Thoughts on Markets

Tuesday, May 24, 2011

Drifting Market - Gold - Silver - Miners - Currencies - Resting in the Lord

The Lord is in His Heaven with Jesus Christ sitting at His right hand until the entire world is under the feet of King Jesus. This is what is taking place in the world today. His people can rest in His care by the faith which is continually strengthened by our daily trials, fellowship with other believers, participation in the two Sacraments instituted by Jesus Christ, studying the bible and seeking to follow His way in every aspect of life. Otherwise means death.
Rest in the Lord, because He is in control of all and cares for His people.

At times it is best to do nothing in the market, but to observe what the market is saying. Currently, I believe we have another leg down for silver and will find gold to be less volatile. Perhaps, this will be the state of things for much of the summer. The fall should see a big jump in the metals and we could even see the time that miners start moving up more rapidly than the metals, themselves. 

Of course the bullion banks and others who have vested interest in the metals and miners could resume their intervention into the markets.It does seem strange that with many central banks continued purchase of gold that the price does not jump significantly. China and India are still prolific buyers, and many others have joined in the buying spree. Our general public here is showing some signs of interest in silver and a little in gold, but we, in general, are far behind the other nations in our interest in precious metals. As the price inflation with falling or insufficient wages, we call, "stagflation" continues and escalates, this will change. 

At the expiration of QE II, there could be a short period of deflation of prices. but I am convinced that we will see a QE III by late fall or winter. There is no other way for the USG to even service its debt, but to have more depreciation of the dollar with the resulting price inflation. I do not expect a large drop in prices during the deflationary time. The commodities and metals may take a time out providing more opportunity for adding to portfolios during that short period of time. Of course, the summer season is usually a time of lower prices for metals. 

Now let's examine the metals and mining news for the day.The dollar is down and the commodities are up early today. The Euro is back to higher levels, as well. It seems to be healthier than the dollar, by far.

Mine Web:
Financial market turmoil leaves gold undervalued
With burgeoning debt in the US, a deepening of the crisis in the Eurozone, and Japan back in recession, gold can only go higher as some say U.S. should sell its reserves to ease its commitments. This is a truism if I ever heard one. Of course, continued intervention has a lot to do with the undervaluation of the metals. HERE.

Mine Web:
Indian buyers help lift gold sales in the Middle East
Indian expats don't just gawk at the glittering gold souks in Dubai. Analysts and traders insist expatriate Indians living in the Emirates are helping push up sales to new heights for the precious metal. Gold is the preferred metal by most who have vast funds, but the rest of us can purchase silver which is a pseudo monetary metal as a hedge against the coming inflation. HERE.

Mine Web:
Of China, gold and interest rate rises
The Chinese population's continuing purchasing of the yellow metal shows that gold demand need not be a victim of higher interest rates. HERE.

Mine Web:
Gold firms further as European debt crisis goes from bad to worse
Trading at the highest level for 2 weeks, gold is seen as extending rebound to $1,536 on technical analysis. The Euro rebounds showing that the US dollar has a worse future than the Euro in spite of Greece and other Euro problems. HERE.

Mine Web:
Chinese citizens turn to gold in one of greatest booms in metal's history
China's gold consumption is still surging after the final relaxation of strictures against holding the yellow metal in 2001 unleashed one of the world's greatest gold booms. Remember that the Chinese government encourages them to buy gold.  HERE.

From GATA (From WSJ):
Euro's father favors rigging the currency markets -- gold too?
Mr. Mundell's surprising statement came at a March 22 conference in New York sponsored by the Manhattan Institute, The Wall Street Journal, and the Ronald Reagan Presidential Foundation. His economic predictions carry great weight because, unlike most economists of his generation, he is often right. His analysis of international economics has revolutionized the field, making him the euro's intellectual father and a primary adviser to China's economic policy makers. Though I do not agree with his solution, this gives and interesting view of some of the contributing factors to the current financial fiasco. HERE

Victor Sperandeo talks about precious metals and the world economy with James Turk - See and hear the interview and read the report HERE.

 Miners from Scottrade:

Currencies from Kit Co:

Some Prices: DOW up 13.74 to 12394.85; S&P up 2.36 to 1319.73; NASDAQ down 1.88 to 2756.89; Gold up 8.40 to 1525.60; Silver up 1.17 to 36.24.

Best to each, Doug


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