Thoughts on Markets

Wednesday, March 30, 2011

Gold vs USD - Gold vs Silver - BYDDF - Miners - Currencies - Gold to 1500 in 2011

Let's join in the praise of King Jesus and ask Him to revive His people. The financial and other problems here now are His call for turning back to Him. Repent and turn back to Him, before it is too late. The time will run out. King Jesus is long suffering or patient, but He has destroyed nations before and can do it again.

Mine Web Pod Cast:
Gold through $1,500 by year end as key drivers remain in place - Walker
While we may see trade in gold get choppier over the course of the year, negative real interest rates and other factors will continue to support gold through the course of 2011, says GFMS CEO , Paul Walker. HERE.

Mine Web:
China TV reports gold sales ‘going through the roof' and shortages for fabricators
A Chinese TV station last week reported 'through the roof' gold demand which was leading to a shortage of supplies for fabrication. HERE.

Mine Web:
Global megatrends favor gold, silver and resources - Rick Rule
Rick Rule explores some of the implications for resource investors when two megatrends from opposite ends of the socioeconomic spectrum collide. I have heard Rick several times and spoken with him on occasion.and found him to be very knowledgeable in metals and commodities. HERE.

Mine Web:
Global gold production may rise short term but will then decline - Burton
GFMS gold analyst, Paul Burton, told an Australian conference that rising costs and lack of new exploration success pose major challenges for gold mining. Thus, the supply may lessen which will push the price higher. HERE.

We are taking a look at the relative performance of gold, silver, and the US Dollar today.  I believe it is important to do this to give us an overall perspective of the metals and the unbacked paper currencies of the world in which we live. Remember all currencies have value in relation to other currencies while gold, silver, and commodities have lasting value in themselves, because they are real.

Which would you rather have over this period of time? Gold or Dollars? Which would you rather have for the next 10-20 years? Certainly recent performance is no guarantee of future performance, but gold is in a 10+ year of bull market and has retained its purchasing power for many decades. In the graph, below, we see that gold has again reached for higher territory as has happened each time it has dropped temporarily in price.

Now let's compare the action of gold and silver. The graph, below, shows that silver has been preferred to gold for several months. Gold has been the laggard.
Here is the KitCo graph of silver over night:
The above graphs suggest that one must hold some gold and silver in their portfolios to protect wealth against the depreciating unbacked currencies of the world. The dollar is likely the most fragile of the paper currencies. 
We will now check on BYD Company (BYDDF) as we have neglected to do so for some time. Here is the current graph which I have annotated. BYD Company is big in batteries and electric cars.

Seeking Alpha:   
Why Buffett Says High Oil Prices Are Not a Signal to Buy Oil Stocks
An electric car company: BYD (BYDDF.PK) (bought 10% of the company). Same story. No way an electric car company is a good investment if oil is at $30. To commit to this young company, Buffett must have a view of permanently higher oil prices, which create a strong demand for electric cars. Complete article on Buffett's ideas. This is about all written on BYD; note that  Buffett bought a 10% interest in the company. HERE.

Miners from Scottrade:

Currencies from KitCo:
Some Prices: FVITF  5.40; BYDDF 3.85 (This is in my buying range.); OLVRF 1.7612; BULM 1.50; HHWW 0.80; DOW up 70.43 to 12348+; SPX up 7+ to 1326.47; Gold 1418.70 even; Silver 37.35 up 0.25.

Best to each, Doug


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