A Melman Minute
| By | Leonard Melman |
|---|
NOTE: It has been a distinct honour to have received an invitation to address the Financial Conference at the giant PDAC convention, the world's largest annual mining gathering, scheduled for March 2-5 in Toronto. My time slot is set for 9:30 AM, Sunday, March 2. We certainly invite all convention attendees or other readers residing in the Greater Toronto Area (GTA) to attend.
It is pleasing to note that following the market lull caused by America’s Presidents’ Day Holiday, gold and silver continue to hold onto their gains of 2014. As noted on the chart below, gold is now trading over $1,320 – remaining up by about $140 YTD.
POLITICAL LEFT – AWAKE IN SEATTLE
One of the advantages of travel is that I get to read an array of local newspapers to get a general feel of the political winds in any given area. Since I spent the past Sunday and Monday in Seattle, this trip is no exception.
The area’s leading newspaper is the “Seattle Times” which has a well-earned reputation as extremely left-of-center and the editions I read on this trip have not caused me to alter that perception by one iota. Some of these items are particularly interesting and I believe they also play into our ruminations regarding the metals markets in the sense that government complexities – a hallmark of leftist politics in my opinion – frequently cause problems which can only be “solved” by more government complexity, etc. The resultant inefficiencies, government debt and money creation would appear to favor higher precious metals prices.
Sometimes the contradictions in their perceptions are most interesting indeed. For example, I did not find it at all surprising that one of their front page stories provided us with substantial information about how well President Obama’s economic program has worked. The article expends a great amount of ink on extolling the virtues of the Obama Administration’s various stimulative programs of 2009. For example, they note, “…White House advisor Jason Furman said the ‘American Recovery and Reinvestment Act’ made other targeted investments that will pay dividends for years to come.”
Another quote tells us that, “…The American economy has recovered more quickly than many major competitors.” Further on we learn that the President’s program resulted in the stabilizations of the economic system; the rescuing of the auto industry and support for the housing industry. Also, about 1.6 millions jobs per year have been created.
With that article in mind, it becomes more than slightly interesting to observe that the Seattle Times editorial board chose “Time to Extend Federal Unemployment Benefits” as the topic for one of its lead editorial positions this morning. In that editorial, presumably written with the goal of supporting one of the Left’s consistent positions, they note that “It’s too soon to cut off emergency assistance for about 1.7 million Americans trying to find work.” They also tell us that, “Without an extension, thousands more throughout Washington will continue to lose emergency federal assistance each week after their state benefits run out at 26 weeks.”
After they note that an extension of federal unemployment benefits has been approved several times in the past, they suggest that it is “time to do it again” because in the State of Washington, “…more than 150,000 people have turned to and exhausted (state) unemployment benefits..”
Perhaps some of our more liberal readers can explain exactly how the economy is functioning in an expansionist, prosperous manner as suggested by their so-called ‘news’ article and at the same time, the unemployment situation is so drastic that emergency federal measures are required to provide relief.
Another indication of the publication’s political leanings (I should not use the word ‘bias’) is illustrated by their lead front-page story in their Sunday Edition which tells us about a Mr. Nick Hanauer who, it turns out, is both enormously wealthy and yet a leading light in state and federal liberal circles. The article is headlined, “Defiant 1-Percenter a Defiant In-Your-Face Progressive.”
The article then clearly paints Hanauer as opposing such folks in a number of positions including support for fighting income inequality; massively raising the federal minimum wage to $15 per hour; advocating forms of gun control; institution of a state income tax in presently income-tax-free Washington and, not at all a surprise to me, strongly supporting a variety of environmental organizations.
Other widely-read publications also add to the perception that the political Left, aka the Democratic Party, is getting their message across to millions of readers. For example, the national newspaper, “USA Today” just published an editorial reviewing the recent West Virginia chemical spill which fouled some water and their answer was, as is so typical of the Left, that bureaucrats should “update chemical regulation law.” They expressed support for a new act working its way through Congress entitled, “Chemical Safety Improvement Act” and the editorial concluded with the instruction, “…Congress should pass this measure for the people of West Virginia and for the country.”
The New York Times, also noted for almost fanatic support of positions advocated by the Liberal Left, offered an editorial comment denouncing North Carolina’s “Department of Environmental and natural Resources” regulators for not being sufficiently intrusive in their enforcement of their state’s ‘coal ash’ disposal regulations. Their conclusion was, again, not at all surprising as they suggested that federal EPA regulators take over and they should, “…declare coal ash a form of hazardous waste and regulate it stringently.”
One other weekend story lets us know just how deeply embedded within the Left is the idea that taxes are good and people who evade taxes – other than the poor who pay no taxes at all - are somehow evil. The article informs us that it is ‘bad’ that the budget for the IRS has not grown sufficiently to continue effectively taxing the population and if only Congress would grant them more money (what a surprise!), then somehow American society could advance toward what Winston Churchill might have described as “broad, sunlit uplands.”
The message of the Left – in my view – is that taxation and regulation enable the government to ‘improve’ our lives and nothing should stand in the way of advancing those principles. Anyone who believes otherwise might consider spending a weekend “reading in Seattle.”
From our point of view at The Melman Report, the actions of the Left impede efficiency, cause new and higher levels of government debt to be incurred and ultimately cause government actions to weaken the financial underpinnings of the once-mighty US Dollar – all to the ultimate benefit of quotes on the precious metals.
As of 8:00 AM PST, financial markets were little changed with the Dow Industrials down about 10 points while Canada’s TSX Index had gained 25. Precious metals continued to rally with gold up $6 to $1,324 and silver had advanced a strong 32 cents to $21.85. Base metals were up by an average of about one percent while mining share indexes continued to trade near multi-week highs.
In other markets, Crude Oil resumed its recent advance and has gained $1.07 so far this morning to $101.37; the US Dollar Index has declined by about 10 basis points to 80.04 while the TYX Index of rates on US Treasury 30-year bonds has declined by 29 basis points to 3.671%.
All quotes US$ unless otherwise indicated.
Next Melman Minute scheduled for tomorrow morning when I plan to catch up on some recent economic developments.