bowman711

Gold as a Truly Last Resort

I agree with the comments on base metals. As the economy winds down, manufacturers will use up much or most of their raw materials, letting those inventories diminish. At some point, the economy will start to turn around, and the first element of the whole economy that will be replenished will be the raw materials manufacturers use in the products they manufacture. So, a position in base metals should be the first to start to rebound in a rebounding economy. A second position that would seem sensible would be in shipping as shippers and railroads scramble to bring the raw materials to the manufacturers.

Oil stocks would seem to be sensible because many products are made from petroleum, and the shippers will need fuel to power their ships or trains.

I also think this should be a good indicator as to when the bear market is ending and a bull market starting. There might be rallies, even significant rallies, but until enough confidence in the economy is indicated by manfacturers increasing their inventories of raw materials, base metals, intermediate rallies will not have the 'legs' needed for a sustained bull market.

Gold Prices Finally Catch Fire

Are my eyes deceiving me or has there been nearly a $100 drop in gold price from the high Thursday afternoon to the low at about 4:45am EDT? Let's see, the Fed floods the world with $84-billion on Monday, and the reports are that world's central banks (including Canada's) all will chip in for another $187 on Friday . . . that is $.271-TRILLION new paper 'dollars' in one week. And 'investors' prefer dollars over gold and silver? Maybe the world has gone mad !

I seem to recall that after all the previous 'rescue attempts' the stock market tanked day or two later. Does that mean that this latest 'mother of all rescue attempts' will result in the 'mother of all crashes?'

Tune in next week to see . . .

Gold Is Set to Regain Its Shine

The Government has to borrow the money for all these bailouts. First, they swap the financial institutions worthless and near worthless contracts for dollars. Then the Government 'packages it all up' and sells them as Treasuries to China and other countries, or to you. So, when you are putting your cash into Treasuries, you are essentially buying the junk that the financials just gave up on collecting! The only difference is that the Treasuries have 'the full faith & credit' of the government behind them. But, the Government doesn't create anything (except trouble!), so it is impossible for the Treasuries to become stronger due to the increased production of something (anything) creating wealth.

If it were an honest choice between Treasuries and gold (or silver, to a lesser extent), gold would win hand down. The Government knows, of course, that rational people would choose gold over their 'fiat Treasuries' backed by their increasingly worthless fiat dollars. So, they have been systematically driving the apparent value of gold down with massive naked shorting of gold. In short, they do what they know best - 'print' paper gold and flood the gold market with it to give the impression that the value of gold is also going down! To a great extent, it does fool many if not most of the people.

But, you can't buy gold anywhere right now, or you are very lucky if you do manage to find a coin or two to buy. I'd guess gold dealers, with the limited supply they can lay their hands on, give preference to their regular customers. But, where is the gold that normally would be moving in the gold market? I can think of a couple of possibilities. First, with the price so artificially low, gold producers are either 'mothballing' mines or not selling what they produce in the hopes of getting much more when gold finally breaks free of the Government manipulators. Second, it could be that the Government's 'Insiders' - which likely would include China and other buyers of Treasuries - are siphoning off what gold become available at the artificially reduced prices.

We don't know how long the Government can keep its 'hands' on gold, but we do know that at some point people will discover that their Treasuries are worth about as much (maybe I should say, as little) as the Government's paper money. When that happens, there likely would be revolution against the Government as gold skyrockets back to where it should have been all along. I think the main reason Lehman wasn't also bailed out like Bear Stearns and Freddie/Fannie is that foreign buyers of Treasuries are balking at buying more Treasuries backed, not really by the 'full faith & credit' of the government, but by junk paper.

We are living in very interesting times. I probably wouldn't be a bad idea to stock up enough staple foods to last months if not a year. Who knows what will happen if/when the people realize the Government has duped them all this time.

The International Gold Rush: Bulls May Soon Be Rewarded

If Congress passing (and the President saying he will sign) what some say is the biggest (deficit) spending package since the New Deal moves gold down, what on earth will it take to make it move up? A nuclear bomb over some U.S. city?

I don't think you can blame such contra-economic behavior on gold's 'summer doldrums.'

A Look at Extreme Gold Disparities

I have read several comentators who suggest that gold is being manipulated by the 'super big boys' on Wall Street. If so, it is probably to disguise the actual fall of the dollar in terms of gold. The fall of the dollar is, of course, a concern.

It seems to me that now there are only two ways to stop the decline. Either the Fed raises U.S. interest rates, or it pressures the other major currencies to lower their rates. The first option would likely push the U.S. economy into deep recession. [Indeed, I have read people writing about 'depression' for the first since I started studying economics over forty years ago.] The second would be to expand the money supply even more, and that would raise the price of gold in terms of Euro, Kroners, etc., if not in dollar terms as well.

Either way, I would submit that the disparity in gold to other commodities is probably the result of market manipulation of gold and not to free market factors. Why? Because, I would guess, the government and Fed and their 'inner friends' on Wall Street are trying to keep the market from a major collapse before the election.

$200 Oil, $2000 Gold?

Since others are giving their recommendations for stocks for this new portfolio, I agree with Pengrowth Energy (PGH). I would suggest, for a longer-term investment, that you consider Oilsands Quest (BQI). As I write this, the last trade was at $4.64 - but several independent analysts who have written on the company say it has $24-$32 per share proven reserves. Also, if there is ever any kind of serious disruption in the world oil supply, owning shares in a company with huge reserves a couple hundred miles north of the border would be highly desirable.