Thoughts on Markets

Wednesday, January 26, 2011

Bondage of the Will - Precious Metals may be oversold - Miners following DOW

Folks,

Today, we will look at the verse that led Martin Luther to Christ. He had been trying to work his way to relief of the guilt of sin he sincerely felt in his life. At this point in his life, he found that there was no way for him to relieve his conviction of sin. This could only be accomplished by the application of the blood of Jesus Christ to him by the power of the Holy Spirit. There was nothing he could do on his own, and it was revealed to him that he could rest peacefully in the Lord through faith.

"For I am not ashamed of the gospel of Christ: for it is the power of God unto salvation to every one that believeth; to the Jew first, and also to the Greek. For therein is the righteousness of God revealed from faith to faith: as it is written, The just shall live by faith." Rom 1:16,17

Martin Luther wrote Bondage of the Will which deals with his knowledge of the depravity of the soul and the inability of man to do anything toward his salvation. This is a great book and should be read by all.


Mine Web:
Could 2009's gold buyers become 2011's gold sellers? - Nic Brown, Natixis
Nic Brown, head of commodities research at Natixis, believes that gold will come under pressure in 2011 if such selling takes place. See and hear it HERE.

Mine Web:
Japan gets in on gold vending machine act
Japanese computer parts manufacturer and gold importer, Space International, has begun selling gold from a vending machine in an effort to boost sales and lower costs. HERE.

Mine Web:
Rising rates and economic recovery could spell the end to gold's run
While gold bulls are still out in full force, gold is down in January and there is a scenario that sees gold prices struggling as 2009's buyers become 2011's sellers. HERE.

Mine Web:
Physical buying keeps gold steady; investors await direction from Fed
Strong physical demand settles spot gold prices after 3 month low. SPDR Gold Trust holdings endure biggest one-day fall. Analyst predicts gold will bounce back to $1,342. HERE.

Town Hall:
Walter E. Williams
Can Our Nation Be Saved?
National debt is over $14 trillion, the federal budget deficit is $1.4 trillion and, depending on whose estimates are used, the unfunded liability or indebtedness of the federal government (mostly in the form of obligations for Social Security, Medicare, Medicaid and prescription drugs) is estimated to be between $60 and $100 trillion.
Those entitlements along with others account for nearly 60 percent of federal spending. They are what Congress calls mandatory or non-discretionary spending. Then there's discretionary spending, half of which is for national defense. Each year, non-discretionary spending consumes a higher and higher percent of the federal budget. HERE.

King World News:London Trader -
Big Money Lined Up To Buy Gold & Silver
Ahead of the World Economic Forum at Davos we have seen gold and silver under pressure.  One trader out of London commented, “It appears certain interests are trying to give the appearance of technical weakness, so all of the banks have sold.  That tells me we are at a bottom because they are always wrong in their call.  Remember they are telling their clients to sell here, and they are on the other side of the trade.” HERE.



Seeking Alpha:
Short-Term, High-Probability Mean-Reversion Indicator: China, Gold and Oil Have Hit Short-Term Oversold Extreme
Monday, I mentioned the possibility of entering into a DIA position but the trade was contingent on how the Dow (DIA) opened the trading day. DIA opened lower which pushed the RSI (2) significantly lower so the DIA trade was immediately off the table. However, the continued collapse in China (FXI) , Gold (GDX and GLD) and more importantly, USO, brought about some interesting set-ups as the trading day progressed.
Towards the end of the day, USO had hit a short-term (1-3 days) “very oversold” extreme with an astonishingly low RSI (2) of 0.5. Typically, when readings hit this type of low, a short-term bounce occurs. As a result of the low short-term readings, I decided to take a position in USO towards the end of the day. HERE.

KitCo:
A.M. Kitco Metals Roundup: Comex Gold Trades Near Steady on Short Covering; FOMC Statement Awaited

Comex gold futures prices are near steady price levels Wednesday morning. Some tepid short covering and perceived bargain-hunting buying are seen, following recent strong selling pressure. Trading is quieter ahead of the Wednesday afternoon FOMC statement. Comex gold last traded up $0.50 at $1,332.80 an ounce. Spot gold last traded down $0.10 at $1,333.25. HERE.

Miners from Scottrade:

Currencies from KitCo:

Some Prices: FVITF  3.78; BULM 1.01; OLVRF 1.2549; REMX 23.41; HHWW 1.84; DOW up 15+ to 11992.82; SPX up 6.11 to 1297.38; Gold off 7.50 to 1325.30; Silver off 0.14 to 26.71. Note that the metals are down due to the paper markets while the miners are up for the most part in concert with the up move in the DOW.

Best to each, Doug
 

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