Thoughts on Markets

Tuesday, February 15, 2011

Real Money Shines Today - Gold Backed State Currency - Unrest Spreads


Gold and silver have been recognized as money from the earliest Biblical times. Both are limited in quantity to the extent that they are scarce and considered by men to be dear. Scarcity, durability, easily recognized, easily divided into proportional pieces of proportional value, and ease of transporting are critical characteristics of money. Thus, both serve well for money. There are many references in scripture when transactions were completed by a payment in gold or silver by weight. 

A return to this real money or at least paper fully backed with and redeemable in real money would be a wonderful thing for a while until banks and governments got greedy again and desired to rob the people. Only a return to the God of our fathers will solve the financial woes of the day.

Mine Web:
History, QE and financial turmoil point to continuing gold strength
While it has encountered some resistance close to its 50 day moving average, the price of gold is likely to continue to rise as the global financial system continues to experience problems. HERE.

Yahoo - The Look Out: 
South Carolina lawmaker wants separate currency for state
A South Carolina state politician wants the state to develop its own gold and silver-based currency. This is allowed by the Constitution and would be a big step forward for any state with the gold and silver to back such a currency. HERE. 

Money Morning:
Washington's Debt-Ceiling Debate – A Political Sham
[Editor's Note: If you want to understand how business and politics interact, nobody can explain it better than Money Morning's Martin Hutchinson. Today the former global merchant banker employs some of Washington and Wall Street's own financial tricks to prove that the looming debt-ceiling debate is a political sham - and to show you that our elected leaders are attacking the wrong problem.] Another farce exposed to all of us. HERE.

Business Insider:
Wisconsin National Guard Preps For Worker Unrest After Governor Unveils Emergency Budget
Wisconsin Gov. Scott Walker, a Republican, unveiled an emergency budget proposal Friday to deal with the state's growing budget woes. Wisconsin has a $137 million deficit this year, and faces a projected $2.9 billion budget shortfall for 2012 and 2013.Under Walker's plan, public employees would lose all of their collective bargain rights, except a limited negotiation of wages. Yes, the unrest is spreading even here in America. HERE.

The Washington Times: 
Federal deficit on track for a record this fiscal year: Government debt to exceed U.S. economy
President Obama‘s budget, released Monday, was conceived as a blueprint for future spending, but it also paints the bleakest picture yet of the current fiscal year, which is on track for a record federal deficit and will see the government’s overall debt surpass the size of the total U.S. economy.
Mr. Obama‘s budget projects that 2011 will see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by Sept. 30, the end of the fiscal year. That would be 102.6 percent of GDP — the first time since World War II that dubious figure has been reached. Yea! The economy is expanding, so Obama can have his way of hepping us all. Remember, "I'm from the government and here to hep you?" When you hear that grab your gun and your wallet, and be ready to protect yourself and your family. By the way, I am offering a bridge for sale. Any takers? HERE.

The New York Times:
Companies Warn That Higher Prices Are Looming
By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods, say retailers, food companies and manufacturers of consumer products.
Cotton prices are near their highest level in more than a decade, after adjusting for inflation, and leather and polyester costs are jumping as well. Yet, many believe there is no price inflation. Those must be reading on the manipulated reports of our benevolent messiah the federal government. HERE.

Free Money Gold Report by James Turk:
Watch the gold/silver ratio
February 12, 2011 – In precious metal bull markets, silver outperforms.  Its price climbs at a faster rate than gold’s price.  The reverse happens in bear markets.  Silver’s price drops at a faster rate than gold’s price.  The following chart of the gold/silver ratio illustrates this phenomenon. Check this out HERE.

Business Insider:
Physical Demand For Gold And Silver Continues To Confound Bubble Believers
Precious metals have certainly caught a lot of attention in the past year or so.  Whether it has been related to the ongoing Euro crisis, consistent/persistent inflation expectations throughout the world or money printing at seemingly every central bank, the price of gold and silver have become investment stars. The real demand in the face of unbacked paper that people incorrectly refer to as money is what makes gold and silver rebound every time they have been capped or fall back in price. HERE.

The Street:
Silver, Gold Prices Break Key Resistance Marks
NEW YORK (TheStreet) -- Gold and silver prices were rising Tuesday on a weaker dollar and mixed inflation news out of China and the U.K. This is getting more interesting. HERE.

Miners from Scottrade:

Currencies from KitCo:

Some Prices: FVITF 4.4415; BULM 0.99; OLVRF 1.2763; HHWW 0.91; REMX 25.0938; DOW down 31.2+ to 12236.52; SPX down 2.83 to 329.47; Gold up 9.80 to 1371.80; Silver up 0.26 to 30.86. The metals have really rebounded and the miners are up in contrast to the downward move of the DOW.

Best to each, Doug


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