Thoughts on Markets

Friday, April 15, 2011

Can't Snuff a Fire w/Gasoline - GDX - GDXJ - Silver & Gold Surging Again

America is still struggling with the financial crisis of the housing balloon, unemployment, inflation, government spending, export-import imbalance, etc. The list goes on with few real signs of economic improvement. The plan to solve these problems was more of the same inflation of the unbacked paper currencies which led to the problems in the future. One cannot put out a fire with gasoline. It's been tried before without success. As we have tended to see not true need for history knowledge, we are repeating the errors of the past. 

Folks, It is becoming more serious that we heed God's call for humbling ourselves before Him, seeking His forgiveness and following His ways. We must become more familiar with God's Law-Word and history which is really a reporting of God's Providence working throughout history. Let's praise King Jesus daily and heed His call to repentance, so He will heal out land.

The Heritage Foundation:
The United States vs. China—Which Economy Is Bigger, Which Is Better
Abstract: China’s leap from poverty due to the marvelously successful market reforms introduced in 1978 has obscured serious weaknesses in its economy—especially compared to the American economy. These weaknesses have been exacerbated by renewed Chinese state intervention that began around 2003. Many seem convinced that China is at the cusp of surpassing the U.S. economically. But Americans should not lose track of their huge advantages over the Chinese—in income, in natural resources, and in surprising areas such as labor. Heritage Foundation China and economic expert Derek Scissors, explains why it is vital that the U.S. remember its strengths and recognize profound Chinese weaknesses. Interesting article. HERE.


Bloomberg:
Gold Leaps to Record on Inflation, Dollar; Silver Tops $42 at 31-Year Peak
Gold climbed to a record as concern about rising inflation and an extended decline in the dollar bolstered the allure of precious metals as a store of value. Silver reached a 31-year peak.
Immediate-delivery bullion advanced as much as 0.3 percent to a record $1,478.32 an ounce before trading at $1,477.40 an ounce at 7:30 a.m. in Singapore. Bullion for June delivery in New York also leapt to an all-time high of $1,479.90 an ounce, gaining as much as 0.5 percent.
“Commodities, including gold, will continue to be the focus of investors,” said Gavin Wendt, an analyst with MineLife Pty. “There’s no compelling reason to own the U.S. dollar and I see little significant recovery ahead for the currency.” HERE.


Mine Web:
Gold prices steady but off record in Europe trade
After hitting a new record in early trade the yellow metal came back a bit as a decision by Moody's to cut Ireland's debt put pressure on the euro. HERE.

Mine Web:
Gold's bull run may be in its latter stages - Klapwijk
GFMS's Philip Klapwijk presented a reasonably cautious view on the likely progress in the gold price for the remainder of the year, although remained positive overall. With a name like Klapwijk, its got to be good. HERE.

Mine Web:
The road to $5000 gold
Fears of inflation and global turmoil have sent precious metals surging, with gold trading near all-time highs and close to $1,500 an ounce. How much further can it climb? HERE.

Mine Web:
Looking for an inflation hedge - gold might not be your best bet
According to ETF Securities, while gold is the traditional go-to metal in times of high inflation, other commodities might be a more judicious bet at the moment.Gold and silver except for a few rare moments in the Fiat currency environment have always been a good hedge.  HERE.

Gold and Silver are on the move:


The following two graphs represent the miners in two groups. The first is the larger miners and the second is the lower capitalized miners. Notice that the smaller miners are out performing the larger ones. This is typical as the precious metals reach higher prices in terms of paper currencies.


Miners from Scottrade:


Currencies from KitCo:



Some Prices: FVITF 6.60; OLVRF 1.73; BYDDF 3.65; SENY 0.60 (Oops!); TBT  36.97 (Down, so LT Bonds are up a bit); DOW up 26.5+ to 12312+; SPX uo 2.4 to 1316.96; Gold 1480.60 up 4.80; Silver up 0.46 to 42.64.

Best to each, Doug

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