Gold and Silver Spike Higher
Research for Online Investors

by John Dalt

9/03/09

Have you ever been at a party, involved in a “conversation”, looked up and everyone was gone?  Today has the feel of a party winding down as investors and traders head out for the weekend.

Gold and silver continued their climb.  Is this the spike that takes gold to $2000?  Probably not, we closed our SwingTrader position in the Proshares Ultra Silver ETF (AGQ) yesterday when it dipped below our stop.  We exited for a nice gain, but it has gone up another 17% since we were stopped out!  It is upsetting to watch this, but we made a profit.  It is reaching a dangerous high now, so be careful.  The dollar is holding steady and many are predicting strength, which does not bode well for precious metals that fluctuate with currency moves.

If you are caught in the U.S. Natural Gas ETF (UNG), you are not alone.  UNG has fallen like a hot potato that no one wanted to grab.  The problem is two-fold.  Natural gas is PLENTIFULL and the Commodity Futures Trading Commission (CFTC) is considering more regulations on futures positions that could limit the size of commodity ETF/ETNs.  Deutsche Bank announced on Sept. 1 that they would close the PowerShares DB Crude Oil Double Long (DXO) on Sept. 9, and repurchase the outstanding shares.

Natural gas is in a similar position as crude oil last winter.  Storage is full and usage is down.  One difference to remember is that natural gas is a national market.  Natural gas could be exported as liquefied natural gas (LNG), but it would take up to five years to build the facilities.  Natural gas is now at a seven-year low.  The price should rebound when manufacturing and economic activity starts growing, and snow starts flying.  Natural gas is now cheaper than coal for electrical generation, but utilities do not have the capacity to switch to natural gas completely.

The other wild card is switching to compressed natural gas as a transportation fuel.  It is already occurring, as the switch also lowers emissions.  Natural gas is used in all the trucks at the Long Beach Terminal in California.  This will take time, and the late adopters will not get to take advantage of the equivalent of $1.25 per gallon gasoline.

The news is covered up with the anointed one to address a joint session of congress next Wednesday night.  The White House is in negotiations with Sen. Olympia Snow (R-Maine) and other rhinos to see what they can do to buy their vote.  Sen. Snow and others like her should realize their popularity is simply that they are the most gullible, and easily swayed.  Much like the “easy” girl at a dance, the popularity is quickly gone.  When you don’t stand for something (smaller government), you will believe anything.

The White House has sent out workbooks to the nation’s public school teachers.  These workbooks are for teachers to use after the President addresses students next Tuesday, in the public schools.  Oh! Bama has asked for time on the satellite, and alerted schools so they can schedule assemblies or turn the TV’s on in each classroom.  The nation’s children get to watch a special message from the President, and discuss it with their teacher.  I wonder if they are going to hand out any little pink pills.  Some parents are planning to keep their children home from school.

You can see the “I Pledge” video that has created a controversy after it was played at a school assembly in Utah. The school has apologized, but has not scheduled an assembly to deprogram the students. Maybe they could invite Ted Nugent (The Motor City Madman) to tell them about guns, individual freedom, and how to field dress a whitetail.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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