Thoughts on Markets

Wednesday, August 03, 2011

Live Beneath Our Means - Be Content with What You Have - Gold Breaks New Records - Silver Up - Prepare for Lower Std of Living

Philippians 4:11b -13: "I have learned to be content in whatever circumstances I am. I know how to get along with humble means, and I also know how to live in prosperity; in any and every circumstance I have learned the secret of being filled and going hungry, both of having abundance and suffering need. I can do all things through Him who strengthens me."

This was written by the Apostle Paul as directed by the Holy Spirit. I firmly believe it is appropriate for us today. We should learn not to be happy and find joy in what we wish to have, but to rejoice in the Lord with what we have. This mind set teaches us to depend more on Him, and for us to be good stewards who live beneath our means. 

Living beneath our means will teach us to realistically adjust to a lower standard of living. Our economy and that of the world day by day reveals that this is where we are heading. Our dollar and the other paper currencies of the world are losing their purchasing power; therefore, it is taking a larger quantity of the currency to purchase the necessities. 

At the same time, we must study God's word and prayerfully seek the guidance of the Holy Spirit in all matters of life. It is particularly important to seek the guidance of King Jesus from the word in matters of finance. Historically, gold and silver have been the money of choice for thousands of years. By living beneath our means, we will be able to accumulate savings in gold and silver to enable us to retain some wealth as the lower standard of living becomes the norm.

Once again this morning the general market is down while gold hit a new high over night and earlier this morning (now 1669.30 up 9.20 and silver 41.73 up 0.88). The DOW, S&P, and NASDAQ are all in rather high negative territory. This is not what I expected as a result of the Debt Limit & Debt Reduction Package delivered to the nation by the Congress and the White House. I expected the opposite to be true.

My take on this is that the "solution" was seen for what it is - smoke and mirrors - another case of kicking the can farther down the street in the hope that it will not be found until after the election. There seems to be no satisfaction among the elected elite or the general public, and certainly not among investors. The recent economy reports have been discouraging, and possible showing more of the truth about the economy than those in power would like. Unemployment remains too high, wages, except for those in Congress and government, remain low, and consumers are uneasy. Therefore, spending is not picking up as the central planners would like. This is what the market appears to be revealing.

Demand for the precious metals remains very high and increasing in Asia and Europe. These folks are uneasy to the extent that they are buying at these levels which we consider lofty. I was hoping for at least one more solid correction to add more metals and miners to my portfolios. This may still come to pass, but the delay of any real correction disturbs me and causes me to ponder whether the Gold Rush is very much closer than I expected.

Internationally it is becoming more apparent that the dollar is depreciating very rapidly. It is for a fact becoming more difficult to find funding for the U.S. among international central banks and investors. Many are vitally concerned about the loss of value. Therefore, the threat of a replacement of the dollar as the reserve currency is coming closer. Only the Lord knows when or if it will really come to fruition. Let's turn to come of the news out there today.

MineWeb:

Gold stocks to shine in current environment - Holmes
According to Frank Holmes, gold stocks are likely to outperform but, he cautions, it will be those gold stocks whose managements have recognised the need for greater discipline and bigger dividends. I believe this is true, but we must also remember that as a key man in U.S. Global Investors, he has a vested interest. Of course, I do to in the portfolios I have. HERE.

Gold once more at new record
Further central bank gold buying, this time by Thailand, and continued fears about the debt situation in both Europe and the US helped push gold up to a new record for the second successive day. HERE.

South Africa's mining unions end gold mine strike, but reject platinum miner's offer
The South African gold mine strike, which has lasted for five days, is now over with settlement achieved and workers returning today. WHEW! I am thankful to the Lord that the gold mine strike has been settled. I did not unload my SA miners. HERE.

Wealth growth driving gold demand; gift-giving season approaches - Holmes
Rising wealth, particularly in India and China, is the fundamental driver of gold price strength and with the gift giving season imminent we're in for an exciting period. Talk about understatement! Moving into the high demand time for the precious metals with gold hitting new highs. HERE.

The reasons why SA won't nationalise its mines
A look at the numbers is enough to show that nationalisation is not a realistic option for South Africa but, a look at the history gives some indication of why government has been reluctant to explicitly say so. I take some comfort from this report. HERE.

KitCo:
View the Pod Cast on Gold Prices HERE.

Miners from Scottrade:


Currencies from Kit Co:

Some Prices: DOW off 64.15 to 11801.79; S&P off 6.80 to 1247.25; NASDAQ off 11.20 to 2658.19; Gold up 6.40 to 1666.50; Silver up 0.70 to 41.55. Precious metals are moving a bit lower >> A continuation of the this could be a correction

Best to each, Doug

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