Thoughts on Markets

Tuesday, July 12, 2011

Owe no man anything - Lean not on man's understanding - Gold - Silver - Dollar Up - Swiss Franc Up - Euro Down

This seems to be a time of doing nothing in the market for me. I am content to hold in my present portfolio positions since they are positioned for higher prices in the metals which I believe we will see in a few weeks as we move into Fall. However, I am sitting with cash as dry powder for the commitment in the near future. 

Times will be getting rougher for us in the dollar region, but we are currently seeing the dollar flex some muscle temporarily. People just do not realize how fragile the dollar is in our debt ridden society. We remain totally dependent upon foreigners purchase of our debt bid time. Guess we should actually add the US to the PIIGS: How about USPIIGS?

Folks, God's Word says, "Owen no man anything, except to love one another." This is just a bit of the sound financial advice which can be found all over Scripture. I urge you to search the bible for sound financial counsel. God created us and gave us His "Operational Manual." We must take advantage of it and lean on our own wisdom. Remember the wisdom of man comes from his reasoning with a sin damaged mind. I would rather lean on the word of the Creator and know what King Jesus wants for us.

KitCo Commentary:  
Something More Important than the Debt Limit
By James Turk
Discussions by policymakers to increase the US debt limit are in the eleventh hour.  Sadly, so far the circus of intense political posturing has avoided highlighting the real issue.
It is not the debt capacity of the US government that is of primary importance, nor how much will be cut from proposed federal spending over the next ten years.  There is something fundamental at stake here and much more important to the future of the US.  It will be made clear by the outcome of budget cuts, if any are finally made.  It is, namely, the adversative relationship between the country’s public and private sectors, or to put it bluntly, the tax-eaters versus tax-payers. This is a very important read with a great graph which is worth perusing. HERE.

Thomas Sowell

Thomas Sowell  

Forgotten Stars 

Three recent sports biographies -- two about baseball stars Stan Musial and Hank Greenberg, and another about boxing great Joe Louis -- are not only interesting in themselves, but also recall an era that now seems as irretrievably past as the Roman Empire. You sports fan will enjoy this. HERE.

Bill Clinton is Right! by Chuck Norris

While Democrats and Republicans struggle to make headway in debt- and deficit-reduction talks in Washington, former President Bill Clinton pontificated in a recent issue of Newsweek about his own solutions for our sluggish economy.

I don't agree with all of Clinton's "14 ways to put America back to work," but I definitely believe he's right about one of them: cutting corporate taxes. There is little reason to have high corporate taxes. These are simply passed through to the consumers. HERE.

Property developers in China move into mining
A slump in the real estate market and the continued monetary tightening by the Chinese is pushing many property developers to seek higher returns in the mining sector, notably gold. The Chinese entrepreneurs are really looking ahead. Their propensity to adjust, to be frugal, and to save are commendable. This is very special in view of the centralized government which controls China. HERE.

Yesterday's Top Story: Peru's President-Elect Humala says he will seek mining windfall profits tax
Peru's President-Elect Ollanta Humala says he will meet with owners of mining companies to discuss increasing mining taxes after he takes office on July 28th. Politicians are the same the world over. Always seeking new taxes without cutting spending. Here in America this is done in spades. HERE.

Sprotts on precious metals - Gold good, silver better!
Sprott Inc. chairman Eric Sprott and Sprott Money President Larisa Sprott say the fundamentals that drive the price of silver are as strong now as before the spring selloff-maybe even stronger. Gold Report interview. Sprott usually has good insight. Important! HERE.

John Williams Exclusive - US Dollar Selling & Hyperinflation
With so many questions surrounding the U.S. dollar and rising inflation, today King World News interviewed internationally followed John Williams of Shadowstats to get his take on the U.S. dollar, Fed and hyperinflation.  When asked about the current fiscal crisis the United States faces Williams stated, “Well, very simply I have very little respect for a political system that goes to the brink each time the debt has to be raised.  They have to raise the debt ceiling because the government already is obligated to spend the money beyond what it can raise in taxes.  I would be very surprised if the US actually defaults.

What they are doing now is the type of thing that has happened a number of times before, although there seems to be more of a serious challenge this time around and risk of an outright default on the US debt.  This would be disastrous for the financial system.  Indeed it likely would trigger very heavy selling of the US dollar, which would accelerate the inflation process and move us towards the hyperinflation scenario.” HERE.

For my portfolios, I place emphasis upon holding precious metals as a first priority. Then I like the Central Fund of Canada (CEF) which holds both gold and silver. This is closely followed by Ever Bank World Markets Metals Select Funds, and Gold Money. Recognise that gold in hand is the only one truly out of the dollar. However, the financial paper holdings of the metals are next best and easier to trade for the time being. Gold Money gives you and off shore holding, which may not be allowed as our totalitarian government grows in power and intrusion into our lives. Here is a graph on CEF:

 Miners from Scottrade:

Currencies from KitCo: Note that the dollar is receiving attention again in the short term. However, note too, that the Swiss Franc is at a higher level. The debt problems in Euro Land seem to be affecting the lower price of the Euro, but the Euro remains well above par with the dollar.
Some Prices: DOW going no where only off 0.98 to 12504.78; S&P off 2.06 to 1317.43; NASDAQ off 10.53 to 2792.09; Gold down 2.40 to 1552; Silver down 0.34 to 35.41.

Best to each, Doug 


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