Thoughts on Markets

Sunday, May 31, 2009

Gold & Silver Up Tonight - Prelude for Monday?

The graphs for gold and silver are up into higher price territory tonight. They are holding at the higher plateau established toward the end of last week. Will this hold through any capping which may come at NY opening? We will know in the morning.


It is nice to see both metals holding on to gains. Gold is now 892.20 and silver is 15.83.

I will be a bit late in the morning as I plan to take the Durango to the shop. Will see how that turns out tomorrow.

I trust that each of you participated in corporate worship this morning as the Lord requires and is of great benefit to His people.

Have a great night of rest to gain strength to face another week. Rest comfortably in the care of the Lord.

Best to each, Doug

Friday, May 29, 2009

Metals UP, UP - Dollar Down, Down, Down

Bits of important news today:

The South Korean Pension Fund is reducing exposure to Treasuries joining China, Russia, and others in a move away from the dollar.

Silver is up 25% this month. It is out shining gold. Likely due to its dual role as a monetary metal and a commercial commodity.

Euro is up to $1.412 and seems to be holding fairly well. Thus, the dollar is dropping again.

DOW is up 25+ to 84330+. Where will it go today? We must wait and see.

Wow! The miners are really shooting upward. Here are a few: DROOY 10.13; HL 3.65; HMY 11.92; SLW 10.48, and VGZ 2.66. Folks, the is getting scary, because we have not had another correction for consolidation prior to the upward surge. There could be a profit taking release in the near future. However, I always wonder if this is the 3rd Phase taking over. I did not believe that it would come this quickly. But our precious metals are also sprinting upward.

Look at gold. Up well above 975 early and now still 975.30 up 16.30.
Here is silver above 15.50 early and now 15.43 up 0.28.

From Telegraph.co.uk:

Bond markets defy Fed as Treasury yields spike

The US Federal Reserve may soon be forced to launch fresh blitz of quantitative easing whatever the consequences for the US dollar, or risk seeing economic recovery snuffed out by the latest surge in long-term borrowing costs.

Yields on 10-year Treasury bonds have risen relentlessly since March when the Fed first announced its plan to buy $300bn (£188bn) of US government debt directly, a move that briefly forced rates down to nearly 2.5pc, a level thought to be the Fed's implicit target. Read it HERE.

The Fed and our Federal Government care nothing about the trashing of the dollar. Here comes more putting the precious metals in ever better positions as inflation hedges. There is no doubt that we are headed for price inflation as a result of the increase in the supply of dollars. It is apparent in groceries today and spreading across the spectrum of consumer prices. Have you noticed that air fare specials are not as special as they were two months ago? Another downside is the fact that interest rates on Treasury issuances have been rising. That will put increased pressure on housing sales. Mortgage rates will move up again as the manipulation by the Fed fails, again.

From MondayMorning.com:

Obama Stimulus May End Up Hurting the Economy it Was Supposed to Have Helped

By Martin Hutchinson
Contributing Editor
Money Morning

Could the massive Obama stimulus plan end up hurting the U.S. economy?

It’s long been a worry, and now it’s beginning to seem possible.

The latest housing reports suggest that the recent rapid run-up in 10-year Treasury bond yields may be having an unhealthy effect on the U.S. housing market. That tells me that - although home prices are back to their long-term average in terms of earnings - we may not yet be close to the price bottom. Read it HERE.

This is most likely!

From TownHall.com:

Burke and Obama
by Thomas Sowell

The other day I sought a respite from current events by re-reading some of the writings of 18th century British statesman Edmund Burke. But it was not nearly as big an escape as I had thought it would be.

When Burke wrote of his apprehension about "new power in new persons," I could not help think of the new powers that have been created by which a new President of the United States -- a man with zero experience in business -- can fire the head of General Motors and tell banks how to run their businesses. Read it HERE.

Remember, the difference between socialism and communism is that the government owns and controls more businesses.

From ChinaDaily.com:

Gold fever grips Chinese investors

By Wang Ying (China Daily)

Bitten by the gold bug, Chinese investors are now rushing to hoard the yellow metal as fears over the global recession deepen.

The increased sales of gold bars and gold jewelry in Shanghai, Beijing, Guangzhou and other large cities are reflected in the precious metal's price surge on the Shanghai Gold Exchange (SGE), which trades in gold contracts for forward deliveries. Gold prices quoted on the SGE have increased by an average 6.74 percent in the past month to the current level of about 209 yuan a gram.

"Gold demand in China in the first quarter rose to 114 tons, up 2 percent over the same period last year, solely boosted by an increase in jewelry demand," according to the latest Gold Demand Trends report for the first quarter of 2009 published by the World Gold Council." Read it HERE.

First, the Chinese government and now the Chinese, themselves, have joined in the "gold rush." That will add a great deal to the demand side of the economic equation with more upward pressure on the price. That coupled with a weakening dollar should send the price of gold up a great deal from where it is now. However, lurking in the background is the potential of doldrums during the summer months.

From Agora Financial's Rude Awakening:

Why are the Chinese Buying Gold?
Eric Fry, reporting from Laguna Beach, California…

"Hey Rude readers, can you see the chart below? The Chinese can see it to…and that may be a big part of the reason why the gold price keeps marching steadily higher.

The Chinese can see that U.S. dollars – like all the rest of the world’s paper currencies – tend to lose value over time…lots of value. The Chinese can also see that the current crop of American leaders is implementing policies that will likely accelerate the dollar’s decline.
American politicians, Federal Reserve appointees and Treasury officials are united in their efforts to counteract the forces of recession. Their weapon of choice: dollar debasement. From behind the ramparts of New Era acronyms like “TARP” and New Era euphemisms like “quantitative easing,” the Fed and its comrades-in-arms hurl trillions of dollars of currency and credit toward the enemy…hoping to scare it into retreat."

We should be joining them in mining the precious metals and mining stocks. Both will benefit from the "gold rush."

From MineWeb.com:

S&P '09 gold, copper and nickel base price assumptions raised

S&P has revised its base-case metals price assumptions in response to changes in metals commodity prices, increasing price assumptions for nickel, copper and gold.

Author: Dorothy Kosich
Posted: Friday , 29 May 2009

RENO, NV -

Standard & Poor's Thursday increased its 2009 price assumptions for copper, nickel and gold, citing higher market prices year-to-date, and also futures prices.

However, S&P Credit Analysts Alex Herbert, Donald Marleau and Emmanuel Dubois-Pelerin lowered their 2009 price assumption for aluminum "due to ongoing weak demand and supply."

"Generally, we continue to expect near-term prices for base metals to be relatively weak, as demand in industrial end markets such as auto and construction remains depressed due to the global slowdown. Despite production cutbacks by companies in response to the difficult industry conditions, which are partly due to cash losses being generated by high-cost assets, we see that inventories are still high in certain segments," the analysts advised. Read it HERE.

From USA Today:

IRS tax revenue falls along with taxpayers' income

By John Waggoner, USA TODAY

Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.

When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. "It illustrates how severe the recession has been." Read it HERE.

From Brasscheck.com:

Take a break from the markets and listen to this video which warns us about the bad effects of processed sugar HERE. Most of what I have heard of this video is good. Check it out and let me know what you think. It does advocate vegetarianism, but provides good reasons. Beyond that, it covers the dangers of current milk. I believe we would all be healthier if we would consume more raw veges. Think healthy and live a better life.

Folks, While I believe that a healthy diet is important for us, I know that the health we enjoy is totally up to our Sovereign God. But in Proverbs 21:31 He tells us, "The horse is prepared against the day of battle, but victory is of the Lord." Thus, He expects us to do the best we can in concert with His word. But we are to give Him the praise for the results of the effort, because it comes from Him. We must always work for the glory of God. Praise Him daily.

Gold up18.80 to 977.80 and silver 15.51 up 0.36.

Best to each, Doug



Thursday, May 28, 2009

A Look at the Dollar, Gold, & Miners - Where will you spend eternity?

We have not looked in on the dollar in a while, so here it is. That, folks, is a nasty graph. Technically, it is indicating that the dollar has much farther to go on the down side. I try to keep sufficient dollars available to cover known bills for a minimum of a month and strive to hold on to six month supply. I seldom make the six month target, because I am reluctant to keep that in dollars. The downside risk is greater than I want to run. Unfortunately, the graph is as of May 27th.
Below is the street Tracks Gold Trust. It is a good proxy for gold, itself, but is updated throughout the day, where as the stockcharts.com graph for gold is not. Here we see an encouraging graph for the metal. The technicals are positive, and the fundamentals for precious metals are still strongly bullish.
The miners are sprinting higher. I did buy in to HL, DROOY, and VGZ yesterday. Since the prices were much higher than my usual buying range, I took very small bites. I plan to continue this on each dip in prices. Were we to have a correction, I would be in with both guns blazing. Here are the prices: DROOY 10.09; HL 3.48; HMY 11.90; SLW 9.92, and VGZ 2.69. My buy in yesterday was lower in each case. By the way, averaging as stock move upward is a much safer technique than averaging on a continuing downward move. Downward is likened to trying to grab a falling knife and many get burned doing it.
Both gold and silver are in a happy mood, as of now. They are reaching upward. Neither has been slammed down. Gold is 962.40 up 14.10 and Silver is 15.12 up 0.46. Both are very strong and on up ticks. It is likely that both are overbought at this time and will be looking for an opportunity to correct a bit before going much higher. That would be the normal scenario, but these are not normal times. During a third phase run, we could see $50-$100 daily sprints.


From the Telegraph London:

British banks revolt against Obama tax plan

British banks and stockbrokers may refuse to take on American clients if new international tax proposals outlined by President Obama are passed.

By Louise Armitstead

The decision, which would make it hard for Americans in London to open bank accounts and trade shares, is being discussed by executives at Britain's banks and brokers who say it could become too expensive to service American clients. The proposals, which were unveiled as part of the president's first budget, are designed to clamp-down on American tax evaders abroad. However bank bosses say theyare being asked to take on the task of collecting American taxes at a cost and legal liability that are inexpedient. Read the article HERE.

More of Obama's war against the people. There will be more to come. The move beyond socialism is in full swing. Of course, G W Bush moved strongly in the same direction. By the way, where is the promised change?

From online.Barrons.com:

The Housing Hurricane Will Howl Again

By MIKE MORGAN

WE'RE OUT OF THE EYE OF THE HURRICANE, but here comes the back half of the storm. A lot of people think that we've seen the worst of the housing crisis. They're talking about green shoots and glimmers of hope, when they should be back in the storm shelter, preparing for a flood of inventory that will overwhelm the markets and produce another round of falling prices. Read it HERE.

I thought that most "economists" thought the housing bubble burst was over. Perhaps, this increasing interest rates, though very slow, are having a rational impact. Borrowers have to pay higher rates and jump through higher hoops for loans. That hurts!

From MineWeb.com:

A collapsing dollar could push gold back above $1,000

With analysts and economists beginning to focus again on the potential for a dollar collapse in the light of the huge US deficit and a major increase money supply, gold could test new highs in the next few months.

Author: Jan Harvey and Veronica Brown
Posted: Wednesday , 27 May 2009

LONDON (Reuters) -

Dollar weakness could prove a boon to gold, pushing prices to new highs for the year above $1,000, as the influence from stock markets and attitudes toward risk wane in favour of its traditional driver.

Last week's dollar tumble saw investors look anew at its fundamentals at a time when gold-specific factors were lacking, leaving the metal to move unfettered through key resistance at $935.50 and hit 8-week highs above $960.

On Wednesday gold was trading around $950 an ounce. Read it HERE.

I expect gold to trade above $1000 this year. The big question is can it surpass $1000 and move higher as the third phase continues. The downside is that this would mean hyperinflation of the type of 1979-1980. That means that prices which are already moving higher would be much higher. Not much fun! But forewarned we can better prepare.

From Independent.co.uk:

Cold, hunger and job losses ignite dissent in Russian town

Impoverished workers resort to eating salads of weeds and nettle soup

By Shaun Walker in Moscow

The Kremlin's worst fears are being played out in a small town outside St Petersburg, as angry residents of crisis-hit Pikalevo marched upon the offices of the local mayor and demanded improved living conditions. Read it HERE.

Perhaps, we can avoid this for the most part. I pray so!

From Casey's Daily Resource Plus:

"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. - Ernest Hemmingway...Notes on the Next War: A Serious Topical Letter...1935"

That has often been the course of history. Will it happen again? War is normally the result of trade wars as each nation escalates the barriers to trade. I wonder if wars can result when a world reserve currency is threathened to be dethroned. Guess we will see before too long if China has its way.

No one on earth knows the exact timing of economic or any other events. However, as we study and apply God's word to every area of life, we can predict with some accuracy the results of actions taken in the world today. The question of when the results will be seen is in the hands of the Sovereign God who has planned and is executing His plans. We do know that King Jesus will one day in the future be sitting on the White Throne of Final Judgment before which the living and the dead will appear for the final judgment. His people, the sheep, will be given an eternal life in close fellowship with our King in a world restored to a wonderful condition with neither sin nor the damage done by sin. Those who are the lost goats will be condemned to an eternal life away from our King in a terrible place of continued pain, the bible calls Hell. This is fact.

You beliefs do not change facts. But they do have everything to do with your future life. I suggest you diligently study the scriptures and find a church which accurately presents the word of God, administers the only three sacraments ordained by Jesus Christ and exercises discipline over its member. These are the measures of the true Church, the Body of Christ. Let us praise Him daily for His providential care of us and daily ask for a return of our leaders and citizens to Him as the Lord and Master He is.

Best to each, Doug




Wednesday, May 27, 2009

Miners Moving Upward - Economics 101 on Bonds

Below is a graph of the Miners. Please, observe the trough outlined by the red lines. This is an important indication of higher prices in the near future. It is a strong upward move. This trend will continue until it is broken. However, the price is well above the lower outline of the trough. Prices would have to fall to about 39.50 before the trend would be broken. A temporary break of the trend line would be significant only if the prices should stay below the line. I suspect we could see a testing of this resistance, but all indications from this technical perspective is that it will hold. We will have to wait a see for certain.

Both gold and silver are holding very well. There seems to be a struggle between the boyz and strong buying. The boyz are particularly well financed and represent a substantial combatant in these markets. We do not know who else is involved. Richard Russell indicates that we are in the early stage three of the bull market in precious metals. He says that gold above 1003 and higher would be a strong indicator of the third phase when the "gold rush" is fueled by the lemmings who climb aboard at the last minute.

Gold is 953.10 up 1 and silver is 14.65 up 0.04 with both on up ticks. The DOW is off 43.25 at 8430+. Our miners are DROOY 9.56; HL 2.23; HMY 11.47; SLW 9.54, and VGZ 2.43. All are holding near recent highs. We will be watching as it may be wise to add to our holdings at these higher prices. A gentle correction is possible to provide a real buying opportunity, but only time will reveal if this will happen.

Below are some interesting article by our conservative "friends." Note Williams' article on the housing bubble and Sowell's and Will's on the supreme court.




Revisit the housing bubble with Walter E. Williams from Townhall.com:

The Housing Boom and Bust
by Walter E. Williams

Hot off the press is my colleague Dr. Thomas Sowell's 43rd book, "The Housing Boom and Bust." The book is an eye-opener for anyone interested in the truth about the collapse of the housing market that played a major role in our financial market crisis.

The root of the problem lies in Washington. The Community Reinvestment Act of 1977, later given teeth during the Bush and Clinton administrations, forced financial institutions to make risky mortgage loans they otherwise would not have made. President Clinton's Attorney General Janet Reno threatened legal action against lenders whose racial statistics raised her suspicions. Bank loan qualification standards, in general, came under criticism as being too stringent regarding down payments, credit histories, and income. Fannie Mae and Freddie Mac, two government-sponsored enterprises, by lowering their standards for the kinds of mortgage paper they would purchase from banks and other mortgage lenders, gave financial institutions further incentive to make risky loans. Read it HERE.

From Town Hall.com:


Sotomayor: "Empathy" in Action
by Thomas Sowell

It is one of the signs of our times that so many in the media are focusing on the life story of Judge Sonia Sotomayor, President Obama's nominee for the Supreme Court of the United States.

You might think that this was some kind of popularity contest, instead of a weighty decision about someone whose impact on the fundamental law of the nation will extend for decades after Barack Obama has come and gone.

Much is being made of the fact that Sonia Sotomayor had to struggle to rise in the world. But stop and think.

If you were going to have open heart surgery, would you want to be operated on by a surgeon who was chosen because he had to struggle to get where he is or by the best surgeon you could find-- even if he was born with a silver spoon in his mouth and had every advantage that money and social position could offer?

If it were you who was going to be lying on that operating table with his heart cut open, you wouldn't give a tinker's damn about somebody's struggle or somebody else's privileges.

The Supreme Court of the United States is in effect operating on the heart of our nation-- the Constitution and the statutes and government policies that all of us must live under.

Barack Obama's repeated claim that a Supreme Court justice should have "empathy" with various groups has raised red flags that we ignore at our peril-- and at the peril of our children and grandchildren.

"Empathy" for particular groups can be reconciled with "equal justice under law"-- the motto over the entrance to the Supreme Court-- only with smooth words. But not in reality. President Obama used those smooth words in introducing Judge Sotomayor but words do not change realities.Read it HERE.

From TownHall.com:

Identity Politics on the Supreme Court

May 27,2009

WASHINGTON -- Responding to early 19th-century rumors that they drank excessively, the Supreme Court justices decided to drink nothing on conference days -- unless it was raining. At the next conference, Chief Justice John Marshall asked Joseph Story to scan the sky for signs of rain. When Story said he saw none, Marshall said: "Our jurisdiction extends over so large a territory that the doctrine of chances makes it certain that it must be raining somewhere -- let us refresh ourselves."

Americans have argued about the court's jurisdiction forever. They should not stop, especially now that the president has nominated U.S. Appeals Court Judge Sonia Sotomayor.

The 1987 fight over President Reagan's nomination of Robert Bork interred the tradition that the Senate, in evaluating judicial nominees, would not delve deeply into the nominee's jurisprudential thinking. Bork's defeat was unjust, but the new approach to confirmations was overdue, given the court's increasingly central role in American governance.

Before Sotomayor's confirmation hearings begin, the Supreme Court probably will overturn a ruling she supported on the 2nd Circuit -- the propriety of New Haven, Conn., canceling fire department promotions because there were no African-Americans (although there was a Hispanic) among the 18 firemen the selection test made eligible for promotion. A three-judge panel of 2nd Circuit judges, including Sotomayor, affirmed a district court's dismissal of the firemen's complaint, doing so in a perfunctory and unpublished order that acknowledged none of the large constitutional questions involved. Read the article HERE.

From MineWeb.com:

The rising cream of the gold crop

A glance at 50 of the most in-demand listed gold stocks, busy running away from the rest of the global investment universe.

Author: Barry Sergeant
Posted: Wednesday , 27 May 2009

JOHANNESBURG -

By now it can be argued that the most positive defining instrument of the global appetite for risk and reward is represented by gold bullion, as also seen in gold bullion exchange traded funds (ETFs), of which the biggest by far remains the SPDR Gold Shares ETF, which currently holds physical gold bullion of just less than 36m ounces, worth USD 34.5bn.

SPDR Gold Shares, which represent a proxy holding in physical gold bullion, is trading, like gold bullion itself, just 5% below dollar price highs, seen during March 2008. By the same token, silver bullion and silver ETFs are trading roughly 25% below the price high seen for the physical precious metal, also recorded just over a year ago.

The performance of gold bullion and gold ETFs has not only outclassed any other kind of publicly available and widely traded investment in absolute terms, but has also given a steadier 12-month return, defying the traditional perception of volatility attached to the metal. Established gold royalty companies such as Franco-Nevada have also performed very well, much in line with gold ETFs, in trading close to highs at this point in time. Read the article HERE.

From MineWeb.com:

Harmony actively seeking to buy assets, now that it's debt free

Harmony Gold Mining said it had met its long-stated target of being debt free by mid this year, and was still actively seeking to buy assets but had yet to identify any worthwhile mines.

Posted: Tuesday , 26 May 2009

JOHANNESBURG (Reuters) -

Harmony Gold Mining Co. said on Tuesday it had met its long-stated target of being debt free by mid this year, and was still actively seeking to buy assets but had yet to identify any worthwhile mines.

The company has previously said it would consider acquisitions around the world once it became debt free, targeting companies in financial trouble because of the global financial crisis.

Harmony said in a statement it had repaid its 1.7 billion rand convertible bond, and interim Financial Director Frank Abbott told Reuters the world's fifth biggest gold producer had 1.5 billion rand in cash by the end-April.

Harmony said the convertible bond was issued on 21 May 2004 and was listed on the London Stock Exchange.

"Harmony's balance sheet is in excellent health. With cash in the bank, we are in an exciting and advantageous position," Graham Briggs, Harmony's Chief Executive said in a statement. Read it HERE.

HMY is one of my core holdings and it is looking even better with this good news.

From John Embry in Investors Digest:

China, western central banks out of sync on gold

Get the PDF article HERE.

From MondayMorning.com:

China Seeks to Dethrone the Dollar, Transforming the Yuan into the Dominant Global Currency

By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

China has taken yet another step to transform the yuan into the dominant global currency, a long-term initiative that could ultimately dethrone the dollar as the world’s top unit of exchange.

In the last four months alone, China has signed currency swap agreements worth more than $95 billion (650 yuan) with an array of nations - including: Argentina, Brazil, South Korea, Indonesia, Malaysia, Belarus and Hong Kong - that are only too glad to move away from the increasingly shaky U.S. dollar. Read it HERE.

These articles on China indicate that China is a real threat to the global supremacy of the dollar. Notice the emphasis of the Chinese on gold. This is important news and we should keep it in mind.

Below is more on the intervention of the U. S. government into the precious metals markets. It is a shame that too many people dismiss this as false. The article is well written by James Turk who is vitally concerned about the situation.

From Freemarket Gold & Money Report FGMR.com:

Behind Closed Doors

Copyright © 2001 by Freemarket Gold & Money Report. All Rights Reserved.

First published on April 23, 2001 in FGMR #283

This past December in "The Smoking Gun" I provided substantive proof that the Exchange Stabilization Fund was intervening in the gold market. From publicly available reports prepared by the Federal Reserve, I established that the weight of gold held as a component of the US Reserve Assets has been changing, and that these changes - some of which are of significant size - result from activity by the ESF. These Federal Reserve reports conclusively demonstrate that the ESF has been intervening in the gold market since at least 1996.

Though these Federal Reserve reports make clear that the ESF is involved in the gold market up to its 'earmarks', a lot of people remain skeptical. I don't know why that is. It is worth noting that many of the most obstinate skeptics who deny US government involvement in the gold market live overseas and have little, if any, experience or understanding of the way the US government really works. But even Americans find it difficult to accept that the US government intervenes in the gold market. Ironically though, they readily admit that the government intervenes in the debt markets, foreign currency markets, and according to a growing number of people, even in the US stock market. It is therefore most baffling that they do not concede the ESF's involvement in the gold market. Read it HERE.

I want to discuss for your information the relationship of bonds and interest rates. There is a growing pressure on the Federal Reserve to increase interest rates. I do not believe that it will be coming very soon, but we are seeing a slowly increasing rate of interest on newer issuances of the Treasury. This has been necessary to satisfy buyers of Treasury bonds and notes. Inflation is the other situation which will eventually force the Fed to increase interest rates. Thus, we are in a period of time where interest rates would be expected to rise. This is negative for bonds.

Let's look at the situation on bonds. For example, if one is holding $1000 face value bonds which were issued at 5% interest (the prevailing rate at the time the bonds were issued), he would expect to receive $50 annual interest on the bonds. He is all set and feels very safe with his investment.

However, were the prevailing interest rate to go upward the situation would drastically change. To illustrate, let's say the interest rate would double to 10%. The newer bonds would be issued at or very near 10%. Our investor holding the $1000 face value 5% bond would experience a significant drop in the market value of his bond.Why does this happen?

In a 10% interest environment, a person could if they were available could buy a $500 face value bond which would then pay $50 a year in interest. Thus, the holder of the $1000 5% bond would find that his bond now has a market value of $500. He has lost 50% of its original value.

Thus, it is not economically rational to purchase bonds in an environment in which interest rates are rising. On the other hand, the purchase of bonds is rational in a period when interest rates are dropping, Because the opposite is true.

Many who invest in bonds will be traders as the interest rates change.

I am an optimist, because I know that my Redeemer lives and that He loves me and His people. He has made many promises to His people and we can rest comfortably in faith, because He does not lie. He is in control and will fulfill every promise. We must also work for His glory and the spread of His Kingdom in response to His love and care. Praise King Jesus and serve Him with the mind, soul, and strength that He has given each of us.

Best to each, Doug





Tuesday, May 26, 2009

The Boyz are Back - Rest in the Lord for Peace and Joy

Once again we are treated to a flagrant display of market intervention by the boyz. Shortly after the London open, they played their game and hammered both gold and silver. Then they hammered again as both fought back to rise.


Both silver and gold are down after the three day holiday after having a banner week. Gold is currently 647.60 and silver 14.49. Both are on down ticks. The miners are off some today, but still trading near their recent highs. DROOY 6.74; HL 3.24; HMY 11.39; SLW 9.19, AND VGZ 2.56. We may have to adjust our buying range a bit higher.

From MineWeb.com:

South African gold output in downward spiral

No longer the world's leading gold producer, South Africa's output of the yellow metal continues to fall as mines get older and grades decline.

Author: Lawrence Williams
Posted: Tuesday , 26 May 2009

LONDON -

For most of the last century and the first few years of this one, South Africa was by far the world's largest gold producer, but production has been dwindling steadily since the 1970s as some of the biggest mines have aged, old mines have closed and grades are dipping. This process shows no evidence of slowing - indeed it may be accelerating, compounded by electrical infrastructure problems across the country and much stricter investigations into mine accidents and fatalities which has led to mines being closed for several days while such adverse events are examined by the authorities.

Last year, South Africa fell from being the world's largest producer to number three - behind China and the U.S.A. - but some thought it might recover its position given all the mines were shut down due to power shortages for a few days during the first quarter - and electricity has effectively been rationed to around 90% since. Read it HERE.

Not good news for South Africa. China is the new winner in the race for top producer.

From the Daily Pfennig: "The U.S. Treasury will auction $162 Billion in securities, with maturities ranging from three months to seven years. $162 Billion Folks! In one week! This supply has got to be choking the foreigners we need to buy it so that our deficit can be financed! When will they do the Roberto Duran, "no mas"? Let's hope it doesn't come to that, but quite frankly I wouldn't blame the buyers if they did back away... Too much of something isn't good..."

Remember the Economic principle of Supply and Demand. When the supply is great, value is usually less. In this case, it would appear to be less attractive to buyers which would lower demand. Of course, the Fed is committed to buying much of the left over with more debt.

From MineWeb.com:

Commodities a buy

The Bank Credit Analyst has upgraded commodities to overweight, with energy at the top of the buy list.

Author: Barry Sergeant
Posted: Monday , 25 May 2009

JOHANNESBURG -

The general pricing level of resources stocks listed around the world has now moved up to the best levels seen since October 2008, as investors and other increasingly search for value, as the global economic crisis increasingly recedes on tickets for speeding, and for speeding against the traffic flow.

For one, strategists at the Bank Credit Analyst have upgraded commodities to overweight, with energy at the top of the buy list. Among the key themes, commodities should benefit from both a weaker dollar, "and a shift in investor portfolio preference toward real assets as a hedge against inflation". The upturn in BCA Research's global leading economic indicators is seen as "another positive sign for the commodity complex".

While supply-demand fundamentals remain idiosyncratic for each commodity, in singling out energy as "top" of the buy list, BCA Research argues that "the rally in oil from the low $30s is technically impressive against the weak global demand backdrop and elevated inventories". Oil prices have touched $62/barrel recently "despite lofty US oil inventories (notwithstanding recent inventory declines) and the fact that Americans are driving much less than last year".

The higher price of oil is seen as reflecting in part the upturn in Chinese oil imports and car sales at a time when oil production is lagging. Russia, states BCA Research, "continues to have difficulty boosting output and oil production has been flat for most OPEC countries. Saudi Arabia has cut production sharply". Read it HERE:

When the Bank Credit Analysts speak, we should listen.

From DailyReckoning.com:

Mogambo wrote,"I admit that I did not read the article, but as far as I know, there are only two good reasons to own gold; to preserve wealth when prices are stable, and to make a lot of fiat wealth when your government acts so stupid as to create, or allow to be created, excess money and credit that eventually destroys the currency, especially when undertaken so as to enlarge the size of government, like now, which makes the problem of inflation worse because those more government weenies have a bigger incentive to save their own phony-baloney jobs, but can only make things worse."

Mogambo Guru speaks with straight tongue.

From MondayMorning.com:

As GM Cruises Toward Government Deadline, U.S. Automakers Must Learn to Deal With a Permanently Smaller Market

By William Patalon III
Executive Editor
Money Morning/The Money Map Report

General Motors Corp. (NYSE: GM) is closing in quickly on its June 1 deadline to finish overhauling its operations, or opt for Chapter 11 bankruptcy. Because that deadline is actually one week from yesterday (Monday), analysts and investors will be watching GM closely this week.

No matter which path GM chooses – conventional restructuring or bankruptcy – the U.S. Big Three of GM, Ford Motor Co. (NYSE: F) and Chrysler LLC will have to adjust to the U.S. auto market's post-financial-crisis "new reality." Automakers will sell only 10 million cars and trucks in the U.S. market this year, the worst in at least 30 decades – and roughly 38% less than the 16 million vehicles that were... You can read the full article HERE.

Even with bail outs and or bankruptcy, they are not out of the woods for the future.

The markets remain choppy and highly volatile. We must use extra caution in any purchases and be quick to sell general market stocks which remain as we seem to be nearing the end of the bear rally. I am out of the general market, as I have even sold the DIA options traded during the last four weeks. The Mogambo hit the nail on the head of the reasons for holding gold.

It is not that we put our trust in gold, but rationally see it as a hedge against the proliferation of unbacked paper currencies of the world. From a biblical view, gold and silver are true money and have been used for many centuries. God even mentioned that the gold was good early in the Book of Genesis. God's way is always best.

We must always study the word of God and follow His way. He made each of us, and knows us in great detail. Thus, He, alone, knows the paths we should follow. He is sovereign in all things.

Rest in the Lord for the peace that passes all understanding. Be obedient to Him and work for His glory and the expansion of His kingdom on earth. There is no other way than through Jesus Christ, our Savior and Lord.

Best to each, Doug









Sunday, May 24, 2009

The Failure of Our Families and Churches in the 20th Century

Folks,

This is a three day weekend, so there will be only international markets until Tuesday morning. It would be an easy time for the boyz to trample the precious metals markets. There should be very light trading during this period. As of now 9 pm Central Time May 23, they have not chosen to hammer them yet. They still have time.

I have been listening to a very interesting series of CDs on the Twentieth Century which was characterized by a slaughter of men and minds. There have been many causes of the slaughter of minds. It seems to me that the greatest cause were twofold.

First, there was the deliberate Marxist take over of our motion picture industry and schools. It was deliberate as the Marxist took control of Columbia University to train teachers to become human engineers to cause students to become virtual unthinking robots who desired to be cared for by the state. This social engineering produced students who were dependent upon the state as a false messiah.

The state actually became and idol in the full sense of the word. The movement which was perfected by Stalin and his followers was almost complete by the end of the 1960s. Of course, it began much earlier.

By the way, the major difference between socialism and communism is that in communism most of the major industries and financial businesses are owned by the state. This seems to be the case as the new administration obtains more and more ownership or control over banks, and other failing industries; such as, GM, and likely Chrysler. This is taking place under the guise of bail out of businesses considered too big to fail.

Second, and likely equally as important is the feminist movement, particularly, in America. This has not elevated women, but, rather, it has degraded women and moved them out of their primary place in the home into the work place, and finally into the military front lines.

Little do these women know of their noble calling as mothers in the home. Little do they realize the great impact that they have in the homes in preparing the children for the task of glorifying God and furthering His kingdom. They can have a great impact upon multiple generations of off spring for the glory of God by performing the task of raising children in the nurture and admonition of the Lord under their husbands who are ultimately responsible. They are called to be help meets for their husbands.

The bible even tells women that they are saved through child bearing. This is a glorious God-given responsibility. The Godly woman rejoices, as my wife often did that she was my perfectly appropriate helper. She often told me that she was glad that I was the one who had to answer to the Lord for the family and that she did not. It was a great peace to her. She was a Godly wife who feared the Lord and attempted to instill the word of God in our children and grandchildren. She knew her calling of God and responded to in so many ways for which I am eternally thankful to her and to the Lord for her 55 years of courtship and marriage.

Also, in the feminist movement, we have seen the feminizing of men. Most young men of today are without proper respect for women and children. In the audio CD which I was privileged to hear, it was pointed out that the sentiment on the Titanic was women and children first. Most of the men willingly stayed behind and died as the Titanic sunk, but the women and children were saved. Would that be the situation today? I think not.

We send women to battle in the military where they are slaughtered, raped by the enemy, and often ravished by the men in our military. Men are to be protectors of women, but are they today?

How many of you young men open the door for your girl friends and wives. How many of you back away and let the woman go through the doors or board the elevators before you. Simple acts of courtesy of this type may not seem important, but this is a way of showing women that you are their protectors. These may seem trivial to you, but are critically important in developing the respect that men are to show to women.

As men have become feminized, they have failed to exercise their responsibility as heads of households, as the spiritual leaders which God has called them to be. One of the Marxist ideas was to undermine the father, husband as patriarchal head of the family. They taught that the father was not really necessary in the home. This has lead to a break down in families.

We must realize that the family is God's basic unit of society. Under God's plan it consists of a father, husband with a wife, mother as his help meet and children for which the parents are responsible for raising in the fear and admonition of the Lord to have a Christian world and life view which they are to live out and perpetuate to their own children for generations which follow.

Churches must teach this and insist that their members heed the word of God on all aspects of life. A recovery from our American decadence will come about only as the people of God humble themselves before the only true Sovereign God of all, repent, turn from their wicked ways, and follow the word of God in all areas of life.

This must be done from the bottom up. It must be initiated in the family, the churches, and the communities. Then it can flow upward to the states and the national level. God preserves His remnant for the reestablishment of this city set on a hill as the light unto the world its founders foresaw. With the blessing of God, America can once again become the great nation it once was.

Let's get to the task at hand and raise generations of God fearing children who will take over the kingdom work under Jesus Christ our Savior and Lord.

Best to each, Doug

Friday, May 22, 2009

Metals Up Dollar Down - Families & Churches are reponsible for our "Woes."

The miners are sprinting upward. Here are our traders: DROOY 10.15; HL 3.46; HMY 11.67; SLW 9.72, and VGZ 2.65. Don't you wish now that you had bought more? I do, too! However, I still hold all of them.

Here is another look at the metals and miners.
Gold headed for 960+ from all appearances. It was not slammed down at the usual time today. Maybe later. Remember, we are facing a long week end.
Silver seems under pressure. Perhaps, silver is the one to be pushed downward today. Of course, it is early in the trading day.

Folks,

Gold touched above 960 this morning. It has dropped off a bit from that, but has yet to be slammed down. The miners are surging ahead. I am thinking that it may not be the time for trailing stops unless you are sitting on a lot of capital gain. If you use them, do not use them on your entire stock of miners. I have too often been stopped out when I would rather stay in. In the use of trailing stops, you do protect some of the profit, but always run the risk of being stopped out. I am waiting for another strong spike upward to add more trailing stops. Then I might consider 10-15% trailers.

To be on its way to 1000, gold must hang tough above 960. There is always lurking behind stage, the bullion banks, central banks, and governments who are intervening to put a cap on the price of the precious metals. We must always keep this in mind. The Lord seems to be allowing them enough rope to hang themselves if they lose control of the metals.

Below are some interesting articles which are optimistic on the precious metals and very negative on the dollar. My prediction is that the dollar will not long be the only reserve currency in the world with the advantages thereof falling to the U.S. At the very least it will be one of the reserve currencies and sharing the honor and privilege with the Renminbi and the Euro. China has already made agreements across Asia and into South America to trade with the other nations in their own currencies or the Renminbi. Though these are small steps, it only takes a small leak in a dike to destroy the whole dike over time. That is precisely what is happening in the reserve currency arena. Note that the Fed did not cover the shortage in buying of U.S. Treasury issuances in the recent auction. The Fed does promise to buy more in the future. Why is this necessary? The international buyers have slacked off some recently.

From the Australian Business:

Gold visits old relationship with the US dollar


GOLD and the US dollar have moved back to their traditional inverse relationship lately, although some analysts say it remains to be seen how long this will last and how strong it will be.

Historically, gold tended to rise when the U. S. Dollar fell as investors turn to the metal as an alternative currency, and vice-versa. But that relationship went by the wayside for much of the last half year as both often moved inversely to the stock market, analysts said.

For instance, the US dollar index rose from a low of 77.688 on December 18 to a high of 89.624 on March 4. In the past, that might have pressured gold. But this time, June gold futures on the Comex division of the New York Mercantile Exchange rose from a December 5 low of $US748 an ounce to a February 20 high of $US1009.80. Read it HERE.

From Associated Press:

Gold prices climb to 2-month high as dollar falls

Gold prices jumped Thursday, rising above $950 an ounce for the first time in two months, as the dollar lost more ground against other currencies.

The precious metal has moved steadily higher in recent weeks amid weakness in the dollar. Prices are up 6.7 percent for the month. Gold benefits from a falling dollar because investors use the yellow metal as a hedge against inflation and a weak currency.

On Wall Street, stocks sold off sharply on disappointing jobs data, which touched off fresh worries about the economy. The Dow Jones industrials plunged nearly 190 points in afternoon trading, while broader market indexes lost more than 2.3 percent. Read it HERE.

From MineWeb.com:

US dollar continues to fall, gold at $950 as green shoots wither

As the dollar continues to fall and the economic recovery predicted by politicians still seems to be far away, gold has breached the $950 psychological barrier and remains the best wealth protector.

Author: Lawrence Williams
Posted: Friday , 22 May 2009

LONDON -

Market optimism appears to be waning, the dollar is falling and the prices of gold and oil are rising again as a consequence. The big question now facing the investments sector is whether the latest stock market downturn marks the end of the recent bear rally and the bear market in equities is about to re-emerge sending stocks to new lows.

The long-expected weakening of the dollar is emerging as the US Fed is seen to be pouring still more money into market stabilisation, yet there is still no sign of inflation being stimulated, which must be a major worry for the authorities who probably see controlled inflation as the way forward. Indeed the opposite is still occurring. In the UK for example the latest cost of living indices are falling ever faster turning recession into deflation. This is a frightening scenario given the billions of dollars, pounds and euros being pumped into the global economy. Read it HERE.

The Fed and Federal Government are still pouring fuel on the economic fire. It hasn't solved, nor will it solve the situation. Only the free market can bring a real solution. But banks and governments want central top down control and cannot tolerate free markets.

From Lloyd's List:

Half of all listed shipping companies may go bust

Paul Slater

MORE than half of the shipping companies with stock exchange listings could slide into bankruptcy or administration proceedings in the next year as their cash drains away, a senior industry figure has warned. Read it HERE.

This is an ominous sign of recession. Products must be shipped to be sold. Less shipping = less business.

From Bloomberg.com:

Dollar Is Dirt, Treasuries Are Toast, AAA Is Gone:
Mark Gilbert


May 21 (Bloomberg) -- The odds on the dollar, Treasury bonds and the U.S. government’s AAA grade all heading for the dumpster are shortening.

While currency forecasting is a mug’s game and bond yields can’t quite decide whether to dive toward deflation or surge in anticipation of inflation, every time I think about that credit rating, I hear what Agent Smith in the “Matrix” movies called “the sound of inevitability.”

Several policy missteps suggest that investors should stop trusting -- and lending to -- the U.S. government. These include the state’s pressure on Bank of America to buy Merrill Lynch & Co.; the priority given to Chrysler LLC’s unions over the automaker’s secured creditors; and the freedom that some banks will regain to supersize executive bonuses by giving back part of the government money bolstering their balance sheets.Read it HERE.

It seems that this man could come right out and say what he means. There is no need for beating around the bush.

History is moving the way the Lord wants it to go. He is sovereign! How wonderful it is to know the Sovereign of all. By the way, you should realize that it is not the Federal Government, the Federal Reserve, or any other civil authority which is the cause of our moral and financial decay. It is the direct fault of the families and churches of America who have failed to follow God's law and apply it to every aspect of life. For the Lord to bless America as He did in the past, the people of God will have to have a Christ centered world and life view. To do this, we must recognize the law of God as the supreme law of life. We must rebuild the City of God to replace the City of Man which America has become. Pray that the Holy Spirit will give the people of God the courage and wisdom to do this soon.

Gold is 957.50 and silver 14.67

Best to each, Doug





Thursday, May 21, 2009

We Must Trust in the Lord - Miners Still Strong

Here is a beautiful graph revealing the strength of the miners. This is the good news. Now for the bad.
This is one of the nastiest graphs I have seen in a while. That should give you all kinds of confidence in the "almighty" dollar. NOT!
Gold is still holding up very well. The bullion banks are holding off for the time being. They can turn this around at any time they desire. Why are they holding off? Who knows, not I. Of course, we know that our Sovereign God knows. I will wait as patiently as possible to see what He has in store for us.
Silver is still holding above 14 which is good. For how long? I don't know.
Here are our miners: DROOY 9.36; HL 3.09; HMY 10.59; SLW 9.03, and VGZ 2.32. They are still very strong though off slightly today. The Dow is off 141.22 to 8284+.

From Reuters.com:

Wary of U.S. debt, China shifts gears on investment

Tue May 19, 2009

By Simon Rabinovitch - Analysis

BEIJING (Reuters) - China has engineered a subtle yet significant shift in the investment of its foreign exchange reserves, a sign of how it is willing to act on concerns about financing an explosion of U.S. debt.

Beijing has been far and away the single biggest foreign buyer of Treasuries over the past year, but this apparent vote of confidence belies how it has turned its back on long-term U.S. debt in favor of shorter maturities.

China's move to the shorter end of the U.S. debt spectrum is a defensive tactic adopted by the wider market as well on the view that the United States will have to raise interest rates down the road to control inflationary pressures when the economy recovers from the financial crisis. Read it HERE.

This consistent with the Chinese moves to trade with Asian and South American trading partners in their own currencies rather than the dollar. China is moving away from the dollar. How long will they continue to buy our debt? It looks as though the time is getting shorter. Then who will support our spending binge? The day is coming. I believe it is probable this year or next.

From CNBC interview with Jim Rogers:

Another Bottom for Stocks Coming

The stock market may hit new lows this year or the next as the current rally has been largely caused by the money printed by central banks and fundamental problems remain unsolved, legendary investor Jim Rogers told CNBC Wednesday.

His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth.

"I'm not buying shares if that's what you mean. Not at all," Rogers told "Squawk Box Asia."

"The bottom will probably come later this year, next year, who knows when," he added.

Governments have not solved the essential problems that caused the crisis but instead they "flooded the world with money," according to Rogers. Trying to solve the problem of too much consumption and too much debt with more consumption "defies belief" and will not work, he said. Read the article HERE.

While CNBC is not the best business news in town, when Jim Rogers speaks, we should listen.

From Bloomberg.com:

Saudi Arabia’s Dominance Challenged as U.A.E. Rebels

May 21 (Bloomberg) -- The United Arab Emirates is rebelling against Saudi Arabia’s dominant role in the Gulf, pulling out of a single-currency project after the Saudis won the right to host the central bank.

Unless a compromise is found, the U.A.E. withdrawal will effectively end the Gulf Arab dream of creating a monetary union for a group with a combined gross domestic product of $1.1 trillion.

The dispute threatens to set back integration among the six nations of the Gulf Cooperation Council and their desire to adopt a monetary policy independent of the U.S. as they face the global financial crisis and a perceived threat from Iran.

“Saudi Arabia will have to show it understands the concerns of its smaller neighbors to continue on the path of unity for the GCC,” said Jean-Francois Seznec, an expert on the Gulf oil monarchies at Georgetown University. “The U.A.E as well as other countries wants to be taken seriously now.” Read it HERE.

Talks broke down, but the trend is still there. Replace the dollar is the cry! It will come.

From MineWeb.com:

Metals and minerals commodities prices to experience summer doldrums, but rally again in Fall

In the latest Scotiabank Commodity Price Index, economist Patricia Mohr suggests recent uranium prices of US$40-45 were unsustainably low, given the high capex cost for uranium mine development.

Author: Dorothy Kosich
Posted: Thursday , 21 May 2009

RENO, NV -

While investor interest in commodities and China's demand may taper off in late summer, Scotiabank economist Patricia Mohr suggested Wednesday prices will likely rally again in the Fall.

Mohr advised three key developments will cause prices to rally:

1) The Asian tigers are likely to lead word economic recovery, with larger fiscal stimulus programs than in the G-7 and more potential for domestic spending (i.e. npn-export led expansion);

2) The reflation trade-investment managers and hedge funds positioning portfolios to take advantage of rising commodity prices and potential inflation as the world economy reflates over the next two years. Mohr noted that price targets for Canadian mining equities "are already being boosted to mid-cycle levels."

3) A growing interest in ‘hard assets' rather than ‘paper' currencies or U.S. treasury bonds by China and sovereign wealth funds, "as evidenced by China's huge direct investment in Australian mines and interest by Asian utilities (South Korea, Japan and possibly China) in locking up guaranteed supplies of uranium through equity investment in Canadian mines." Read it HERE.

From MineWeb.com:

Gold finding support at prices around $900

Over the past couple of weeks the gold price has been resilient at a time when weakness might hav been anticipated. Buying on any weakness is recommended.

Author: David Levenstein*
Posted: Wednesday , 20 May 2009

JOHANNESBURG (South African Gold Coin Exchange) -

Although many gold commentators including myself have been expecting to see the gold price soften in the short-term, the price of the precious metal has been extremely resilient over the last few weeks, and is showing signs of good support at prices around $900. Each time gold has dipped below $900 it has recovered very quickly, even though there are certain fundamental reasons which should, under normal circumstances, put pressure on the gold price.

Despite the fact that certain central bankers have indicated that there are some encouraging signs of a recovery and despite the fact that risk appetite for equities has made a comeback over the last several weeks, gold has remained steady. Often, investors tend to sell gold to raise cash when they expect higher returns in other markets, such as equities and currencies, there has not been any evidence of any major selling of gold. Read it HERE.

It is good to end on a cautious note. These markets are very risky. One is wise to be cautious and to use trailing stops on a portion of even the mining stocks. I used them this week and lost some shares I did not want to sell. However, I am happy to have the profit and the cash for repurchasing should the prices drop down again.

I know that I am learning more about trusting in the Lord for security and His blessings. He seems to only provide that for which we can be trusted for stewardship. He also provides the Holy Spirit to teach us as we study the scriptures and learn to apply it is our lives. What a blessing this is to each one who diligently studies and follows the word for all of life. We must continue building the City of God and move away from the City of man which is actually the domain of Satan. As we grow in the likeness of Jesus Christ, we learn to trust in Him and await His answers in HIS time.

Best to each, Doug