bowman711

Precious Metals Stocks to Consider as the Dollar Falls, Banks Fail

CEF holds roughly half gold and half silver, so it is a good way to play both precious metals. TODAY is a great time to get into CEF - it is down about $1.60 to fall in line with the following: TORONTO, ONTARIO, Sep 23, 2008 (Marketwire via COMTEX News Network) --
Central Fund of Canada Limited (TSX:CEF.A)(TSX:CEF.U)... ("Central Fund") of Calgary, Alberta announced today that it has entered into an underwriting agreement with CIBC World Markets Inc. under which the underwriter has agreed to buy and sell to the public, in Canada and in the United States under the multijurisdictional disclosure system, 11,900,000 Class A Shares of Central Fund. The offering will be made under a second prospectus supplement to Central Fund's US$750,000,000 base shelf prospectus dated March 31, 2008.

The purchase price of U.S.$10.80 per Class A Share is expected to result in gross proceeds of approximately U.S.$129 million. Substantially all the net proceeds of the offering have been committed to purchase gold and silver bullion, in keeping with the investment policies established by the board of directors of Central Fund, for settlement at closing of the issue. The additional capital is expected to reduce the annual expense ratio in favour of the shareholders of Central Fund.

Closing is expected to occur on or about September 26, 2008.

[I doubt today's drop in price will stay that way very long.]

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.