Thoughts on Markets

Monday, March 21, 2011

WWIII potential - INFLATION - Gold & Silver up again - Selling some FVITF - DOW & SPX UP

The report from the Trend Journal is a bit scary, but it makes some points worthy of consideration. We still can trust in the Lord and are shown by this editorial that the Bible is correct when it warns us not to trust in men, who are changeable, but to rely upon the unchangeable King Jesus who rules over all. Rest and trust in Him, because He loves and cares for His people.

Trend Journal:Special
Trend Alert:
The 1st Great War of 21
KINGSTON, NY 21 March 2011 — It is a bad science fiction movie written by mad political scientists

Exactly eight years to the day that President George W. Bush took America and his “Coalition of the Willing” to war with Iraq, President Barack Obama has taken America and his “Broad Coalition” to war with Libya.
And just as the world was sold a “coalition of the willing” that was predominantly a fleeting alliance of the cajoled and the arm-twisted, the putatively “broad” Obama coalition consists primarily of America’s two cronies-in-war, the UK and France.

Only in a mad political science fiction movie could a President engaged in perpetuating two unjust, immoral, interminable and expensive wars begun by his predecessor, take his nation into yet another unjust, immoral, expensive and, in all likelihood, interminable war … and expect a happy ending! This is food for thought. Some may disagree, but it is a worthwhile read. We have been stirring the bucket of unrest in the mid-east for some time now making more enemies than friends. HERE.

Seeking Alpha:
Time to Take Inflation Seriously 
While the world has focused on fuel rods in Japan and fighter jets in Libya, issues that are ultimately much more significant for investors have gone largely ignored. For example, the Producer Price Index for February registered a 5.6% Year-Over-Year increase. That was the figure in the headlines, at least. The reality is much worse. I agree! When I shop, I see the prices for what I generally purchase in grocery and household goods is a stealth increase over time. Of course, most of these items are not covered in the "core inflation" of the USG. Bet you have the same experience. There is an informative graph, too.  HERE.

Political spotlight heats up for Nevada mining taxation

The Nevada Tax Commission and a state assemblywoman are major players in the latest interrogation of whether or not Nevada mining is paying its fair share in state taxes. Politicians are all the same. They are experts at finding innovative new ways to raise taxes, but ignorant in putting the same talent to reducing spending. In fact, virtually all seem dedicated to extracting all they can from the taxpayers. Where have all the good girls, I mean statesmen gone. HERE

Mining boom faces a few headwinds
Global miners enjoyed a huge recovery in 2010 and early 2011 but slowing growth, lagging prices and higher taxes could provide some unwanted headwinds for the boom. This is a look at the impact of higher and new taxes on any business. HERE.

Seeking Alpha:
Divergences in Gold May Be Signaling Reversal 
Gold has set new highs in US Dollar terms, but is lagging both in terms of other currencies and in the share price of gold miners.
After recently setting the all-time-high price of $1435.70/oz, Gold stands at a pivotal juncture between a continued price increase and a big potential reversal. Struggling to hold above $1430 from October to December 2010, Gold entered a quick but relatively-shallow correction. It has since recovered all of its losses and broke out to new highs. But a few divergences and inconsistencies stand in the way of Gold, and may be warning of upcoming trouble: the price of gold in terms of other currencies and the Gold miners ETF (GDX) have not yet reached new highs. Interesting discussion with graph of an opposing view. HERE.

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? There are many who say that China will and about as many who say China will not. I am neutral for the most part, but do lean more toward the will not. China is developing a middle class with great desires for new products and conveniences that we enjoy. This should replace a great deal of the loss of American consumers. We will wait and see. HERE.

Gold in euros - more than meets the eye
With many eyes focused on Libya and Japan, a look at gold's relative performance in a number of currencies has some rather interesting results. This contains a great graph which compares currencies to the price of gold. HERE.

Gold rises for fourth day in Asian, European trade
Driven by concern over the impact of the Japanese earthquake on global growth, the yellow metal rose in morning trade in Europe. What do they know that we apparently have missed? HERE.

KitCo News:
A.M. Kitco Metals Roundup: Gold Rallies on U.N. Military Action in Libya, Higher Crude Oil, Weak U.S. Dollar
21 March 2011, 8:12 a.m.
By Jim Wyckoff
Comex gold futures prices are trading solidly higher Monday morning, on safe-haven demand following the heavy United Nations air and missile assault on Libyan strongman Moammar Gadhaffi's military. Crude oil prices have also rallied on the U.N. action, which is also bullish for the precious metals markets. Meantime, the U.S. dollar index remains in a slump, further benefiting gold and silver prices. Comex April gold last traded up $14.40 an ounce at $1,430.50. Spot gold last traded up $10.50 at $1,430.75.
The United Nations military action during the weekend, while not a big surprise to the market place, does add to the overall instability in the Middle East, and that's bullish for the gold market. Reports say the military action has severely crippled Gadhaffi's military. However, the market place is now asking, "What comes next?" That's the uncertain part of the equation that has boosted the crude oil market and keeps gold a safe-haven demand asset. There is also ongoing unrest in Bahrain and Yemen. Crude oil prices are trading around $103.00 a barrel Monday morning. HERE.

 Miners from Scottrade:

Currencies from KitCo: Note that the Australian Dollar is back just above par with US.

Some prices: FVITF 5.2606; OLVRF 1.648; HHWW 0.092; BYDDF 4.03; SENY  0.979 DOW Up 202+ to 12061.84; SPX up  20.6+ to 1299.85; Gold up 10.30 to 1430.90 Still holding above 1430; Silver 35.90 up 0.62.

Here is a graph on FVITF. I have put up for sale a few shares. I may regret this as it seems to be getting stronger, but wanted to gain some more cash and lock in some profit. It is also important for me to inform you about what I am doing. I am also putting more cash into PRPFX the Permanent Portfolio Fund.

Best, Doug


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