Thoughts on Markets

Monday, August 08, 2011

General market crashing - Gold & Silver sprinting upward - Miners Down, but not out - I happy to be out of the general market - Gold & Silver Appear to be my best bet

Folks, We are going into a season of gold, and to a lessor extent of silver. Gold is being recognized more and more as true money in a financial arena of unbacked paper currencies. To some extent the Swiss Franc is still preferred over all of the paper currencies, because of their central bank holding firm on fighting inflation. Even the central bank's moves, of late, to slow the pace of growth of the Franc have added to its value among investors. The Yen, recently has been holding its own against the dollar as Japan, too, attempts to slow the growth of the Yen. 

Gold screamed up to about 1718 over night and has backed a bit to 1694.50 this Monday morning. $2,000 Gold does not seem very far away. Silver is up to a nice 39.23 after being over 40. The DOW is now down 189 and was down over 200 minutes ago. The drop in the general market is very likely causing more investors to receive margin calls feeding the downward move in the market itself as investors scramble to find liquid assets for conversion to dollars to meet the margin calls. It is a self-feeding phenomenon which is putting downward pressure on the miners.  The metals are holding very well in spite of, perhaps, even partially due to the lowering of the credit rating of the U.S. from AAA to AA+. 

We have yet to see the major shift which could come about after the rating was lowered. Were this to happen to an individual citizen, he would have to pay a higher interest rate and find it much more difficult to get a loan. This will put more shadow of doubt on the full faith and credit of the U.S. Dollar, too. More international investors and central banks will have more caution in lending for continued support of our obscene governmental and individual spending. They know that the only way we can pay even the service on the debt is by depreciating the dollar and that represents a substantial cost to many of them since all are presently holding dollars.

Less spending in the current financial chaos is a wise choice for governments and citizens. We simply must reduce our spending to that which is essential. There is no other way to move to economically sound life style. We must prepare for the lower standard of living and teach ourselves way to do without excess discretionary spending. After all economic saving is foregone consumption which is good for all, particularly, long term economic security for families.

In the midst of the market crash, I am content to do nothing at this time. If I had no miners, I would be buying, but I can wait a bit longer because I have a good stock of them in my portfolios. The metals are my best long term holding and I look for one more opportunity of adding more of them and the miners. However, I am beginning to wonder if this is it. 

Only the Lord King Jesus knows the answers to our puzzlement. I am content to rest in Him and to study His guide for us, the bible, make my plans in accordance with it, commit them to Him, move out following the plans and rest on Him for the answers whether it be victory or defeat in the near term. I am committed to Him in all respects for His eventual good and sound victory He has laid up for me.  That is the only way to a peaceful life on earth and a wonderful life in Heaven with Him.


UPDATE 1-COMMODITIES-U.S downgrade to hit prices, panic unlikely
* Trading seen volatile, demand outlook weakens
* Weaker dollar to give no lasting boost to commodities
* China growth still seen supporting commodities
By Manolo Serapio Jr and Dmitry Zhdannikov
SINGAPORE Aug 7 (Reuters) - Commodities, except gold, will likely fall when markets open on Monday due to a U.S. ratings downgrade and a worsening debt crisis in Europe but panic shall be avoided. HERE.

Resource nationalism is biggest risk to miners: report
LONDON (Reuters) - Resource nationalism is the biggest threat facing the mining sector this year and next as governments seek to take advantage of higher commodity prices to try to restore fragile finances, advisory and accountancy firm Ernst & Young (E&Y) said on Sunday. HERE.

China Business News:

China takes conservative position on gold
China may be one of the world’s leading gold producers, but its 1,054 tons of gold reserves account for a mere 1.6% of its foreign reserves and are only one-eighth the gold reserves held by the United States. HERE.

Gold increased by around 11%, Silver rose 19% in a month
Silver made impressive gains last week to close at its highest level since early April, when it was soaring higher towards its record level.
During the past month, the white metal rose from $34 to around $42, a 19% gain, while gold only increased by around 11%. HERE.

Business Insider:

The rise & fall of silver | gold and silver weekly recap 1-5 August
Gold moderately inclined by 1.86% during the week; furthermore, last week's average gold reached $1,619 /t. oz which was 1.79% above the previous week's average price of $1,648 /t. oz. Gold finished the week high at $1,651 /t. oz.
 Silver on the other hand declined by 2.79% from beginning to end, and this week's average price was $39.76/t oz or 1.35% below the previous week's average $40.31/t oz. HERE.


G-7 Seeks to Avert Collapse in Confidence
Group of Seven nations sought to head off a collapse in global investor confidence after the U.S. sovereign-rating downgrade and a sell-off in Italian and Spanish debt intensified threats to the world economic recovery.
The G-7 will take “all necessary measures to support financial stability and growth,” the nations’ finance ministers and central bankers said in a statement today. Members will inject liquidity and act against disorderly currency moves as needed, they said. HERE.

Personal Liberty Digest:

Totalitarianism Becomes Benevolent
Totalitarianism is crude force and inhuman treatment of men. We conjure mental pictures of the Spanish Inquisition and concentration camps of World War II and their disease and starvation.
Americans imagine the inhumanity of Japanese and German concentration camps of World War II. But the book Other Losses by James Bacque reveals how German prisoners at the end of World War II were put in American concentration camps run by allied commanders and subjected to disease and starvation.
The human population is composed of two personality types. The masses are the worker bees, and a small minority are human parasites who live off the masses through deception and manipulation. HERE.

Mine Web:

Gold surges through $1,700
Continued market turbulence despite pledges by the G7 and the European Central Bank saw investors pile even more heavily into gold. Gold is beginning to act in a more natural way to the world about us. Look for more of this in the immediate future. HERE.

Risks and rewards for investing in junior gold and silver stocks when other sectors fall.
There can be increased risk in investing in junior gold and silver stocks when markets crash. We look at factors to take into account to seriously reduce this risk element in an already risky sector. HERE.

Gold massively underinvested - silver data overwhelming: Eric Sprott
Speaking at GATA's sold-out Gold Rush conference in London, Eric Sprott affirmed his strong views on gold and his even more positive thoughts on silver. A very important read. HERE.

Miners from Scottrade:

Currencies from Kit Co:

Some Prices: DOW off 340.09 to 11106; S&P off 41.65 to 1157.73; NASDAQ if 97.33 to 2435; Gold up 38 to 1701.40; Silver up 0.90 to 39.22. The metals are still moving up in contrast to the general market. Even the miners, though still down, are not dropping as is the general market. Expect Bernanke's helicopters any minute now with a new load of unbacked toilet paper and computer blips to go into a big bombing run.

Best to each, Doug



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