Thoughts on Markets

Thursday, October 06, 2011

We have met the enemy and it is us! Pogo - Gold & Silver Up a Bit - Miners following - Is the gold/silver correction over?- Miners - Currencies

As God's call to American individuals, families, and churches to repent and return to Him from our pagan ways, He has delivered a 212% increase in unemployment over that of August. How low must we get before we will return to our Providential Founder? Christians, it is up to us to repent, seek His face, and turn from our evil ways back to Him.

Why, many would ask? We are failing to tithe to Him on a regular basis, therefore we have a very wasteful welfare system. We fail to honor the Sabbath by consistent corporate worship, acts of mercy, and fellowship with Christians. We have added to God's prescribed ways of worship to suit our own desires instead of His. We neglect the diligent study of His word in order to know His way in all of life. He is not first in our lives as we seek to be content in all of life by seeking fun instead of the lasting joy which comes from King Jesus, alone. 

We often do not present the gospel to the lost for fear of offending others. Fellow Christians, we have left our first love. Remember how great it was to be a new Christian? How great was His word which became letters from a dearly loved God who first loved us. 

In these and many other ways, we fail to recognize Scripture as sufficient for all of life. And we have lost our hunger for God's written word which is all about His Son. Christ came to earth at great sacrifice to do the will of His Father. Should not we seek to do the same? Do you seek to consistently do the will of the Son by following His example under the power of the Holy Spirit? If not, then you are part of the problem and not the solution until you repent and turn back to Him 24/7.

Resource Investor:

Silver Shorts Cover Nearly Half Position in a Week
As we anticipated earlier this year, commercial shorts including JPMorgan are finally within grasping reach of covering their positions and transitioning to net long. For more than a decade, the large commercial trading banks have been trapped with an enormous short position in silver as the price has risen from its lows near $3 to its May high of nearly $50. Most analysts expected the commercial shorts to be broken in a short squeeze, likely launching silver above $100. However, this short squeeze will not occur.  Finally, they have manipulated the price to  take down half. What about the other half? Are they still going to play the game with us to dump them, too? Note the great graph.  HERE.

Gold Is NOT a Safe Haven
Surprise! Gold is not a "safe haven" – a genius insight many pundits are pushing today like they just split the atom.
No one watching gold's ups and downs over the last decade's five-fold gains would claim otherwise. But fair's fair. The price has slumped 11% this past month, even as stock-markets and the economic data tanked, making September 2011 the worst month since the wipe-out of October 2008 after Lehman Brothers collapsed.
How come? Wasn't a banking crisis, plus the threat of a government default, supposed to be good for gold? Well, just like three years ago, the problem with a banking crisis – and the accompanying stock market crash – is that it forces money to flee the futures market. There speculative traders can bid up (or push down) the price of gold in the future, using borrowed money. The game is always played with the paper (futures) market, not the physical metals. To a great extent this is true. However, there remains a great demand for gold and silver coins are in very short supply. HERE.

Is the Correction Over in Gold & Silver?
Stock markets are tumbling from Japan to Wall Street.  Already shaky Spanish and Italian financial instruments are quaking in their fancy boots as Greece does not make the cuts needed to be able to receive financial assistance. Vladimir Putin, a prototypical example of a classic Russian Bear says that the American Bull has blunted horns and suffers from impotence.  He states, “Americans are living beyond their means and shifting the weight of their problems to the world economy...They are living like parasites off the global economy and their monopoly of the dollar.”  China joined Putin by calling the brouhaha in the West as “madcap brinksmanship.” 
The scepter of fear is haunting the fiscal world from West to East.  International turbulence is precipitating a search for safe havens.  Treasuries (TLT) are hitting new highs, the US dollar (UUP) has bounced versus other currencies, commodities (DBC) are being sold off and gold(GLD) and silver (SLV) bullion’s volatility has increased significantly. 
These actions are signaling a notice of caution in an economy which is in desperate need of jobs.  It is not only the debt crisis, it is the debt.  The world is worried. Scared is the correct word. Those who depend upon the markets are learning that many are not safe. The concept of the safety of the dollar is an illusion which will eventually pass. The only sure security and prosperity is found in King Jesus and fear of Him. That with an application of His word to ALL of life, is the only answer. HERE.

Gold & Silver Speculators Have Left the Building
We use a combination of sentiment analysis and technical analysis in market timing which often gets a bad name courtesy of mainstream retail nonsense. The dumb money tries to time the market while the smart money utilizes market timing to weigh risk and reward. It’s rather simple when you acquire the skills and helps you understand markets. Recently we had been quite bullish on precious metals but thought we were in a small corrective period. We were wrong as the sector has suffered from Europe’s version of 2008. The good news is, our market timing work leads us to believe that the worst is soon to be over and this is an opportunity on the long side for those who have a twelve month time horizon. The speculating interventionous banks have very deep pockets and continue to play as long as they can. I, therefore, doubt that all speculators have left. This article has some great graphs. I would also expect the price of both metals to be consistently moving higher with minor setbacks if all had "left the building." HERE.

The Daily Pfennig (
Chuck Butler gives more of his thoughts on China today: "Listen to me now and hear me later dear reader. The U.S. depends on the kindness of strangers to allow us to continue our deficit spending. And the major "stranger" is China. The day China does a Roberto Duran, and says "no mas". we as a country will turn into Greece, with insurrection in the streets, because the Gov't won't have the money to continue to issue food stamps, and all the other Gov't boondoggles that exist. So. please. let's not tick off China. People argue that China needs us as much as we need them. And a few years ago, that was true. China got their financial strength from exporting goods to the U.S. But when the you know what hit the fan in 2008, and China's exports to the U.S. went to hell in a hand basket, the Chinese decided to change. And they promoted domestic & regional growth. So, yes China needs the U.S. to continue to buy their goods, but not more than we need them." These are my thoughts, as well. Of course, if we could stop our debt and spending binge, we would not need others to support us by giving us more debt. That should have happened years ago, but will it happen today? NO!


Analysts mostly unfazed by gold price volatility and raising 2012 forecasts
Far from lowering their 2012 gold price forecasts in the light of recent volatility, many mainstream analysts have actually been raising their predictions for the year ahead seeing unchanged fundamental support. One has to take along term view on the precious metals and rest in the bull market which exists. The volatility comes from the paper, not the actual metals market. Therefore, the first priority must be to have in hand the metals. HERE.
Miners from Scottrade: The miners are on the move again. Both gold and silver are showing improvement, as well. Could the correction be over? Have the boyz covered all their shorts and are now letting the prices float with the market activity? Possibly!

Currencies from KitCo:
Some Prices: DOW up 38.18 to 10977.56; S&P up 5.42 to 1149.45; NASDAQ up 20.10 to 2481; Gold up 1.70 to 1644.30; Silver up 0.81 to 31.32. Gold and silver are playing leap frog with silver in front now.

Best to each, Doug


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