli currencies which have been thrown out world wide. Yes, particularly here in the US, most has gone into the bank reserves and not released into the economy. However, it is still out there and there is much more to come in the very near future. With Bernanke's "what ever it takes to avoid depression" policy, expect much more.

Eventually, this will be released into the market places. Then we will have price inflation. This is the stuff of which bubbles are made. Coupled with our employment problems, I believe we will have a stagflation. Stagflation is what happens when prices are rising and wages remain low through unemployment and part time vs full time jobs for many folks. Shadowstats.com tells us that the unemployment is more accurately reported in the 20% range. That is a sad situation for too many Americans.

Yesterday, I added more Fortuna (FVITF) to my portfolios. This was reported in an email dispatched yesterday to let you know what I was doing in the markets. I am waiting to put more into the mining stocks and took advantage of a drop in the price to as low as 2.98. My buys were at 2.98, 2.99, and 3.00. If the price of silver continues this present move, each of those will be outstanding buys in the near term and potentially in the long run.

Treasuries and the dollar were up a bit yesterday which depressed the price of metals for a time yesterday. As mentioned, above, they are higher in over night and early morning trading. I am beginning to wonder if we are going to get anything like a correction this Fall. Perhaps, I will have to take advantage of any slight drop in prices to add to portfolios. Remember to make your own decisions based upon your wisdom, risk tolerance, composition of your portfolios, and your cash vs debt positions.

Here are the 24 hour gold and silver graphs from Kitco.com covering the last 72 hours of trading:

A Podcast from MineWeb.com:

QE2, deflation and commodity prices - Puru Saxena
The founder of Puru Saxena Wealth Management takes us through the pros and cons of quantitative easing, inflation and the impact of all of this on metals prices. It is good to get different perspectives and weigh each carefully. He is right on in his correct definition of inflation and deflation. Listen carefully.  HERE.

From MineWeb.com:

China's unofficial metals embargo of Japan may ignite global REE fire
An unofficial rare earth elements embargo sparked by a small diplomatic incident may finally be the spark that fires up western nations to stop relying on Chinese REE supplies. This will potentially lead to trade wars. Read it HERE.

From MineWeb.com:

Silver to win even if economy picks up
While much of silver's recent move has been attributed to concerns about the state of the global economy, a number of analysts expect silver's industrial uses to come strongly to the fore when the economy does recover. I still believe that silver will out perform gold in the near future. HERE.

From MineWeb.com:

Yesterday's Top Story: Central Banks - have they lost control of the Gold Market?
A brief recent history of Central Bank control of the gold market, how they lost it and whether they will regain it. This sounds a bit too good to be true, but it will happen at some time. Also, we must note that banks have reversed from selling to buying gold. HERE.

From TownHallDaily.com:

Red Herring Politics
Thomas Sowell:

In an election year, this is the time for an "October surprise"-- some sensational, and usually irrelevant, revelation to distract the voters from serious issues. This year, there are October surprises from coast to coast. There are a lot of incumbents who don't want to discuss serious issues-- especially their own track records. Sowell has hit the nail on the head with this article which points out, again, that the politicians are not interested in us. Their primary interest is getting re-elected and most are willing to do anything to perpetuate their plush job and power. HERE.

Check out the frightening USDebtClock.org. HERE.

From Bloomberg.com:

Gold Rises to a Record on Japanese Rate Cut, Demand for Wealth Protection
Gold climbed to a record in New York and London after Japan cut its key interest rate and said it would step up asset purchases and as the dollar weakened, boosting demand for gold as a protection of wealth. Silver advanced to a 30-year high.  Check it out HERE.

From StraitsTimes.com:

Super-rich buy gold by ton
GENEVA - THE world's wealthiest people have responded to economic worries by buying gold by the bar - and sometimes by the ton - and by moving assets out of the financial system, bankers catering to the very rich said on Monday. Interesting. See it HERE.

From MineWeb.com:

Lack of trust could push gold higher, but fundamentals precarious
While the distrust factor could continue to push gold higher into 2011, Australian group RCR feels weak fundamentals could see prices dissipate later next year. HERE.





Here is an update on Fortuna (FVITF):




Below, is Hecla Mining (HL). This graph is a bit stronger than Fortuna:

Miners from Scottrade.com:


Currencies from Kitco.com:
Some Current Prices: FVITF 3.15; SILA 0.805; TLT 104.64 (Down Slightly Today); DOW Up 80+ to 10831.55; SPX Up 11+ to 1151.30; Gold up 15+ to 1330.70; Silver up 0.46 to 22.33.

Best to each, Doug













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