Thoughts on Markets

Tuesday, April 12, 2011

Gold & Silver Correcting or Being Corrected - Possible Buying Opportunities Ahead - General MKT Ugly

Folks,

I am running a bit late today and wanted to get this out more quickly. My bride returned from visiting family in Dallas, so I was a bit lazy this am. Will continue my perspective of the stagflation - inflation environment which we are and will continue to face. There could be a period of deflation ( I believe more stagflation) after QEII is ended in June; however, longer term we will be facing increased inflation as the Federal Reserve and USG continue to depreciate the dollar. 

In the meantime remember that "This is the day the Lord hath made and we shall rejoice and be glad in it." (Psalm 118:24)

Mine Web:
Silver, gold, and struggling currencies - Ian McAvity
A look at the hot money flowing into silver, the implications of gold acting as a mirror for currencies seemingly in a race to the bottom and China's role in the copper market. I have spoken with Ian several times at mining shows in Las Vegas in years past. I respect and consider him honest and insightful. Listen to the Pod Cast HERE.

Mine Web:
Investors should be in gold and silver for insurance and profits - Melman
Leonard Melman discusses why he recommends precious metal stocks, but advocates changes in monetary policy that if followed (perhaps unlikely) could diminish the price of gold. Gold Report interview. Read it HERE.


Town Hall:
Another Spending Cut Plan
By Thomas Sowell
Since everybody else seems to be coming up with plans on how to cope with the skyrocketing national debt, let me try my hand at it too.
The liberals' easy solution is just to increase taxes on "the rich." But, if you do the math, there aren't enough of "the rich" to cover the huge and record-breaking deficit.
Trying to reduce the deficit by cutting spending runs into an old familiar counter-attack. There will be all kinds of claims by politicians and sad stories in the media about how these cuts will cause the poor to go hungry, the sick to be left to die, etc.
My plan would start by cutting off all government transfer payments to billionaires. Many, if not most, people are probably unaware that the government is handing out the taxpayers' money to billionaires. But agricultural subsidies go to a number of billionaires. Very little goes to the ordinary farmer. This is a plan that no politician would dare propose or even suggest. It would be cutting off their campaign fund inflow and deny them the resources to stay in office enjoying all the perks and power. HERE.

Town Hall:
Chuck Norris
Gun Owners' Guide to the 2012 Election
This week, the picture is finally complete. First, the Obama White House decided to leap headfirst into the gun control debate. Then came the response from Congress, which is far more interested in investigating the "Fast and Furious" scandal, in which federal agents allowed thousands of guns to be "walked" into Mexico and furnished to drug cartels. And now the final piece: President Barack Obama has filed his papers to run for re-election.
That in a nutshell is all gun owners need to know about the 2012 presidential election. After two years of avoiding the gun control debate (and violating his own campaign promises to push for additional restrictions), Obama finally is showing his true colors on this important issue. Let's not forget that this is the same candidate who once espoused a total ban on handguns and more recently supported a nationwide ban on right-to-carry laws. And if he couldn't get that done, he said he would support increasing the taxes on guns and ammunition by 500 percent. Now he is trying to be measured about his gun control objectives, using vague and gauzy rhetoric that his handlers hope will be difficult to hang around his neck. Remember a government which is seeking more control of citizens always wants the citizens to be unarmed. It is a government seeking to enslave the citizens so they are not a threat to a totalitarian government. HERE.

OCALA.com: 
Run on silver has coin shops scrambling 
Buyers worried about the dollar and inflation are driving up the metal's price.
It may not be another California-style gold rush, but a silver stampede is occurring in local coin and antique shops.
Silver, which has doubled in value since September, reached a 31-year high Friday at $40.46 per ounce, a price not seen since the Hunt brothers attempted to corner the silver market in the 1980s.
The effect: Speculators and collectors are snatching silver off the shelves of local shops. Platters, pitchers, cutlery, jewelry and coins are selling at a brisk pace, retailers say. Thus, the shortage of silver. It is too bad that manipulation of the paper metals is still holding them back in price and is likely causing at least partially the current correction. HERE.

The Street:
Gold, Silver Prices Seek Direction
Gold and silver prices were treading water Tuesday as investors were stuck in wait-and-see mode.
Gold for June delivery was down $5.30 to $1,462.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,468.50 and as low as $1,454.70 while the spot gold price was flat, according to Kitco's gold index. HERE.

It looks to me like the Boyz need to unload some more of their paper shorts. The paper metal instruments have a profound impact upon the spot prices of the precious metals and upon the mining stocks. Here are the latest overnight graphs from KitCo:

Miners from Scottrade:

Currencies from KitCo:

As you examine the currency charts, below notice how the Swiss Franc is out performing the dollar even though it, too, is an unbacked paper currency. Albeit, the Swiss are better managers of their currency than is our Federal Reserve. By the way, the Swiss still train and arm every male citizen during the years when they can be called upon to defend their country. Why is the USG trying to disarm Americans? 


Some Prices: FVITF 5.9671 (Getting closer to my buying price around 5.00); OLVRF 1.652; BYDDF 3.61 (Certainly in my buying range, but I believe I have enough of BTD Company); DOW off 137.76 to 12244.39; SPX off 13.85 to 1310.61; Gold off 13.90 to 1449.30; Silver off 0.32 to 39.90. Both precious metals are in a correction mode, as is the general market. I am prepared to buy big time during any serious correction. 

The old saying "Sell in May and go away." could be appropriate, but I do not believe in doing much trading in the mining stocks and precious metals. However, the last few years the precious metals have rebounded with huge strength in the August - September areas. So as always make your own decisions and BUYER OR SELLER BEWARE. Too often when one trades in the metal miners, he will sell only to see the price move strongly upward after selling and he will feel "Left Behind." Borrowing the title from the false theological popular series. I intend to hold to all and seek buying opportunities with each correction. My few sell yesterday were enough for me, and I have added more cash to my buying stock.

Best to each, Doug

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