Thoughts on Markets

Thursday, October 20, 2011

The Costly War Business - Capitalism replaced by Central Control - PPA - Time for Buying ???? - Both Precious Metals Down along with General Market - Rest in the Lord


Both gold and silver are down early today which may provide opportunity for more buying. The prices of miners are interesting to me. Currently, Gold is 1623 and Silver is 31.13. the miners are definitely lagging behind the metals.

It will be interesting to see how the Treasury Auctions go today. Of course, the Fed will be buying through the back door which tends to conceal who is doing the buying. It seems that foreigners have slowed their buying, it is difficult to determine accurately who is doing the buying, as the Fed often buying through bankers.

We need a change in foreign policy. Our enemies are increasing throughout the world. Our devotion to policing the world is turning the world against us big time. Both Richard Russell and Richard Maybury are speaking to this subject in the area of investing. See the first two references, below:

From Richard Russell's Dow Theory Letter yesterday: "The most expensive thing any nation can do is fight a war. The next most expensive thing a nation can do is prepare for war. The US has been in a state of war (or multi-wars) ever since World War II. As I see it, the US is now preparing for a possible war with China. Watch the anti-China propaganda build up in coming months and years. At the same time, China has the largest number of men under arms of any nation on earth. China is building and expanding its Navy as fast as it can, and this worries the Pentagon, which vows it will not be over-matched by China. The future of war, it seems is the carrier and remote delivery systems such as the Sparrow or the Sidewinder." In this Russell joins with Richard Maybury's Early Warning Report which has long advised in investments in military manufacturers. The U.S. is definitely in the full time business of war and preparing for war. We spend more in this area than all the rest of the nations in the world. This is the largest expense which contributes to our debt which is monumental and growing every day. Russell suggests that PPA might be a good buy for long term holding as long as war remains our business.


Bank of America Bosses Find Friend in the Fed: Jonathan Weil
The Federal Reserve is backing the B/A's derivatives effectively making the taxpayers liable for the great risk of the bank. Once again the taxpayers are on the hook for the banks. This, of course, in additional to the exposure of J.P. Morgan and likely others. Thus, we are seeing the Fed back the banks as it did with QE I & II, and now expect the same play with QE III whatever it is named. Read about it HERE.

Protests Show Capitalism ‘Nearly Broken’
That is strange! We have not had capitalistic free markets in several centuries, if ever. We moved away from truly free markets before the ink dried on the Constitution. The free markets envisioned by our founders was effective in building financially sound These United States of America, but scarcely was the ink dried before there was more centralization and resulting damage to the capitalistic free market. The War of Northern Aggression led to more centralized control by the Federal Government, then the establishment of the Federal Reserve and Income Tax in 1913 delivered another blow, FD Roosevelt grew the centralized welfare state even further, and then Richard Nixon removed any backing of the dollar by gold on August 15, 1971. This article is interesting, and seems to redeem itself toward the end with this statement,“It’s sort of a glib way to push them off as if to say they’re not really very important,” Blood said. “Many of them aren’t saying that business and capitalism are inherently evil. They’re just simply saying that the way it is currently functioning is not working, it’s not right.” Read it HERE.

I just had to include this picture from Ed Steer's Daily Gold and Silver Report. 


Gold and silver investment prospects in times of turbulence and fear - Auerback
This is true and we must always remember that gold and silver are seldom real investments for profit. Rather,they are used to preserve and protect the wealth of buying power in the face of the unbacked paper currencies which depreciate over time and have only value in relation to other currencies. As long as the US is in the war business, the depreciation of the dollar will continue.  HERE.

Miners from Scottrade: Several of these miners, including FSM &HMY, are in MY buying sights. You decide for yourself based upon your cash, portfolios, and risk tolerance. Remember that these are held for the gold rush. 

Currencies from KitCo:
Some Prices: DOW down 47 to 11457; S&P down 5.30 to 1204.58; NASDAQ down 28.16 to 2575.91; Gold down 28.70 to 1614.80; Silver down 0.49 to 30.74. Both metals seem attractive to ME at these levels.

Best to each, Doug


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