A Melman Minute — September 15, 2011

Once again, markets have turned a blind eye to the same troubles that consumer their interest and reversed their previous actions. After fretting about the immediate problems which might occur following a Greek default – including the non-payment of over seventy billion Euros worth of debt now held by mostly European banks – which could then face bankruptcy themselves – financial markets gave a quick shrug, then turned higher this week, all based on assurances that somehow the combined actions of Germany and France would allow Greece to avoid default.

No specific details were proffered, but those assurances were sufficient to send financial markets higher and precious metals markets lower. As can be seen, gold has dropped back to the middle of its recent range between $1,700 and $1,920 and the chart now appears to have taken on a topping look.

Markets have also continued to offer their response to Barak Obama’s recent ‘jobs’ speech and reaction is predictably mixed. His avid supporters have offered their enthusiastic comment, but many others have expressed doubt that there was anything truly imaginative or exciting, other than the smooth and polished manner in which the President delivered the speech. However, not everyone was impressed and one of those expressing a negative comment was noted writer, Victor David Hanson of the National Review..

Hanson had the temerity to point out that, in his opinion, many observers are getting weary of Obama’s relentless use of teleprompter-aided speeches. They are looking for less speeches and also something new and imaginative. Instead, they are getting repetitive concepts expressed using the same phrases such as “…let me be perfectly clear”; “…make no mistake about it”; and “Let’s be honest.”

There are indeed some real problems for the Obama team as the important 2012 election grows nearer and one of them was a visible demonstration that Obama may be losing the support of one of the critical blocs of his support, the Jewish votes which were an important factor in New York, Pennsylvania, New Jersey and Illinois. Without victories in those states, McCain, not Obama, would have been President as he polled in the 80% range among traditionally liberal Jewish voters. Therefore, it must have come as a stunning disappointment when the Democrats lost out in special election to replace disgraced Democratic Congressman, Anthony Weiner, he of the pornographic photographs. The Republican candidate scored a decisive victory.

Weiner’s district had been a dream for the Democrats as the demographics played into all their strengths; liberal, unionist and ethnically and yet they suffered a shocking loss. What made the loss appear even more ominous was the Republican had stated clearly that he was asking voters to use their ballot to express their opinion on President Obama’s actions.

We would offer the opinion that gold and silver enthusiasts – who also are traditional opponents of socialist, leftist economics, should also realizes that if the Democrats and Obama do actually suffer a major defeat at the polls next year, there could be a negative reaction in the metals markets if there appears to be a real chance for traditional free market economics coupled with limited government interference to take hold.

In the meantime, negative economic data continues to accumulate, with the latest such reports showing that home foreclosure filings by banks are once again on the rise, retail sales are flat and long-term unemployment is now at the highest levels since the end of WWII.

We are schedule to be on the convention floor before markets open at 6:30 AM PDT and therefore cannot provide current quotes. However, in overnight markets financial futures traded higher, gold was near $1,805 and silver was trading just above the $40 level.

We will be pleased to share our gleanings from the convention floor tomorrow morning.

All quotes US$ unless otherwise indicated.

Next Melman Minute scheduled for tomorrow morning, September 16..

Even newsletter editors get a break once in a while and I will be ON VACATION from September 17th through the end of the month and plan resume regular contributions the morning of Monday, October 3, 2011. If conditions appear to justify special reports, I will have Internet capability to forward comments from September 20-27.

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