Thoughts on Markets

Monday, February 28, 2011

DOW - Dollar - Gold - Silver - Small & Large Cap Miners.

The Lord has given us another great day which He has made, and we will rejoice and be glad in it. The sunshine is bright today in San Antonio which is another blessing from our Lord. We praise King Jesus daily and greatly enjoyed the corporate worship yesterday. We hope that you, too, attended corporate worship in concert with the Law-Word of God. 

Consumer Spending in U.S. Rose Less Than Forecast in January

Consumer spending in the U.S. rose less than forecast in January as increasing food and fuel prices caused Americans to cut back on other goods and services.
Purchases increased 0.2 percent, the smallest gain since June and half the median forecast of economists surveyed by Bloomberg News, Commerce Department figures showed today in Washington. Incomes climbed more than projected, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December, and inflation remained below the Federal Reserve’s long-term forecast. Interesting news. Some were over optimistic. Also, the optimistic figures for 4th quarter last year have been revised downward. HERE.

Currency Wars Lose to Inflation, Emerging Markets to Win
As recently as last month, governments of emerging economies from South Africa to Brazil warned that competitive devaluations might be needed to keep their strengthening currencies from stifling economic growth.
Now, talk of currency controls is being abandoned and interest rates are rising as record food prices and oil at $100 a barrel make inflation the bigger threat. That means developing nations will keep outperforming in the foreign-exchange market, according to Morgan Stanley. Inflation is actually here and being admitted. HERE.

Mine Web:
Australia still world's no. 2 gold producer
Australia produced 266 tonnes of gold in 2010, up 17% on 2009. But that was not enough to secure it first place as China's output grew to 341 tonnes in the same period. This is a central reason for the strength of the Australian dollar. HERE.

Mine Web:
Difficult for China to invest in commodities - FX chief
According to the head of China's State Administration of Foreign Exchange, investing much of its FX in global commodities markets would push up the prices of those raw materials on which the Chinese economy depends. This is a very interesting comment. It makes a lot of sense. Were China to dump its dollar reserves into the commodities on a grand scale, the comment would come to fruition. However, we know that China has slowed or even stopped purchasing US debt. HERE.

KitCo News:
A.M. Kitco Metals Roundup: Comex Gold Firmer amid Middle East Worries, Slumping U.S. Dollar Index
28 February 2011, 08:00 a.m.
By Jim Wyckoff   HERE.

Mine Web:
WGC initiative could see Indian gold sales soar on strong farm incomes

De-seasonalised demand for gold is likely to shoot up in India as agriculture income in the country soars. Farmers primed to invest in gold through systematic investment scheme backed by World Gold Council. Perhaps, this has been the source of some of the demand that causes buying when the price of gold takes a hit. HERE.

Mine Web:
 Gold to take an ever increasing role in global monetary system

Gold is increasingly fulfilling a stability role in global monetary transactions as major currencies fall in unison. This is an interesting comment which I have been observing more and more. Gold is and has been for millennia  MONEY.  It may once again become money in the eyes of the current Keynesians. Wouldn't it be nice to have a gold backed currency to replace the paper trash we have today? Wishful dream or coming reality? HERE.

Miners from Scottrade:

Currencies from KitCo:

Some Prices: FVITF 5.09; BULM 1.39; OLVRF 1.889; HHWW 1.15; REMX 24.833; DOW up 101+ to 12232.73; SPX up 9.32 to 1329.17; Gold up 4.30 to 1413.90; Silver up 0.51 to 33.89; GDX ( Large miners Index) up 0.66 to 59.605; GDXJ (Small miners) up 0.75 to 38.61. Miners are moving up in concert with the general market. In the long run, we are very likely to see a breaking away of the miners from the general market, but not for the time being.

Best to each, Doug


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