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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Market Bull or Bear?

Commodities / Gold & Silver Sep 16, 2008 - 12:46 PM GMT

By: David_Vaughn

Commodities A Carnegie Mellon Professor gave what turned out to be his last lecture this past year. Professor Randy Pausch died just this last summer of cancer. His last lecture achieved remarkable attention. More than he ever expected. His principle theme in the lecture was advice to college students about how to pursue their career and attain their personal goals. The lecture was one of the most powerful given concerning offering hope and optimism. The message seemed to ignite over the Internet ultimately being heard by millions. Professor Pausch said that the lecture was primarily a message to his children to give them their fathers' testimonial before dying of cancer that he had been fighting for two years. 


"Almost all of us have childhood dreams; for example, being an astronaut, or making movies or video games for a living. Sadly, most people don't achieve theirs, and I think that's a shame. I had several specific childhood dreams, and I've actually achieved most of them.” - Randy Pausch

I suppose the hardest thing to do is to maintain your dreams and your objectives in the face of adversity. And if you are one of the mortgage holders today facing foreclosure because of higher interest rates then you know what I mean. A lot of bubbles have been popped these past ten years. The Internet.com craze, the tech boom and now the real estate crash continues to linger on and on. The gold market this summer has been slip siding away. Any chance things will turn around? There are those who believe this to be the end of the bull market and the other camp believes this just to be a normal pullback in a bull market. You, ultimately have to decide which is correct.

Gary Dorsch - “Psychology in the commodities markets has swung from the “fear of inflation” and the mad scramble for natural resources, to the theme of “Demand Destruction,” or worries that a global economic downturn will weaken demand for commodities.” “In the game of commodity and FX trading, one must be quick on the trigger, and have the skills of a psycho-analyst, in order to anticipate and profit from the next major market move.” “You must never delude yourself into thinking that you're investing, when you're speculating,” said Benjamin Graham.” “On August 18th, Kenneth Rogoff, former chief economist at the IMF warned, “The worst is yet to come.” Gary Dorsch, Kitco .com

But certain factors continue to grow with every passing day. In particular the US massive debt to other nations continues to grow to fantastic levels.

China 's foreign currency reserves soared to a world-leading $1.68 trillion at the end of March…” “Currency holdings are 40% above where they were at this time last year…” Money Morning/The Money Map Report, morningnews.com

And while many Americans have yet to grasp this simple truth. Our bills are increasingly being paid by growing indebtedness to Asia .

“This massive “loan” from China has effectively helped the U.S. government to do everything from waging wars in Iraq and Afghanistan, to paying Congressional salaries (including those of politicians criticizing China), to rebuilding roads in New Orleans, and writing Social Security and Medicare checks. “ “In order to finance this deficit and its own foreign investments, the U.S. must import about $1 trillion of foreign capital every year or more than $4 billion every working day…” aasc.ucla.edu/uschina/trade_currency.shtml

And what about the gold market? Public sentiment is going in two different directions. While many believe the gold bull to have made its high there is also a large number of analysts who think this is merely a pullback.

Gold Report, Darrell Brookstein - “…this is a pullback in a bull market.” “You have to have a long-term perspective and wait until these sell-offs start to go to the upside.”

And another long term gold optimist?

Ned W. Schmidt – “However, to look at abysmal fundamentals of U.S. economy and then to prognosticate a longer term bullish outlook for U.S. dollar is pure fantasy. Gold has put in place the 2008 bottom on the current dollar fantasy. Investors, now, need to turn their thinking to potential for a new high in the future. Given all the factors, adding to your Gold holdings at current bargain prices is imperative. Remember, many of the dollar bulls of today were FNM & FRE bulls of yesterday.” Ned W. Schmidt, Kitco .com

Don't forget to email.

By David Vaughn
Gold Letter, Inc.
David4054@charter.net

© Copyright 2008, Gold Letter Inc.

“The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable.”  

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2008, Gold Letter Inc.

David Vaughn Archive

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