What They Say Is What They Mean!

March 26, 2009 Global Economy, Physical Gold, Politics No Comments

What they say is what they mean, no matter how they revise it. Buy gold on the dips because the Secretary of the Treasury is telling you that he is not going to defend the dollar in the long run. Read between the lines and you will see that what they say is what they mean.

The DOW is in cruise mode this morning, up 46 at 7,796, the NAS up 32 at 1,561, the dollar is recovering from Secretary of the Treasury’s, Timothy Geithner’s remarks, up .24 (.31%) at 83.97. The market is handling today’s bad news rather well, having, so far, reacted well to a new record number of people collecting unemployment as reported by the Labor Dept. The third revision for the U.S. economy in the fourth quarter showed a contraction of 6.3%, the worst since 1982. On the bright side, it was not as bad as the 6.7% economists had anticipated.

Homer DOH Blk Bkg What They Say Is What They Mean!

Little Timmy Let's It Slip!

The Council on Foreign Relations held an event in New York and Secretary Geithner was asked about the remark made by People’s Bank of China Governor Zhou Xiaochuan’s call for a new international reserve currency. Secretary Geithner responded that while he had not read Zhou’s proposal, he understood it as a plan

“designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that.”

As an aside, before we continue looking at the Secretary’s remark, has it occurred to anyone that no one in this administration nor in the Congress bothers to read anything that they sign on to. What an incredibly stupid remark by the man who’s main responsibility as the Secretary of the Treasury is to protect the strength and integrity of the dollar. Are there any adults in the Federal Government on either side of the isle? Apparently not.

In a direct response to the Secretary’s stupid comment, the dollar slid as much as 1.3 percent against the euro within 10 minutes of news accounts of his remarks. About 15 minutes later, Roger Altman, who worked with Geithner as deputy Treasury secretary in the Clinton administration, asked him to clarify his comments. Altman posed his question in this manner,

“I’d like to ask one final question, in effect on behalf of the market. Let me ask the question this way. Do you see any change over the foreseeable future in the basic role of the dollar as the world’s key reserve currency?”

After being pushed in the right direction, possibly whith a wink, wink, the Secretary responded,

“I think the dollar remains the world’s dominant reserve currency.”

After the clarification, the dollar began to recover. These slips seem to always come when comments are made extemporaneously and they point to the underlying motivation of this crowd. They are global socialists and unless they are tightly scripted, they have trouble and revert to their true nature. All politics aside, this will have a long ranging effect on the dollar and stock trading in the future. This is just another indicator of how strong gold will get when they implement more of their policies in the days to come. You can be a slave to the ideology and put your head in the sand or you can be aware of where this government is going and how it will effect your investments. Each one of these “tells” may not be significant by themselves, but combined, they point in a very ominous direction.

On another front, Bloomberg is reporting,

” Borrowing costs for small gold mining companies have almost tripled in the past year as the credit crunch forces banks to demand a premium for political and security risks, the World Bankâ€™s private financing unit said…

Banks have curbed lending to new raw-material projects to conserve cash as the global recession curtails demand for commodities. The Reuters/Jefferies Index, which tracks 19 raw materials, dropped 36 percent last year in the biggest annual decline since at least 1957.

This is another part of the puzzle that will lead to higher gold prices. Consumption is up and production is down. That is a formula for higher prices. I don’t want to hear about the drop in jewelery sales because sales of bullion and coins are offsetting the jewelery drop. If you want to perform a little test, you should write down all of the gold positive news you come across for the month with all of the gold negative news. The results will be clearly visible in black and white.

Protect yourselves from changing ideologies in Washington. Buy gold, buy gold coins and buy gold stocks on any dips in the future. Do your own homework and research before you make any purchase in order to maximize your dollar’s purchasing power. Whenever gold gets knocked down, use it as an accumulating opportunity!

Till next time, good luck and good trading!