Thoughts on Markets

Wednesday, May 25, 2011

Gold Standard by 2014? - Price Inflation Worldwide - Paper Gold vs Physical Gold - Gold & Silver Up - DOW down a bit at opening.

Price inflation is rampant throughout the world and is causing great unrest. We are experiencing more rioting against governments which are in trouble and taking austerity measures. There is true suffering out there. The only thing that has really saved us in America, for the most part, is the dollar as the reserve currency of the world. Some day, it will not be the sole reserve currency for the world, and we are now seeing signs of resentment for this status of the dollar. 

The world seems to knows the difference between hedging in paper gold vs physical gold. Hedging using derivatives involves a counter party; that is, a party with very deep pockets on the other side of the trade. Holding physical gold has no counter party. The counter parties are in many cases playing an immoral game with the holders of paper metals. Though not strictly illegal, the actions are a type of fraud. The world knows this; therefore, many of the institutions, foreign investors, and central banks are turning to physical gold and to a lessor extent silver to avoid the counter party risks. This is important to understand. Thus, we are experiencing a greater demand for the physical metals..

While there are struggles for us and the world, we can rest securely in the fact that there is nothing in the world or in the Heavens which can separate God's people from His love and care. Though we go through challenges, we know that these are for our eventual benefit to help us to grow and become more Christ like. Praise Him daily for the day He has given us and for His work in our lives.

Town Hall:
Walter E. Williams 
Common Sense Versus Nonsense
William J. McGee, the consumer advocate on the Department of Transportation's Future of Aviation Advisory Committee wrote "Forcing the F.A.A. to Fly Blind" in The New York Times (April 9, 2011), where he laments Congress' cut in the FAA budget, saying, "A $4 billion cut will necessarily reduce the work force further. And it's hard to imagine this will not diminish safety." Mr. McGee suggests there will be shortcuts in aircraft maintenance.

Mine Web:
Hate paper money, love gold. Gold and silver turning up - Puru Saxena
Hong Kong based Puru Saxena sees Eastern precious metals demand continuing and rising as wealth grows - and sees the recent downturn in prices reversing.This is an interesting Pod Cast. HERE.

Mine Web:
U.S. House Subcommittee told foreign minerals dependence costs jobs, threatens natl. security
Without increased domestic exploration, significant declines in U.S. mineral production are unavoidable as reserves are exhausted, said House Subcommittee Chairman Doug Lamborn, R-Colorado. HERE.

Mine Web:
Where should the gold/silver ratio really be?
Many silver investors follow the God:Silver ratio closely, but there are very mixed views as to what level this indicator should settle. HERE.

Mine Web:
Headed for a ‘Gold Standard System' by 2014 - Ian Gordon
80 Years on from the Great Depression, Ian Gordon reckons financial cycles suggest we are due for another collapse, but this time even worse. Gold and gold stocks may provide protection. Gold Report interview. Could be! Maybe should be. HERE.

KitCo News:
.M. Kitco Metals Roundup:
Comex Gold, Silver Higher on Safe-Haven Buying; Bullish Technical Momentum also Building

Comex gold and silver futures prices are trading higher again Wednesday morning, with support coming from safe-haven buying interest and a more bullish near-term technical posture in both metals. June gold last traded up $4.20 an ounce at $1,527.50. Spot gold last traded up $1.40 an ounce at $1,528.00. July Comex silver last traded up $1.012 at $37.14 an ounce. HERE,

Miners from Scottrade:

Currencies from KitCo:
Some Prices: DOW off 4.46 to 12351.75; S&P off 0.26 to 1315.63; NASDAQ up 3.67 to 2749.83
Gold up 2.20 to 1526.30; Silver up 0.72 to 37.35.

Best to each, Doug


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