Thoughts on Markets

Wednesday, August 10, 2011

Why should we trust Democrats or Republicans? - Gold to new Highs - Silver Up - Miners mixed - Are we being ruled by Ignorance, Stupidity or Connivance? - Hecla (HL

Gold is becoming the international currency of choice. It is not only holding on very well, but continues to establish new highs. It is trading above 1770 presently. Silver is lagging where it was leading earlier in the year. Silver at or just below $38 is a buy for me. I already have funds ready to jump on silver. I will very likely add to my Canadian Trust (CEF) which is down a bit due to the exposure in silver. Their gold is keeping the price steady. 

The downgrading of U.S. debt is very serious to international investors and central banks. American investors and funds are ignoring the downgrade. They are familiar and feel safe with the Treasuries, so are not concerned about the downgrade. Believe me, I expect it to have very great impact upon our ability to sell debt to the world. Most everyone will wake up to the detrimental impact before very long. The fact that Bernanke chose to hold interest rates low for two years, as announced, will further scare international investors. 

The dollar will continue its depreciation and inflation will grow regardless of the deflationary impact of lower consumer spending. Many folks have great fears and concerns about the economy. The riots in England, mostly attributed to a police shooting, are partially due to unemployment and governments failing to solve the financial chaos. These are on expansion of those in Greece and other parts of the world. Expect more! It's a jungle out there. When will the mobs start here and be roaming the streets? 

The mining stocks are mixed, but seem to be picking up a bit. I expect silver to boom upwards before very long. At that time, the miners will begin to pick up steam. We are moving into the historically upward time for the precious metals. As the price of metals grows, the profit of the miners follows.

Rest in the Lord and be at peace. It is time for great caution in the market place. We must have a sound strategy for investing to survive. Above, all we should be following God's way in all of life. King Jesus told us to "do business until I return." We are cautions over and over in Scripture to be good stewards of what God has entrusted to us. Christ spoke on that in the parable of the talents. There is sound economic advice for individuals, families, churches, businesses and governments in God's Word. Read and heed.

Town Hall: 
Thomas Sowell
Thomas Sowell
A Pyrrhic 'Victory'
In Don Marquis' classic satirical book, "Archy and Mehitabel," Mehitabel the alley cat asks plaintively, "What have I done to deserve all these kittens?"
That seems to be the pained reaction of the Obama administration to the financial woes that led to the downgrading of America's credit rating, for the first time in history. HERE.

Walter E. Williams
Walter E. Williams
Ignorance, Stupidity or Connivance?
President Barack Obama has called for a luxury tax on corporate jets as a means to generate revenue to fight federal deficits. The president's economic advisers ought to be fired for not telling him that doing so is unwise and counterproductive. They might have already told him so, only to have the president say, "Look, I know you're right, but I'm exploiting the public's envy of the rich!" Let's look at what happened when Obama's predecessor George H.W. Bush signed the Omnibus Budget Reconciliation Act of 1990 and broke his "read my lips" vow not to agree to new taxes. HERE.

Check out the Grass Roots Action posting on the dirty deal of the Republicans on the debt "solution." HERE. Folks, we cannot trust either major party to do what is correct and in accordance with God's word. They have become a law unto themselves. O' Lord, please, send us statesmen.

Mine Web:

Gold stocks valuations in the current macro environment - Joe Mazumdar, Hayward Securities
A look at some of the factors behind the difference in valuations between gold stocks and gold bullions in the context of the significant macro economic turmoil. Listen to the Pod Cast HERE.

Prospects for gold in the light of recent economic events - Nichols
Jeff Nichols and Rosland Capital have raised their gold price target for the year to $1850 in the light of recent economic events in the U.S. and the Eurozone. HERE.

High gold price dents demand in India
Customers refrained from making fresh gold purchases and physical demand for the yellow metal was weak, with market participants scrambling to raise cash to meet margin calls in a battered stock market. HERE.

Silver prices to rise more dramatically than gold in short term-Hecla CEO Baker
Hecla Mining CEO Phil Baker said record gold prices may be priced out of the range of small investors, who will then turn to silver investment. Read the article HERE. Check out the graph on Hecla (HL), below. It remains one of my core holdings.


Fed to keep rates low for two years, stocks jump
The Federal Reserve on Tuesday took the unprecedented step of promising to keep interest rates near zero for at least two more years and said it would consider further steps to help growth, sparking a rebound in stocks.
The Fed painted a gloomy picture, saying that U.S. economic growth was proving considerably weaker than expected, inflation should remain contained for the foreseeable and unemployment, currently at 9.1 percent, would come down only gradually. HERE.

The Golden Sextant:
November 22, 2010 (RHH). Gold Derivatives: Three Years of Contraction and Concentration

On November 16, 2010, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries and Switzerland for the period ending June 30, 2010, together with its triennial survey on the OTC derivatives of a wider universe of "non-regular reporters" from nearly 50 jurisdictions. This is a very important read HERE.

Gold to new high and silver seems to be moving up after yesterday's action. 

Miners from Scottrade:

Currencies from KitCo:

Some Prices: DOW off 366 to 10878; S&P off 35.16 to 1135; NASDAQ off 74.54 to 2407.98
; Gold up 31.90 to 1776; Silver up 076 to 38.47.

Best to each, Doug


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