Thoughts on Markets

Monday, October 17, 2011

Dollar Mixed - Gold & Silver still Inching Upward - China may be coming to Europes Rescue - Trade Barriers between US & China may be coming.

The dollar is mixed today after the good news last week of the September Retail Sales increased slightly. However, we also saw the Consumer Confidence figure come in lower and the Fiscal Year 2011 report shows we added 1.3 Trillion Dollars to the National Debt. Over all, this reveals a weaker economy than many would like us to believe.

The 10-Year Treasuries saw another increase in interest rates to 2.28%. Remember that the value of existing bonds is very sensitive to current interest rates. As the interest rates increase, the market value of existing bonds decreases. Then when interest rates are decreasing, the market value of existing bonds goes up. Thus, those currently holding these Treasuries are losing market value on all  the bonds they hold.

The coming solution to the European debt fiasco is expected and the Euro responded by pushing toward the 1.40 level, but missed a bit and has fallen back a tad as the markets opened today. This uncertainty is throwing fog into the currency markets. One would have expected the dollar to be very strong, but it is mixed as the day progresses.

 The precious metals have bounced upward again, but were capped by profit taking and possible intervention. It seems that the pattern of  each up step is followed by at least one foot falling into a sand pit, before the next small up step. The War on Gold continues. After all, the bullion banks and governments do not want to let gold tell the true tale of the fraud of the FIAT unbacked paper currencies of the world. The world financial system of debt and toilet paper "money" is on very shaky foundations. It is a house of cards which is being challenged by more and more people.

God, Himself, warns against unequal weights which He considers an abomination. It is forbidden in Scripture for individuals and governments, as well. Unbacked paper currencies are an abomination to God. He is long suffering in His patience, but in the fullness of time, He comes with judgement.

Of course, man even violates these laws were we to have gold backed currencies. However, a move back to a form of gold standard would more properly price the precious metals and, perhaps, give us a rational and stable currency for a number of years. This would be a blessing until men started stirring the bucket again.

MineWeb:

Gold could go lower than anyone expects but then set for incredible opportunity

QE3 is going to make QE1 and QE2 seem like a little prelude and will set up a moon shot for precious metals and junior mining companies says Edward Karr. Gold Report interview. HERE.

Latest COMEX futures: bullish trend on gold, bearish on copper
The latest CFTC figures show an increase in bullish bets on gold by money managers, but copper at highest short position for over 2 years. HERE.

The gold and mining stock bargain store on the TSX
Low metal prices and economic gloom have seen carnage among junior mining stocks - again. But the savvy investor should treat this phase as a major buying opportunity although there may yet be worse to come first. HERE.

Deeper implications in gold bullion outperformance - Part 2
You don't need to be a gold-mining stock investor to wish gold would stop outperforming them soon as there are deeper implications to bullion's out performance. HERE.

Bloomberg:

Hedge Funds Add to Commodities Wagers
Speculators boosted their wagers on higher commodity prices for the first time in five weeks as increasing confidence that the global economy will avoid another recession spurred the biggest rally of the year. HERE.

Gold Traders Most Bullish Since July After Plunge
Gold’s biggest slump in three years means traders and analysts are now the most bullish in three months, speculating that Europe’s debt crisis, slowing growth and a bear market in equities will drive demand for bullion.HERE.

China Currency Message Stronger Than Chance of Sanctions
The U.S. Senate’s vote to punish China for depressing its currency to promote cheap exports is the latest legislative ritual in which the message may be as important as the proposed sanction. HERE.

MarketWatch:

China secretly backing euro--zone rescue: report

 China has pledged in secret to back a euro-zone bailout that will include investments in infrastructure and sovereign debt, the U.K.'s Sunday Times reported. HERE.

Reuters:

Gold motors to three-week high

Gold jumped to a three-week high on Monday, boosted by fresh investor interest and a softer dollar against the euro after a G20 summit reinforced hopes that European leaders would soon resolve the region's debt crisis.
Spot gold rose 1 percent to hit $1,694.60 a troy ounce, its highest since September 23. The precious metal was bid at $1,682.49 an ounce at 1130 GMT from $1,678.53 late in New York on Friday. HERE.

KitCo:

Jim Wyckoff A.M. Kitco Metals Roundup: Comex Gold Slightly Higher, Hits 3-Week High, But Firmer U.S. Dollar Index Limits Upside
17 October 2011, 8:02 a.m.
By Jim Wyckoff
Of Kitco News

(Kitco News) - Comex December gold futures are trading slightly higher in early U.S. dealings Monday. Trading remains choppy on a day-to-day basis but the bulls still enjoy the overall technical advantage. A higher U.S. dollar index Monday morning is limiting gains in the precious metals. December gold last traded up $2.60 at $1,685.60 an ounce. Spot gold last traded up $4.60 an ounce at $1,685.00. December Comex silver last traded up $0.087 at $32.26 an ounce. HERE.


Miners from Scottrade:


Currencies from KitCo:
Some Prices: DOW off 102.40 to 11542.85; S&P down 10 to 1214.63; NASDAQ down 18.67 to 2648.69; Gold up 3.70 to 1683.50, and Silver off 0.04 to 23.12.

Best to each, Doug



























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