Thoughts on Markets

Friday, May 06, 2011

Gold & Silver up a bit - Dollar Up - Euro Down - HMY - Miners - Currencies

Today, we are seeing some life in the precious metals. These are the times which try men's minds and teach us patience. Exciting, yes, but at the same time challenging. If I were to do anything in this market, I will be very careful. I am holding on to the miners and metals, and not looking to sell. I am being very cautious with my options on XSL. May sell them today. 

With the fall in silver and gold prices, those who moved quickly into XSL (ETF which in effect shorts Silver) and DLL (ETF which in effect shorts gold) are sitting on profits for the time being. However, it is important to know when to check out and pocket the profit. I am trying to look at support levels as the prices fall. Any bounce off a support level and failure to penetrate would appear for me a time to bail out, and likely a time to add to my portfolio of miners. BUYERS & SELLERS BEWARE!

From Ed Steer's Gold & Silver Daily: "My bullion dealer just had the two biggest back-to-back sales days in silver in his company's history.  It was wall-to-wall buyers [and some sellers]...and the phone was ringing off the hook all day long, as the buy-the-dips crowd was out in full force again, like they have been all week" It is good to buy while there is "blood in the streets." One can never precisely predict the bottom of such drastic moves, but then the long term investor does not have to hit the exact bottom. Close is certainly satisfactory.


Reuters:
Treasury suggests $2 trillion debt cap raise: sources


Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised.
But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters. What good is a "debt limit" if it can be quickly and consistently is raised? This is simply another farce. HERE.

Market Watch:
Peter Brimlow
Market-manipulation mutterings intensify
Gold bug Russell adds voice to idea of Wall Street-Washington plot
ecently, I noted that longtime gold bug Richard Russell of Dow Theory Letters finally converted to the thesis that gold’s price is subject to manipulation by a Wall Street-Washington alliance. See April 25 column on Russell and the gold-manipulation thesis.
Russell seems to be brooding about this insight. In reply to a correspondent who asked about the possibility of an FDR-type confiscation of gold he said the following:
“I’ve thought about this at length, and I’ve arrived at what I believe to be the correct answer. The answer is — No, the government will definitely not call in the gold. The simple reason is that a tremendous amount of gold is held in very powerful hands. The manipulation of the precious metals, particularly the paper metals, makes prediction very difficult. In fact, almost all of our markets are manipulated from one extent to the other. Thus, many mistakes are made in forecasting. The Monday morning quarterbacks always claim to have full insight, but then that is after the fact. HERE.

Mine Web:
Jim Sinclair says ‘relax', don't do it - don't sell your gold!
Some commentators now see gold - and silver - ripe for recovery with the suggestion that like the rise, the subsequent falls may have been too far too fast. Others disagree. This was a very rapid correction and either side could be correct. I believe both metals have been oversold, but that condition can continue, also. Just beware. HERE.

Mine Web:
Gold to resume upward path - H3 Global
Despite a drop of more than $100 in just four days, H3 Global Advisors CEO, Andrew Kaleel believes that the yellow metal is likely to rally as the U.S. dollar remains week and countries build up their gold reserves. Of course, the dollar has temporarily stopped its steep fall and has rallied some against many currencies. The Euro was talked down some yesterday which was very likely for the purpose of slowing the fall of the dollar. The metals are reacting to some extent to the bounce in the dollar. HERE.

Mine Web:
Dollar finds unexpected friend in commodities market
Panic selling in commodities like oil, copper and silver led to the dollar's best day since October as investors fled to habitual havens of safety. There was panic selling in commodities yesterday. There was also the several early mornings of sharp drops in the prices of the precious metals during the light trading periods which is very suspicious. This influenced many investors to dump their holdings. The habitual haven of safety widely chosen was the dollar. Thus, the dollar appreciated. HERE.

News on one of my core holdings from Mine Web:
Harmony Gold's dual horizons
South African based gold miner Harmony's revitalization continues, with its Wafi Golpu jv with Newcrest growing like Topsy. I have followed and held Harmony (HMY) for a very long time. It has been a sound miner and may pick up with this joint venture.  HERE.

Miners from Scottrade:


Currencies from KitCo:

Some Prices: DOW up 141.6 to 12726.57; S&P up 14.37 to 1349.47; NASDAQ up 27
12 to 2841.79; Gold up 18.30 to 1491.40; Silver up 1.10 to 35.76.

Best, Doug

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