Thoughts on Markets

Thursday, May 26, 2011

Gold as collateral - Gold vs Silver - Miners - Market Closings - More on Bin Laden


Please, accept my apologies. I had planned to get this out this morning, but I had to finish some painting and install a light fixture, so I'm trying to catch up this afternoon after the market closed.

DOW Closed up 8.10 to 12402.76; S&P up 5.22 to 1325.69; NASDAQ up 21.54 to 2782.92; Gold down 6.40 to 1519.40, and Silver down 0.71 to 37.19. Sort of a dull day in the markets with the dollar lower against several currencies and the Euro flexing a little muscle.

Mine Web:
Gold's remonetisation grows as European Committee approves collateral usage
The global acceptance of gold as money has been given another boost as the Economic and Monetary Affairs Committee of the European Parliament has approved it to be used as collateral. That would seem to be a logical action. HERE.

Since May 2, when U.S. special operations forces crossed the Afghan-Pakistani border and killed Osama bin Laden, international media have covered the raid from virtually every angle. The United States and Pakistan have also squared off over the U.S. violation of Pakistan’s sovereign territory and Pakistan’s possible complicity in hiding the al Qaeda leader. All this surface-level discussion, however, largely ignores almost 10 years of intelligence development in the hunt for bin Laden. HERE.
The graph, below,  went into a reversal favoring Gold for a change in the early part of May. It is seems to be reversing back again. Does this mean that silver will once again be the favored metal? Silver is favored due the much higher price of gold, but gold remains the favored monetary metal. However, silver hangs in there as both an industrial and monetary metals. Silver was certainly hammered the most viciously during the two - three weeks of early May. The markets will tell us very soon. Please, if you missed it, go back and see the brief explanation of the difference between physical and paper metals in yesterday's posting. We should always prefer the physical metals in hand as the safest hedge against the depreciating un-backed paper currencies. Though I am working on this on Wednesday evening, it will go out on Thursday morning if all goes according to my plans. I will defer to the Lord Who always, knows best. Changed to tonight.
Take a look at the currencies by KitCo:Note the Euro which is hanging rather strongly onto the 1.41 handle.

The miners put in a rather mild performance today.. Here in San Antonio it has been quite hot for the last two days. Maybe the miners are trying to cool off a bit in the underground mines and just resting for a time. The rest may last all summer. At times it is best to follow that idea and just take a rest for ourselves.

It is important to take a long term view of the Precious Metals and miners. The dollar seems destined to further depreciation; therefore, it makes sense to have our investments in somethings which will both retain value and are not under the thumb of governments and central banks.

I have not sold anything into the current correction, and have not made purchases either. For my portfolios, I am just holding and waiting for the markets to give clearer signals. Emails will be sent if the situation changes.

Best to each, Doug


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