Thoughts on Markets

Friday, March 18, 2011

Dollar in Trouble - Gold & Silver Up - DRD Gold Accident - Bible Guide for Life & Practice

Russell posted a warning of coming depreciation of the dollar in an article from John Williams (Shadow Stats.com), who along with others has been posting such warnings for some time. We have heard similar warnings from Bill Buckler (The-Privateer.com), as well. If one predicts a coming disaster too far in advance over a long period of time, people begin to write it off, as many have done. I, certainly thought that the dollar would be gone by now, but it continues to hang in there with ever less purchasing power. 

Long ago, I moved into precious metals as preservers of wealth which has proven to be a good move. Was I a bit too early? YES, but now I am rejoicing that the Lord gave me that insight. Do I still believe the dollar will inflated to almost oblivion? YES, and I believe the question is not one of if, but when. In such matters, it is better to be way early than hours or days too late. Don't be the last one in the life boat as the ship sinks! Women and children first, but then some of the men, maybe if there is room.

The dollar has been hanging in there, primarily, because it remains the reserve currency for the world and because it has been since WWII, so most people of the world believe it is the safest place to be. This has not been proven rationally true of late, as the dollar has failed to hold value and has depreciated against many currencies of the world, particularly, the Swiss Franc. 

The Lord in His word lays out many principles of investment and sound money. Search it and you will be amazed how often money and stewardship is discussed. After all, the bible is the only true guide for life and practice. There is none other. Check into it!


Mine Web:
Black Swans, and global currency decline: for gold the only way is up
It is not unforeseen disasters and events which necessarily move the price of gold, but the general decline in value of global currencies against the yellow metal. Everything is relative. Relative is the operative word, each unbacked currency of the world only has value relative to the others and for what it may be exchanged. They are worth less and going in that direction; therefore, it takes more and more to purchase the precious metals over time. HERE.

Mine Web:
Turkish gold imports expected to rise by 50% in 2011
According to TEB's director of gold banking, Selami Erten, imports of the yellow metal in the country are expected to increase to 60 - 70 tonnes this year. This is news from the 4th largest consumer of gold. HERE.

Mine Web:
What happens to metals commodities if (when) China slows down?
China accounts for almost half the global market for metals like steel and copper, whose mining drives the world economy. What happens when China slows down? Of course, another question. What happens if China does not slow down anytime soon, but continues to develop a middle class of consumers hungry for the things we have and take for granted? I'm not a Pollyanna, but China is developing markets to replace their losses of the U.S. consumers. China will slow, but I doubt that it will be sudden, but rather will play out over time. HERE.


Let's look at the dollar, gold, and silver. The dollar appears to be somewhat over sold at the moment, but the graph is not all rosy. Long term the dollar will continue to depreciate. It is likely due for a short term bounce. However, since many dollars will be expended by Japan during their recovery, and Japan is not likely to be buying our Treasury issuances, that should put some downward momentum on the dollar. Thus, it faces even a short term drop.







KitCo News: 
A.M. Kitco Metals Roundup: Gold Rallies amid Middle East Unrest, Higher Crude Oil, Weak U.S. Dollar
18 March 2011, 8:09 a.m.
By Jim Wyckof 
Comex gold futures prices are trading solidly higher Friday morning, as the Middle East concerns are ratcheted up a notch, which has in turn boosted crude oil prices and is supporting investment demand for gold. The weakened state of the U.S. dollar is also moving buying interest toward gold Friday morning. Comex April gold last traded up $14.30 an ounce at $1,418.50. Spot gold last traded up $13.90 at $1,418.50. HERE



Now let us look at silver. 
 Miners from Scottrade:

Currencies from KitCo: Note that the South African Rand has taken a licking and the Swiss Franc has really been moving recently.

Some Prices: FVITF 5.1956; BULM 1.45; SENY 1.01; BYDDF 3.93; TBT 36.65 (LT Treasuries still going down early today along with the dollar); DOW up 112+ to 11890+; SPX up 10+ to 1284.39; Gold up 15.40 to 1419.40; Silver up0.87 to 35.10.

DRD Gold (DROOY) a core holding has had another accident. This time, it was a bus load of workers with many casualties. One of the several accidents of late. This one was not in the mine, though.

Best to each, Doug

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