Weekly Comments from TheGoldBug

July 1, 2009

The weekly commentary appears every Wednesday evening. Other comments will appear as market conditions dictate.

Economy
Reputations are rarely as good or bad as they appear at first glance. The much maligned former Treasury Secretary Henry Paulson had his share of missteps. However he did many of the right moves when the economy hit the fan. Last September 15, when Lehman Brothers imploded, we all had a look into the looming abyss. Treasury and the Federal Reserve combined to keep the economy from falling in. Both political parties passed the very necessary bailout bill in a rare show of unity to save the economy. Today, many politicians and TV pundits are espousing a revisionist history.

World
Food aid to North Korea has dried up after recent missile and nuclear tests. Malnutrition, a fact of life for two decades is accelerating. Torben Due, the U.N. World Food Programme representative in North Korea says in many areas women weigh only 100 pounds just before giving birth. History shows that food shortages create revolutionary pressures. How much of the North Korean bluster is for domestic consumption? War threats are always good excuses for crackdowns. Kim Jong-il wants to pass his leadership post to his 26 year old son. He may need a war to maintain his iron grip and complete the power transfer.

XAU
This first day of the new fiscal quarter all sixteen XAU components closed higher.

The XAU closed at 144.33 up 5.31 points, a 3.82% gain. In this monthly chart the XAU is just above it's 50 month moving average.

Yamana Gold was the best percentage performer, up 7.13%.

Kinross gained 6.78%.

Randgold Resources gained 4.8%;

Goldcorp gained 4.43%.

Quote
“Good traders get out of their bad trades and add to their good ones.” Dennis Gartman

Trivia
Who said this at a conference honoring Milton Friedman on his 90th birthday? “I note that I first read A Monetary History of the United States early in my graduate school years at M.I.T. I was hooked, and I have been a student of monetary economics and economic history ever since.” Answer next week.

Last week: Which President made it legal for Americans to own gold? Richard Nixon.