Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Derivatives Implosion Benefits Gold Bull Market

Commodities / Gold & Silver Oct 03, 2007 - 09:15 AM GMT

By: David_Vaughn


"Time to Trim The Wicks!”

Is not this gold bull simply amazing? Though I will share with you that there are a lot of gold investors waiting for gold to crash back down to 640. Sorry folks. Ain't going to happen.

What do I mean when I say its time to trim the wicks? Well, a lamp burns brightly with a good flame until the fire has carried the life of the wick lower and lower. At that point the lamp begins to smoke badly and the wick is turned with the hope there is more good wick available to produce clean light with no smoke.

Our economy has burned brightly now for 25 years. And whenever a problem cropped up to bring a little smoke the wick was trimmed and the bright flame continued to illuminate. For 25 years always there has been enough wick in the lamp to make everyone happy and to keep the flame of economic success and prosperity burning brightly.

“Panic has seized the minds of many as the shaking of a credit implosion rumbles through the marketplaces of today's moneychangers. The ground is giving way beneath them threatening to suck them into a financial hell of derivative defaults and dishonored debts.” Footnote

But today the wick needs trimming. Today that lamp is getting mighty smoky and many efforts are being made to trim the wick just as it has been done for 25 long years. But a problem is occurring. There doesn't seem to be much of that wick left. A real problem.

“Investors in stock and other markets began returning to gold on Friday looking for a haven as the dollar fell and the Federal Reserve moved to inject cash into liquidity-strapped credit markets…” Footnote

In the realm of economics Bernanke is torn between finding a new wick or letting the existing wick burn down and down. But as he turns to look for that miraculous new wick there are none. They all are used up. No wicks left in the drawer. Big problem.

“A flight to the age-old safe haven of gold in times of market turbulence is appearing not just in spot gold, where prices came within a whisker of $740 a troy ounce last week – its highest nominal level in almost 28 years – but is also spreading to exchange traded funds, where investors have been showing an extraordinary appetite in recent weeks.” Footnote

The world notices also that the US economy is beginning to smoke pretty badly but they have no wicks to share. The entire world has depended on the United States being a leader for a very long time. The world accepted our currency as the strong reserve currency of the world. But now Wall Street is burning and the confidence of the rest of the world is fading very quickly. The world is looking at their US assets shrinking rapidly lower and lower in value.

“The penalty is eternal death for hedge funds doomed never to rise again whilst for others they escape those searing flames by the skin of their solvent teeth.” Footnote

The sub prime problem is not going away but is predicted to continue growing into the next year. And it is being discovered that this sub prime crisis has infected the entire world as everyone wanted to share in its potential success. Well, it's no longer succeeding and slowly taking both the US and the world economy down a slow spiraling path straight down.

“Since July, gold has resumed its normal status as a safe haven, says Daniel Draper, head of Lyxor ETF for UK, Ireland and the Nordic region. “We have seen a real spike up in trading volumes and assets under management [in gold ETCs] since August 17 and again since the Fed cut its interest rate.” “Gold is exceptionally attractive in the US at the moment,” he adds.” Footnote

The world will feel the U.S. Sub Prime Mortgage Crisis. The business of creating new financial vehicles such as derivatives has exploded in recent years. The global financial turmoil has prompted a backlash in some quarters against such financial engineering. The sub prime crisis it can be felt all over the road unsettling hedge funds, banks and stock markets as far away as Asia and Europe.

“The markets have taken a few blows these weeks past but not strong enough for some to believe that government debt will totter and fall. We shall see but the economic and financial assaults of the past suggest that it is the Golden Tower that men will resort to when all else fails.” Footnote

Risk on a global scale has now increased. The market appears to be finding it harder to even understand what the real underlying risks really are involved. Countries over seas have been surprised to find that problems with United States homeowners could be felt so drastically in other foreign countries. Losses have often surprised overseas investors because they were just ignorantly unaware of the extent of their risks in US interests.

Homeowners that were once experiencing the “American Dream” are now seeing their home slipping away. Foreclosures are becoming more and more common and the worst has yet to come. And it seems there just is no end in sight.

“We're seeing a flight to quality in gold with US currency concerns, portfolio diversification and petrodollar recycling also playing their parts.” “People have watched volatility in the equity markets in the last couple of months and been concerned about quant models, now they are looking for a safe place to put their assets,” says Deborah Fuhr, a managing director at Morgan Stanley.” Footnote

Financial analysts are predicting that a historic number of home owners will lose their homes. It is estimated that 2 to 3 million additional homeowners could lose their homes. The vast majority of those losing their homes are the middle-class. The problems in the U.S. sub prime mortgage market could escalate out of control and turn into a full fledged global financial nightmare. Because of $1 trillion in delinquent mortgages, we could be just one hedge-fund collapse away from a global liquidity crisis. The risks of a global meltdown are growing. The problems are only beginning. The world is in major trouble as the liquidity crisis widens. Even with the US Fed pumping new vast dollars into the world banking system the fears of an imminent crisis are only growing. Only a flight to quality gold assets will save your sick portfolio. “The increased demand is also coming as knowledge about commodities investing grows.”

Gold and resource stocks, historically, have presented the highest rate of returns. Gold Letter, Inc. reviews gold and other resource stocks under valued and poised to rise in this time of increased demand. Natural resources and related contrarian stocks will only escalate in value as the world continues to experience unprecedented population growth. Gold Letter's 10 best performing stocks are up over 2,000% and GL's top 55 performing stocks are over 400%. Close to 90% of all Gold Letter's recommendations since inception in January, 2003 are close to 200%. GL charts are computer generated and updated every hour while markets are open.

Click here to order Gold Letter

Send me an email and your comments.

By David Vaughn
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 2007, Gold Letter Inc.

David Vaughn Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules