Thoughts on Markets

Friday, November 19, 2010

SCCO - FVITF - BULM - SILA - OLVRF - Currencies - Rare Earths in U. S.

Our God is sovereign ruler of everything, everybody, and every circumstance. However, He created us in His image and gave us minds to think and an eternal soul. He does demand that we obey Him. And we are to show that we love Him by doing so.

John 14:15  "If you love Me, you will keep My commandments." John 14:24  "He who does not love Me does not keep My words; and the word which you hear is not Mine, but the Father's who sent Me." These passages are quite clear. We demonstrate our love by obedience to King Jesus.  Let us pray that the Holy Spirit will guide us in being obedient servants to Jesus Christ.

We are still faced with the big question about which there is much diversion in newsletters. Is the market experiencing a dead cat bounce in a bear market or is this the beginning of a new bull market? Long term, we are still looking at a depreciating dollar and rising precious metals. The Early Warning Report also says that we will be seeing wars, rumors of wars, and increasing defense spending. Richard Mayburg of that newsletter continues to recommend defense stocks and gold. If you are to be in the general market, his recommendation for defense stocks seems to be a good idea. It has been for the last two decades.

U.S. Geological Survey finds U.S. rare earth elements not so rare
The director of the U.S. Geological Survey said domestic rare earth deposits have the potential to meet U.S. REE needs "for years to come." I hope that this is not like too much of hype and miscalculations that often flow from our government. It would be comforting to discover that at least some of the data released is accurate and not just for public consumption. HERE.

Long term gold bull market not yet over - Richard Russell
But, be warned, we've hit an all round mega-bubble, he says, in everything that is tradable and it will continue until someone, purposely or by mistake, pulls the plug. HERE.

Here is the latest graph from We are being treated to a wide and more volatile trading range during this correction, but gold is holding well above 1300 which is encouraging
Silver, as gold is more volatile and is staying well above 25 which should give us much comfort. I still expect to see silver outperform gold on a percentage basis as the dollar depreciates and unrest grows. Historic ratio of gold to silver price has been 16 to 1. It now stands at 50.65 to 1, and that is a vast difference.

Don't Fly!
The article suggests we do not fly until the intrusive searches, x-rays, and groping is ended. HERE.

A.M. Kitco Metals Roundup: 
Comex Gold Trades Near Steady; China Rate Hike Limits Buyers
19 November 2010, 8:06 p.m.
By Jim Wyckoff
Of Kitco News
Read the entire report HERE.

Market Nuggets: Barclays:
Decline In Copper Prices Creates Buying Opportunity
19 November 2010, 9:08 a.m.
By Allen Sykora
Of Kitco News
Copper price is usually an indicator of economic activity. I have been in and out of Southern Copper (SCCO) options in the past several times and will be looking into the potential for now. HERE.

Stocks, U.S. Index Futures Fall as China Raises Reserve Ratio
China sneezes and the world gets a cold. My, how times change. The U.S. was once in the drivers seat, but others are stepping behind the wheel. How far will this go? Read it HERE.

Bernanke hits back at Fed critics, points at China
Federal Reserve Chairman Ben Bernanke hit back on Friday at critics of the U.S. central bank's bond-buying program and issued a thinly veiled attack on China's policy of keeping its currency on a leash. A bit of saber rattling by Bernanke. HERE.

Miners from Scottrade: The miners are performing well while the metals are down a bit.

Currencies from Notice those which I have underlined in orange. These are the three which have attained very recently par or over par with the dollar.

Some Prices: FVITF 4.03; BULM 1.03; SILA 0.725; OLVRF 1.2342 (What a nice buy! Days ago, it was <1.00); TWDIF 0.3376 (Still above my buy in.); DOW down 1/8+ to 11166+; SPX down 2+ to 1194.38; Gold down 0.30 to 1353.20, and Silver down 0.05 to 26.94.
Best to each, Doug


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