Gold's Safe Haven Status Back in Play

In the short term the market knew that if Mitt Romney had been elected president the price of gold and silver would probably have went through a temporary drop, based on the actions of what a President Romney would have done.

On the other hand, the market also factored in a win by Barack Obama would be good for gold and silver, with expectations being Obama would continue to implement the same failed policies he did the first four years of his Presidency.

That has born out well so far, as the price of gold continues to rise immediately after the election, although there are other factors coming in to play.

The most significant is the safe haven play, which has grown as the presidential race played out.

No matter what is done going forward, there is little desire in Washington for politicians to take the needed steps to deal with the economic disaster and the policies that have been behind the cause of it, including an unfettered Federal Reserve that sees only printing more money as the answer to economic weakness.

This is happening in light of a stronger U.S. dollar, which suggests investors understand it's a faux strength, and not one that is inherent to the currency. The only reason it still is perceived by some as a safe place to park their money is that other major economies also have had their central banks throw money at the problem as well, resulting in the currencies moving down in value together, giving the impression of things going on as usual.

But the move in gold price confirms that a growing number of investors know that this is the case, and gold will continue to rise in response to that reality over time.

Continually in the background is also the ongoing sovereign debt crisis and Europe and the march of the region into recession; which is ensured now.

All of this would be enough to push gold and silver prices up, but we haven't even seen significant, official inflation yet, and once that kicks in, all bets are off as to how high the price of gold and silver will go. It's only a matter of when, not if that happens.

Finally, China and other Asian countries appear to be buying up a lot of gold, offering price support to the precious metal, and over time, if China is bolstering its gold supply for the purposes of acquiring other commodities in the future, this will add even more strength to gold, driving up the price even further.

The VIX, which measures the fear factor, has also been rising recently, confirming there is more fear in the market than there has been, providing more incentive to place capital in gold.

7.8 Percent Unemployment Numbers a Joke

If I were Barack Obama, Joe Biden and the Democrats, I would keep my mouth shut concerning the alleged drop in the unemployment rate from 8.1 percent in August to 7.8 percent in September. Former General Electric (GE) CEO Jack Welch said on Twitter that the numbers appear to be manipulated. While that's definitely a possibility, the other part of the equation is the typical seasonal hiring in response to the busy holiday season. And the jobs created had nothing to do with anything positive, as the vast majority were part time jobs, which was a positive nod to American who were willing to take the jobs in order to get work; apparently hoping for full-time employment after the holidays by proving they are worth keeping to employers. It's almost certain, even with seasonal hiring, that we'll see adjustments to the numbers right before the presidential elections, which by that time the majority of people have already made up their minds on who they're going to vote for. So even though the Obama administration will boast about an improving labor market, that will likely backfire on them as the reality sets in that even if the numbers are accurate, it reflects nothing but part-time, seasonal hiring, and nothing to do with long-term, full-time, good-paying jobs. With that in mind, the best thing the Obama campaign could do is shut up so it doesn't boomerang back on them. The good news for Republicans is that is unlikely to happen, which should give them plenty of ammunition to shoot at Obama, as they hit hard on the fact he can only create low-paying, part-time jobs.

Sam Zell: Stock Market 4,000 Too High

Billionaire Sam Zell, who mad his fortune in real estate, says the stock market it over 4,000 points above what it should be if not for the artificial stimulus which pushed up the price of stocks far beyond their real values.

According to Zell, if quantitative easing were removed from the economic situation, the index would plunge by over 4,000 points to land at about 9,000, based upon economic and corporate fundamentals.

"Based on the fiscal cliff and all of the headwinds, the stock market should be at 9,000 and not 14,000," Zell concluded.

The fiscal cliff refers to the combination of Republican President George Bush's tax breaks expiring while at the same time public spending is cut.

Uncertainty surrounding taxes are a major part of the reason businesses of all sizes aren't expanding, as is the renegade Democratic party and Obama, who continue to boost regulations at the expense of doing business in the country.

Combined, this weighs heavily on the present and future business climate in the United States, and businesses must base their decisions on the most accurate picture of the future they can see, using the most up-to-date data.

These ancillary issues cloud the economic picture enough to make it possible to fairly accurately see the future in any way. That is why the businesses, for the most part, aren't hiring or expanding, and why they won't until the interference from the government, as well as tax situation is resolved.

If Obama is re-elected says Zell, it'll make it harder to implement healthy economic reforms which would have a positive impact on the economy. He's right.

Zell concluded, "You're looking at capital expenditures across the board being deferred, and they are being deferred for a very good reason. They have no confidence."

Good Ridance to Obama's Solyndra

Another domino in the disastrous, so-called green energy initiative, which according to Obama is the future, is closing out its final phase of its bankruptcy process, as it is holding an auction for the largest asset it still owns, a 412,000 square-foot manufacturing building. 

Soon after the Obama administration guaranteed a $535 million loan for the company, it declared bankruptcy. 

With the total amount of money expected to be raised via the liquidation process reaching not even $125 million, it is far under the approximate $870 million in debt held by the company. That means little of the capital lent to the company will be recovered by investors, including the taxpayers, who have had to pay for this mistake of Obama's, as well as similar ones.

In response to this terrible energy policy, the house recently passed a bill which would gradually end the loan guarantee program of the Department of Energy which irresponsibly funds these losing projects.

The focus instead should be on oil and gas holdings in the United States, which is the real future of energy in the country, whether people want to admit it or not.

Think of North Dakota which is booming, while providing outstanding jobs for those working there. We need that to happen around the U.S. where these amazing deposits reside.

Instead Democrats and liberal politicians are attempting to stop companies from accessing these amazing resources, which could give us true energy independence if we really want it. 

Green energy, which very few Americans could care less about, needs to compete against other energy to see what people want to buy, rather than be artificially propped up in the midst of very low demand. 

The government shouldn't be involved in any way in the free market as it is, and when you add these types of politically motivated projects, along with the low industry demand, it is a sure recipe for economic failure and disaster, as so many of these failed projects confirm. 

It's good news to see this bill pass, but unfortunately, Obama and the Democrats won't even consider this bill in the Senate, while Obama would no doubt veto it even if it came to a vote and successfully passed.

Euro Falls on Draghi Inaction

After the bravado expressed by European Central Bank President Mario Draghi concerning doing what it takes to support the euro, the announcement today that in the short term he will do nothing caused the euro to come plunging down from its recent strength.

His problem was he raised expectations far too high in the near term, something some experts said may be the case. They were right.

All that Draghi basically said was there are plans being drawn up by the ECB that would allow it to make outright purchases of bonds. Essentially all he did was say they are preparing to take steps that may or may not be taken. And odd and weak climax to the posturing he took concerning the euro.

The one major negative factor is that Germany isn't behind the moves yet, although contrary to public assertions by Merkel, she always has caved when it comes down to more stimulus in the euro zone.

So the real question appears to be how long it will take before all the mechanisms are lined up and where and how large the stimulus will be.

The euro will remain under pressure until that is more clear, and the U.S. dollar will continue to be strong.

It's almost a surety that the Federal Reserve will take some action at its next meeting in September, as the failing presidency of Obama is at risk.

Warren Buffett Finally Admits US Economy Weak

After months of data showing the U.S. economy is stagnant, Warren Buffett finally has admitted the economy of the country is "more or less flat," during an interview on CNBC.

Buffett has been a cheerleader for Obama and his failed economic policies, not willing to say it was in major trouble in an apparent nod towards not wanting to make Obama look bad in a reelection year.

Trying to salvage something positive out of the acknowledgement for Obama and the American economy, Buffett added there has been a boost in the residential housing sector, although saying it "doesn't amount to a whole lot yet, but it's getting better." That's basically a meaningless and irrelevant comment and observation.

Buffett has been trying to spin the idea that economic growth in the U.S. would pick up once the residential housing market began to recover. That hasn't happened at all.

Talking on the euro zone, Buffett noted it is falling apart economically very quickly, citing the last six weeks in particular. Taking the longer outlook, he said he believes the region will work out its issues, but it could take up to a decade before it happens.

Buffett also said he doesn't believe the euro zone will be what its creators had originally envisioned in the next ten years, and isn't certain the euro will survive as a currency.

Going back to his cheerleader role, Buffett asserted that in spite of the weaker American economy, it's doing better than the other major economies around the world. I guess he doesn't follow the growth rate of China, even when it's slightly slowing down in growth. It's still growing at a far more rapid pace than the American economy.

Finally, Buffet implied he has no idea which direction the economy is going, and said "to some extent" is awaiting until things become clearer.

Coal Miners Protest Anti-Business Obama Administration, EPA

Coal miners from major mining states like West Virginia, Virginia, Ohio, Kentucky and Pennsylvania came by the 100s to Washington to protest against the Obama administration and its EPA, which in the eyes of the miners are attempting to destroy the coal industry which supplies for their families.

At issue is the war by the Obama administration against mountaintop removal mining via the tool of the Environmental Protection Agency.

Controversial EPA Administrator Lisa Jackson has stated her goal is to raise the so-called standards so high, that chance of having a permit issued for valley fills would be close to zero.

West Virginia state senator Jay Rockefeller blasted Jackson, saying she "doesn't understand the sensitivities economically of what unemployment means. Her job is relatively simple: clean everything up, keep it clean, don't do anything to disturb perfection. Well, you can't do coal and do that at the same time. God didn't make coal to be an easy thing to work with."

Rep. Hal Rogers, R-Ky., said she was practicing "strangulation by regulation."

Senate Minority Leader Mitch McConnell, R-Ky, said, "Send them a message on November 2," as the coal miners cheered. You get the feeling the message will be sent loud and clear.

Freeport McMoRan (NYSE:FCX) CEO's Copper Outlook Justified?

Not too long ago Freeport McMoRan Copper & Gold Inc's (NYSE:FCX) Chief Executive Officer Richard Adkerson said he was bullish on the outlook for copper, and the increased imports of copper into the U.S. seem to justify his assertion. Is he right?

It all depends on your outlook. There is very little private sector demand for copper, and the idea that is what's driving copper imports would be wrong.

Copper imports are rising only because the Obama administration has hinted for some time on spending even more taxpayer's dollars in another round of stimulus. This time to the tune of $50 billion for infrastructure projects.

Just like the over trillion dollars spent in the past, all this does is hide the weak economy and give the impression it is recovering, while the recession lingers on. After all, the money isn't free, somebody eventually will have to pay for it.

It's like having a deadbeat son or daughter living at home and you give them thousands of dollars to live on, then announce to your friends and family they're productive because they have capital to spend.

The reality is they're producing nothing, and even in the case of infrastructure, the Chinese did that too, and brought themselves to the brink of disaster, which still could cost them.

As soon as the prior stimulus dollars and gimmicks ended, the American economy reverted back to what it had been all along: in a recession. Spending billions more isn't going to change that.

So in the case of copper, anticipation of another stimulus is what is driving that, and it isn't based on any real demand, but the creation of artificial jobs to give the illusion there is an economic recovery.

The rest of the country has to pay for this "job creation," and it would be better to cut taxes and remove the stifling regulations holding back the free market than the government to continue to throw money down the hole.

Some clueless economists are already jumping on the stimulus bandwagon saying these copper imports prove there isn't a double dip recession.

Hopefully the politicians will have the guts to vote this down and let the economy run its course.

As far as Richard Adkerson's bullish sentiment concerning U.S. copper imports, it's based only on stimulus spending and not real copper demand.

Commodities: Oil Prices Rise

There are a number of variables involved with the overall commodity sector, and oil is affected just as much as all the commodities.

Some of the obvious factors are the economic slowdown, forced liquidation and deleveraging that have had the type of impact that has caused commodities to be very volatile, in contrast to their normal predictable behavior in an economic slump.

For example, gold would usually be considered the place for investors to put their money when recession times like this are upon us. But gold hasn't skyrocketed the way it normally would have, although signs are it's starting to do that now, along with silver, platinum and other precious metals.

Oil prices especially are affected by the economy, as consumers stay home rather than using their disposable income on gas. That has caused oil stockpiles to rise and prices to plunge. The oil surplus has alos caused gas prices to fall in a major way as well.

In an attempt to put a halt to the surplus, OPEC is cutting oil production even more in an effort to shore up prices. Oil companies have cut back on drilling too, as the lower prices keep them from keeping too many wells in production.

Even though stocks have risen a little recently, traders are starting to look again to commodities as their choice of investment. U.S. dollar related investments are becoming increasingly risky in this environment, as the government goes into horrid debt, which the Federal Reserve will have to pay for by keeping the printing presses running full time.

Those who think the proposed Obama stimulus plan will change this are in for a big surprise, as it will only add fuel to the fire, and will do nothing to help the market. In truth, the market doesn't need to be helped, and the Obama big government machine needs to realize that.

While futures traders are looking more favorably at precious metals, they're puzzled about oil, as it seems many are attempting to make it look like it's going to continue to go up, but the underlying fundamentals aren't pointing that way.

No matter what OPEC or others attempt to do to inflate the prices, the higher oil goes, the less people will buy. Demand will go down, and prices with it. What will the government do, implement oil price controls? That's already proven to be a horrible failure which will launch oil shortages. History has proven this is always the result of price controls.

Consequently, the idea that oil stockplies will decline is ludicrous, for the reasons stated above. People holding tight to their money aren't going to change their habits when oil prices rise. They didn't do it when prices had plunged far below the current levels.

To underscore that, even as oil prices have risen for a couple weeks, so has crude inventories in the U.S., rising by 14 million barrels in just three weeks, says the Department of Energy's Energy Information Administration.

I'm not sure where oil industry watchers think the commodity will continue to rise, but it's a fallacy, and those betting on it are going to lose big time.

Some people think oil is totally unpredictable, as they're moving away from supply and demand, and instead are looking at governments who are attempting to game the market by their bailouts and cutting of oil production. Those artificial efforts are useless.

Commodity prices will rise in 2009, but oil won't be included in that basket. It may rise some, but the trend will continue for some time. It's moving lockstep with the economy, and people have stopped spending their money on travel. Nothing a government can do will change that reality.

Oil is one commodity I would short. Unless there's something unknown that happens, that will be the reality for some time to come.

Peter Schiff on Origins of Economic Meltdown

Economic expert Peter Schiff gives a devastating critique of the origin and causes of the global ecnomic collapse in this extraordinary TV interview.

He largely takes aim at the the medicine being offered for the disease: more government spending, and calls for the need to amputate the gangrene originating with the illusion larger, socialistic government will be the answer to the dilemna.

Rather, Schiff exposes the government as the perpetrator of the global disaster, not the solution.

As Schiff rightly illuminates, the government has no wealth, all they can do is confiscate the wealth of others and redistribute it through their taxation and redistribution program.

So the announcement of Obama that he's going to come to the rescue with the misguided public works expenditures, he's not really creating wealth or jobs, he's simply taking it and redistributing it to less valuable areas.

In other words, he's going to take wealth that the private sector creates, and redistribute it to government-created programs. The consequences will be the destruction of real employment opportunities, according to Schiff, which will cut into our standard of living.

Schiff's solution to the problem?

Let recession run its course

More discipline by Americans in spending and consumption

Need more savings and less borrowing

More production and less consumption


Schiff on government's role:

Less government spending

Sound monetary policy

Lower taxes

Get rid of military/industrial complex

Slash government programs

Higher, not lower interest rates


View video below if you want one of the best video presentations of the truth behind the economic crisis. It's brilliant!

Jim Rogers Giving Clinic on Identifying and Solving Economic Crisis Part 4 of 5

Points covered in video:



Obama plans on taxing capital, which will be a disaster

Obama also plans on more protectionism, which will also be a major disaster for the American and global economies

Historically power follows the money, money is flowing to Asia

People also follow the opportunities capital provides

Talks on living in Singapore

Part One Part Two Part Three Part Four Part Five

Commodities: Barack Obama Disaster for Economy

Why Barack Obama will be disaster for commodities and economy

At the World Money Show, Jim Rogers told those in attendance that if Barack Obama follows through with his two policies concerning the economy, it'll be a disaster.

The two misguided policies, according to Obama's rhetoric, are to tax capital when it is at its weakest, and secondly, he wants to protect American jobs.

According to Rogers, the only thing that will help America is if Obama is indeed just throwing around rhetoric. If he actually follows through with them, it'll make the American economy even more unhealthy.

Rogers is right when saying both of these ignorant steps are rewarding the incompetent at the expense of the competent. That's what happens when people vote in the most inexperienced candidate in history. Sarah Palin was far more experienced in running an economy than Obama is or will be.

As far as investments go, Rogers asserts the commodity decline is a temporary blip, and overall it'll extend the commodity bull market rather than end it.

Concerning the U.S. dollar, Rogers adds that the currency rally is a short-term phenomena, and U.S. debt and business failures ensure it will also end soon. Rogers says we should bet against the U.S. dollar, along with long-term U.S. bonds.

Commodities he's bullish on are sugar, cotton and gold. For oil he likes African stocks, primarily those in Angola.