Several times over the past few months we’ve pointed out that the incumbent never loses on an up market. With this in hand, we thought an Obama win was a given. However, as Election Day approached we saw a weakness in the markets that caused us to wonder.
J. Keith Johnson | All Articles
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J. Keith Johnson
J. Keith Johnson is a self-proclaimed contrarian, always questioning the front page and striving to read between the lines. His Austrian and Libertarian perspectives on current socioeconomic and geopolitical events are fueled by his insatiable desire to keep learning. He’s not content to merely study and learn though. As he’s grown in understanding issues that sometimes have far reaching implications, he desires to help others understand the truth. Simply understanding the truth through the fog of disinformation, media spins and mainstream manipulations is a major part of the battle. But only in understanding the truth can people plan and prepare for the future.
Having been a gold bull for fifteen years, he says he’s not a perma-bull; but he’ll remain a bull as long as the fundamentals dictate. After writing several blogs, studying markets and especially precious metals, J. Keith Johnson is now writing as The Gold Informant. You’ll find his articles on The Gold Informant website, Seeking Alpha, The Motley Fool, The Daily Caller, Goldco Direct and occasionally on various internet financial and news sites.
As we approach another round of elections, it behooves us to consider how metals have responded historically. The following chart is only a 10-year chart, but it certainly offers a little perspective.
For many years only gold bugs and conspiracy theorists discussed whether Fort Knox had gold in it. Of course, with the help of GATA and other whistleblowers, coupled with a greater realization that the Fed isn’t the all-beneficent guardian that many once perceived it to be, a more critical eye is being cast on gold reserves.
As I prepare my weekly contribution to The Daily Caller, I’m almost invariably seeking an angle on precious metals to explore. Sometimes it’s direct, while at other times it’s tangential. However, this week the link is rather obscure.
Is it possible that continuing problems in South Africa will cause gold prices to soar? At this point it’s difficult to tell. However, it is clear that a lot of people are losing a lot of money due to the labor conflict.
As the 1992 presidential campaign heated up, it was evident that the U.S. economy was still struggling. And, although 90% of Americans polled in March 1991 approved of President Bush’s performance, just a year later the president’s approval rating had dropped below 40%. While not terrible, the growth that had been enjoyed for most of the previous decade was not being realized.
Over the past 40 years, the Federal Reserve has been force-feeding the world the idea that its printing press puts out more valuable paper than anyone else’s. This is, of course, because in 1971 it was given legislative approval to manage the U.S. currency, without any asset restrictions.
The buzz over QE∞ has been quite amazing. Even seasoned traders are being pulled into the wake of the “don’t fight the Fed” mentality. Of course, on one hand they’re absolutely correct. Going against the printing press can be disastrous. However, there are tensions in the markets that will have to be resolved eventually, a topic that we spent a lot of time discussing this week.
A couple of weeks ago I wrote an article pointing out why this simply isn’t the right timing for QE3. And over the past few weeks I’ve mentioned many times in The Gold Informant thoughts along the same lines.
What for a long time was only discussed among gold-bugs, libertarians and the few Austrian economists who managed to hold on to their perspective is regaining attention. Ever since Reagan’s failed Gold Commission in the early ’80s, the idea of considering a gold standard has been taboo.
When we look at markets, we tend to suffer from severe myopia. Rather than looking at the bigger picture, we want our fix today so we can enjoy the inflation buzz for a few more months … or maybe days.
In 1971, for the first time in history, every major currency in the world became fiat. With the signature of President Nixon, the gold-backed dollar became the greenback, forever backed by the promises of the Federal Reserve and U.S. Treasury. Initial reactions were negative, sending the dollar downward. However, after the realization that all major world currencies were backed by dollars (largely because of its tie to gold), came the realization that it was in everyone’s best interest for the dollar to retain its perceived value. In just a few weeks the dollar returned to previous levels. Of course, since that time it’s been a continuous downward spiral, with the dollar losing near 80% of its value.
In today’s international market of pirating videos, phones, computers and other brand name goods, we’ve become somewhat accustomed to the reality that it’s going to happen. And there’s a whole plethora of knockoffs out there, some legal and some not. And, quite often, the knockoff actually performs as well as, or even better than, the original.
A truly free market seems elusive these days. Anyone familiar with markets has to admit that manipulation takes place on many levels. And, while our discussion usually focuses on manipulation in precious metals, the fact remains that various types of manipulation are taking place in every market.
Odyssey Marine Exploration Inc. [OMEX] appears to be an exciting company. Its employees get to do what young men dream of doing --- search for hidden treasure. From old galleons to cargo ships sunk during WWII, if there’s treasure to be found, they’re all about finding and retrieving it.
The dollar’s status as the world’s reserve currency has solidified over the past several decades, offering the U.S. a strong position in international trade, even when not directly involved. It seems, however, that this influence over world economies is beginning to wane.
In desperate situations, any perceived victory, no matter how big or small, can bring about euphoric responses. Enter the euro discussions.
Thursday evening, as markets were drawing to a close, Moody’s officially announced downgrades of 15 major banks. This came as no surprise, as rumors swelled throughout trading. Such rumors may have had some influence on the decline we saw in major indexes Thursday.
At what point in the purchase of a house can we say that we’re really homeowners? For a select few, they might claim it’s when they purchase the house, since they pay cash. From that point on, it’s theirs, right? For others, they’d claim it’s when they’ve finally paid off their mortgage. For them, that’s really the point when they actually own the house, right? For a few disillusioned folks, they’d claim that they’re homeowners even as they’re paying the bank for the house they live in. Of course, missing a few payments can be a reality to bear, as the banks exercise who actually owns the house.