Thoughts on Markets

Thursday, February 24, 2011

Sunk Cost - Gold higher - Silver down - DOW & SPX Down - Miners - Currencies - BYDDF

 Our and most governments fail to scrap failed plans. They tend to blame the lack of enough funds to successfully pursue the project. Therefore, they throw good dollars or other paper currencies after the bad projects. This is caused by a perception that any project once begun is bound to succeed. There is an overall failure to understand "Sunk Cost." Too often the focus is upon the cost which can not be changed now. How many times have projects or investments continued solely, because we have invested so much in them.

Sunk Cost is that purchase or investment cost expended in the past. This cannot be changed. It is over and done with. The problem is not that the funds were expended, but the spent funds should not be our first consideration. We must focus on what the project or investment is worth today. The spent cost should not be a consideration. Today's decision should be based on the best way to use the current value of the project or investment. It could be to continue the project or hold on to the investment. However, the prior expenditure must not be the priority it is too often given.

Asia Times:
A hard habit to quit
Commentary and weekly watch by Doug Noland
We're now close to the half way point for the second round of the US Federal Reserve's quantitative easing - or QE2. The June wrap-up date should begin to move from the back of the markets' mind to the forefront. Last week from the Financial Times' Michael Mackenzie: "It is no secret that China's appetite for Treasuries has been waning. Official figures now bear out Beijing's stated desire to diversify away from US government debt. The market impact is likely to be muted for now, given the Federal Reserve's bond-buying under its 'quantitative easing' ! important; . But what happens when QE2 ends in June?" Read the article HERE.

Richard Russell on 321Gold:
For those of you who do not get Richard Russell's newsletter, HERE, is the one dated Feb. 24.

From 321Gold:
Bernanke, You Stupid Bastard Yes, you.
And Trichet, and the rest of the Central Bank fools.
But especially you, Bernanke.
There's dumb and then there's really dumb. Let's take a short walk back down history lane.
You were sure there was no housing bubble.
Then you were sure it wouldn't pop.
Then you were sure when the subprime problem hit, that it wouldn't cause a recession.
Then you were sure you had it under control with Bear Stearns' hedge funds. The article continues to report failures in judgment. HERE.

Qaddafi Holds Tripoli as Eastern Cities Fall to Opponents
Opponents of Libyan leader Muammar Qaddafi consolidated control over cities in the oil-rich east while he clamped down on Tripoli, using tanks to block highways and security forces to attack residents, witnesses said. The sad saga continues. HERE.

The Street:
Is Short-Covering Moving Silver and Gold?
NEW YORK -- Gold prices were flirting with seven-week highs Thursday as safe-haven buying kept the yellow metal afloat.
Gold for April delivery was up $2.30 at $1,416.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,417.50, a high for 2011, and as low as $1,408.30. The spot gold price was adding $4, according to Kitco's gold index.  HERE.

KitCo Video News:
John Hyland on Inflation. See it HERE.

 Our metals are still holding at high levels over those of recent times. This is encouraging, but there still seems to be some capping or profit taking before the upward sprints begin again. These are times which try men. However, we are seeking the Lord's way and trusting in Him for the results.

Miners from Scottrade:

Currencies from KitCo:

Some prices: FVITF  4.9068 ( This looks to me as a decent buying range. ); BULM 0.99 ( have sold this as reported a while back); SENY 1.08 (below my purchase prices); OlVRF 1.617 (coming back a bit); REMX 23.86 ( this is a recent low, but I have not bought yet ); BYDDF  3.92 (up a bit from my purchases yesterday); DOW down 13+ to 12093.27; SPX up 0.52 to 1307.02; Gold up 1.50 to 1413.20 (it keeps inching upward); Silver off 0.31 to 33.25 (striving for, but not returning to 34)

Best to each, Doug


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