Gold prefers Obama Victory

Gold is worried, and rightly so: Obama might lose.  In the post-debate sprint for attention, bloggers and pundits at media sites large and small declared the winner fueled mainly on personal bias.  While the actual tally if assessed independently is that the debate was a tie it must be acknowledged that you don't get the championship belt with a draw.  You must beat the champ.

Obama's performance in the first debate was so bad that he would have had to work really hard to match it. As a result his performance is being received far more glibly than had he done better the first time out.

But gold has no political bias other than to react to the candidates and the impact their respective policies could have on gold's price.  Gold as a predictor of economic policy is telling us that Romney is the better choice.  If elected he would do a better for the economy, thereby making the need for gold a little less important.

On the other hand gold thinks that four more years of Obama is, well, four more years of Obama.  Since the first debate GLD, the SPDR Gold Trust ETF (NYSE: GLD), slid from an intra-day high $174.07 on October 4 to an intra-day low on October 15 of $167.53, a slide of almost 4%.  Clearly Romney's strong showing and gains in the polls is perceived by gold as a bad thing, if only for gold prices.

GLD is up slightly as of midday today, October 17, but not by much, suggesting that perhaps there was no clear winner of the second debate nor front-runner to win the election.

GLD has had a spectacular run under the Obama administration, rising more than 100% in that time.

Gold's cousin silver has had it rough of late and has experienced much more volatility over the past four years.  It remains however an object of consternation as many silver aficionado's have been predicting it to rise to variously debated forms of historical parity with gold.

What for many is easy to forget, considering that silver at current levels is down 33% from its peak in 2011, is that silver is up almost 200% since Obama was inaugurated.  Silver too, here the iShares Silver Trust ETF (NYSE: SLV) reacted to the debates in kind.

As a precious metals investor I'd root for the guy who was going to screw things up and send gold and silver higher.  As an American I have to vote for the guy who is going to do the best job for our country, economically and otherwise.

Gold and silver seem to be confirming my beliefs.  I hope everyone else takes notes.  As an investor I will be taking precautionary measures, just in case the best man does win.  As an American citizen and voter, I'll just have to accept lower gold prices.

Does Gold Love Obama?

Gold broke out of a four day slump today, posting gains for the first time since the day after the first Presidential debate.  A not so curious phenomenon for avid gold watchers, but one which begs the question: if Romney wins, will gold fall?

I for one say no.  Maybe in the immediate days following his victory, but ultimately no.  The Libertarians will tell you, there is virtually no difference between the candidates.  I don't agree with that entirely, but when it comes to gold and the things that a president can influence which can affect the price of precious metals, I do not see a great difference.

The Libertarians are right in that regard, but not just because both parties and candidates are equally big government spend-aholics.  It is because the damage has been done and even if Ron Paul was President it would be hard to change. The spending cannot not be rapidly curtailed, especially given the weak economic environment.  The government will continue to spend, the future be damned.

But if Romney continues to do well and maintains a tight race, and heaven forbid he wins (sarcasm), let you gold doubters take heed: this is a buying opportunity.

I think Obama is going to win.  And I know that the spending will continue unabated and probably at a greater pace during his second term.  The man wants us broke. He wants to redistribute our wealth not to our fellow Americans but to the rest of the world, the world he believes we've stolen from in order to achieve American superiority.

And a lot of American citizens agree with Obama.  Foolishly, I might add.  Were it not for the American "Empire" the world would probably be a much worse place. Among those we've "wronged" are some that believe, including Obama's neglected half-brother George, that America and Britain have been helpful.  Many are grateful for the aid provided their cultures and the British and American influences that have helped them reach greater heights than ever before.

But if I were to write this post as a person with no essence of compassion and with a complete self-serving attitude I would say that if Obama and his radical cohorts have their way and our wealth is redistributed to other countries, which we know will never make its way back, then the quality of American life which is already in decline will decline much further.

Socialism has never worked in a closed society.  It is ridiculous to think it will Obama's way.  But the real naivete is the idea that America will not feel the effects of said redistribution and that the living standards of our citizens will not change. For those who proudly claim membership to the 99% and who support such measures I say "Idiots!"  Once again it will be you that feel the pain, not the 1%. The 1% will simply leave the country and live on the island of their choice while you stand in the unemployment line waiting for the next handout that will never come.  Oh, and lest I forget, your beloved Obama (last I read since he became President his net worth has skyrocketed to over $11 million) is a 1%-er and you can be damned sure he'll living large on his private tropical resort once he's done.

My fellow investors, keep a little cash handy.  Gold may dip a further if Romney maintains his current pace.  But pay attention, if gold loves Obama as I suspect it does it will gain quickly if he reestablishes a dominant lead.

I know its too late to nominate a candidate, but perhaps a write-in will do.  At least it will send a message.  Here's my guy, the ultimate American.

SPY Tops, SLV Ambles, GSH Spikes

We knew it was going to be fun, and it will continue to be so.  As the world anticipates the big VP debate tomorrow and gears up for Obama's return to the podium and his response to being pummeled in his debate last week the US stock market seems to have reached an intermediate top.

Depending on ones charting preferences it can be argued, as I've illustrated in this chart, that the S&P 500 has already broken below the trend line support.  The long term perspective supports the argument that the market is peaking, although additional upside before the big sell-off is likely.

Barring anything particularly positive and surprising, and especially if the market is disappointed by the election, I think the market is topping.  My long term analysis suggests that it should be at or below the two previous peaks in 2000 and 2007, somewhere in the 1525 range.  The bottom could be quite low, especially if things really unravel.  Based upon the last two sell-offs and what I perceive to be the trend line dating back to 1992 I suggest that bottom would materialize somewhere between 700 and 900.

Of course this is less prediction than observation.  As I've written before I am trying to understand why the market should move higher.

I am long both gold and silver and as written here recently believe gold will trend higher.  Silver should as well, but it is plagued by its industrial uses.  Hence it appears a bit schizophrenic at times.  I am concerned though, for both metals but especially silver, that in the aftermath of the election we will see a sell-off of silver as a risk asset.  If it occurs I think it will be an opportunity to acquire more and set oneself up for potentially significant gains.

Silver, here the iShares Silver Trust (NYSE: SLV), peaked earlier in 2011 than gold but surged in concert with the yellow metal in August 2011.  Silver subsequently got pummeled.  However it has recovered nicely in the past month or two.  I think the bottom for SLV would be back to the previous low, around $26.00 per share.  That is worst case scenario.  I think economic circumstances will worsen especially if the election goes the way I think it will, not necessarily the way I want it to, but both silver and gold will ultimately rise while the equity markets fall.

Finally, my alter-ego Steve Gunn over at www.DividendsandIncomeDaily.com wrote an article yesterday on Chinese railroad operator Guangshen Railway (NYSE: GSH).  It's a good piece, if I do say so myself, which was predicated on the dividend and the need for railways in China, slowdown or not.  The article was written Monday, and although not published until after the close yesterday, I'd like to think it is responsible for the stock being up more than 8% in the last two days.  Anyway, please check out that article and the others written by the very accomplished and good looking Mr. Gunn.

Until next time...

Romney Gains, Welch Doubts and Gold Pauses

In the wake of the debate last week Mitt Romney closed the gap with Barack Obama successfully making the election a statistical tie.  While Obama leads by a point on many polls Romney leads on some and the momentum is decidedly in his favor.  The President will need a great performance from Vice President Biden in the upcoming Vice-Presidential Debate against challenger Paul Ryan.

While some pundits offered Wild Joe's experience and Mr. Ryan's likely deference to Biden's seniority as an advantage I think the youngster comes intellectually armed and oratorically dangerous to push Biden back on his heels.  Biden is likely to get ruffled and aggressive and given his recent public gaffe's I suspect this will be a much more entertaining event than even Romney/Obama.

A big benefit to Obama's re-election campaign was last weeks unemployment number.  Roundly criticized as inconsistent with other measures of the economy it was Jack Welch, former GE chief, that made the biggest headlines Friday when he Tweeted that "those Chicago guys" will do anything to swing the campaign. Implying that the numbers were falsified in order to make political gain is a questionable decision, one which could harm Mr. Welch as much as point out the disparity.

Many economists however agreed that the number was odd, given that it did not jive with expectations nor other measures of employment.  The U-6 number, the measure which includes underemployed  part-time and discouraged workers, did not budge.  The headline rate dropped from 8.1% to 7.8%, a big move and the lowest the unemployment rate has been since January 2009 the month Obama took office.  It is suspiciously low and many economists are still analyzing the data to figure it out.

Jack Welch got support this week from Donald Trump and Ken Langone, the Home Depot founder.  Both men agree with Welch.  Good for Welch.  Trump is never one to shy away from publicity and Langone has long been critical of Obama.  Trump was keen to predict that the number will likely be adjusted up, after the election...after Obama wins?  I concur.  Conspiracy or not, the number will be adjusted and the real unemployment rate is higher than 7.8%.

Frankly, 7.8% unemployment sucks anyway.  But it makes a great story for Obama.  Look at me, it took four years, but unemployment is now below where George W. Bush left it.  Poor George.  He'll remain Obama's go-to-excuse even if he wins reelection.

Gold remains muddled in confusion and is likely to remain so until after the election.  After peaking last Thursday at a multi-month high gold (represented by the SPDR Gold Trust ETF (NYSE: GLD) in the chart below) has been sliding back a little.  The previous two similar peaks (February 2012 and November 2011) present a bit of a resistance level, which is cause for concern.  The last time GLD traded meaningfully above these peaks was when it hit its all-time high in August 2011.

I am keeping my eyes on those levels.  Further resistance can trigger a sell-off of a good 10% quite easily.  I do think gold will move higher from here, however, even after a 10% draw-down   And I am in good company as many analysts and pundits are predicting >$2000 gold (I read $2400 by the end of 2013 recently). Volatility will be the key, especially if the economy worsens.  In that circumstance, gold will likely get spanked as a "risk asset" first and then fled to as a "safe haven" second, the net result will be higher prices.  Stay tuned...

The Election, Gold and "The Next Big Thing"

It's funny how some publishers welcome or reject articles.  I wrote a piece yesterday for a financial publisher along the same theme as my post here yesterday although a little less political and more investment oriented.  The editor flat out rejected it and told me to reduce the political rhetoric and focus on the investment impact.  I followed the instruction, loaded the piece with charts and analysis, eliminated the "Obama wants to lose" theory and resubmitted it. It was rejected again, for one because the editor claimed I hadn't made the case as to which candidate would be better for the respective investments, gold (the SPDR Gold Trust ETF GLD and the SPDR S&P 500 Index ETF SPY).

Nevertheless, I did not resubmit the piece.  The editor missed the point.  I don't think it matters much who wins, at least far as investing is concerned.  I think there is a big difference between the two candidates and I do have my preference.  I do not think either candidate is ideal, nor am I a partisan ideologue (if anyone cares I am a registered Republican, once a registered Democrat, with heavy Libertarian leanings that likes to think of himself as an Independent and possibly schizophrenic).

There will be a reaction to the election in the immediate days following.  The last few weeks of the year may be volatile.  But the future has been carved in granite over decades of governmental mismanagement.  For gold anyway, the future is obvious and nearly incontestable.  Many will disagree and get mired in the minutiae, but the fact is that the dollar is in intentional decline as it has been for a very, very long time.  The government will continue to overspend regardless of who wins the election.  The world will continue to slowly diversify away from the use of American currency in reserves and trade.  With a more diverse currency environment ownership of precious metals will become far more necessary.  All arrows point to lower dollar, higher gold prices.

Let me be clear, I am not predicting the end of America, although a catastrophic collapse is certainly possible.  But the world is mutually dependent.  American exceptionalism as it relates to global economic dominance has been in decline for a long time.  This is also indisputable.  What is disputable is the pace of decline and the impact on the domestic economy.

If you are an investor, as I've covered for other publishers, you need to heavily diversify your holdings to emerging markets but to far more places than the BRIC countries (Brazil, Russia, India, China).  The BRICs are are not all following the same path, but the best growth rates are behind some while smaller, lesser accessible countries have their best years ahead.  And thanks to the proliferance of new Emerging and Frontier Market ETFs the individual investor can readily gain exposure to some of the better performing up-and-comers.

I'll close today with one chart:

I drew this chart for that ill-fated article yesterday.  I've been drawing this chart since back when I was predicting a double top, the peaks of March 2000 and October 2007.  This macro-perspective allowed me in 2007 to move to cash and avoid the crash.  Unfortunately I wasn't publishing at the time, but I've been predicting the "Triple Peak" since then, having first written about it in 2010.

In two article written for a financial publisher in Dubai, www.alrroya.com, I asked one main question: what will propel the market not just to match the previous peaks but exceed and stay above them?  Sheer stubbornness on the part of investors and traders can make this happen.  Outside of that and an infinite flood of cheap money, what is the catalyst, the "Next Big Thing" that will make it so?

Obama Wants to Lose: Gold Will Win Either Way

It became clear very early in the debate last night that President Obama really doesn't want to win.  Incredibly, the mass media, including the right-leaning Fox News, were stymied by the President's seeming lack of clarity, his unpreparedness and generally boring performance.

And while Obama Lovers like Chris Matthews wet themselves, in a different way, because of the President's failure I couldn't help but think he did this on purpose. Obama is a smart guy, and yes, he has gotten to where he is by non-material factors, like his historical significance as the first half-black mixed-race President, his supposed oratorical skills (really he's a great reader of written words) and his ability to say whatever he needs to say to whomever is in front of him then totally contradict himself while succeeding in not being called out by the liberal media, but he is not incompetent enough to have flopped in such a manner accidentally.

Where was a reference to "The 47%", Bain Capital or any other Romney talking points?  He mentioned the imaginary five trillion in tax cuts Romney is proposing and the also fictional two trillion in additional military spending enough times, but none of those other "hot button" topics.  He's too smart to have forgotten.  And I doubt that he was unaware that he was losing, nor that he was taking a "high road".

In an interview that was broadcast some time within the last 18 months Obama stated he would be OK with being a one term president.  I can't remember who was the interviewer, nor can I quote Obama, but I do remember watching the interview and thinking "He got what he wanted and now wants out".  

Back in 2008, before he won the election, my initial opposition to Obama was that I thought he was full of you-know-what.  I didn't buy it.  I still don't.  So many books have been written on Obama proposing myriad theories.  He's incompetent.  He's a anti-colonialist.  He's racist.  He's whatever.

What he is is an opportunist.  All Obama wanted was to be the "First Black President".  He wanted to be a historical figure.  He doesn't care about America. He doesn't care about the middle class, the poor, anybody...but himself.  He isn't just OK with being a one term president, that's what he wants.

He's wanted out since he got elected.  Serving a second term does nothing for his legacy.  No matter how bad of a president he may eventually regarded as, Big-Ego Obama doesn't care.  He was President.  He is a "First" in American history. He'll become very wealthy when he's out of office.  He'll have Secret Service protection for the rest of his life and will still be loved by many.  He'll get a massive advance on a book deal and command huge speaking engagement rates.  If he's "One and Done" he'll leave with a smile on his face.  For the countries sake, I hope he does.

Unlike Obama, Gold is not so certain about itself.  Having run up quite nicely since July, the questions regarding what happens after the election is giving some gold traders pause.  Obama is still in the lead, but this lead is shrinking.  If Romney starts to look like he really might win gold may weaken initially, but ultimately it will go higher.

The bank of England recently reinforced its decision to keep rates low.  Australia surprised many with a rate cut.  Here in the US QE Infinity is our destiny.  The European Union will continue to be a mess, with larger problems looming. Germany is still a candidate for departure, no matter what the media sound bites say.

It is a fools proposition to think that the global currency situation will change in any meaningful way, except to get worse.  No, the dollar will not collapse, but here has been irreparable damage done and frankly regardless if Romney or Obama win the dollar debasement strategy will continue.

What is occurring and will continue is the diversification of currency in global trade.  The dollar dominating as the currency of choice is diminishing and will also continue.  There is no argument.  And as this occurs the natural impulse to protect against currency uncertainty is to buy gold and other hard assets.

The world has benefited from the short but bountiful tenure of the dominant dollar. Its slide will continue, and it may still be the most used currency decades from now, but as the percentage of dollar transactions reduces, the impact on the US economy and the wealth of its citizens will be felt.  Once again, investors must own gold.  Everybody must own gold.  Gold will rise from here.

Democrats Stand Up for Stupidity.

Please watch this video.  Hysterical and terrifying.  There is an epidemic of stupidity in this country and apparently many Democrats at the DNC are afflicted and happy to demonstrate their malady on camera.  These are the morons who are influencing the future of our country.  Fear for your future.