A Melman Minute — October 22, 2012

NOTE: Mr. Melman will be appearing at the upcoming "Silver Summit" in Spokane, WA scheduled for October 25-26. He will be appearing in an industry panel on the 25th and offering a presentation entitled "Silver - and gold - forecasts for late 2012 through mid-2013." Cambridge House has assembled a fine array of speakers and many mining companies - with an emphasis on silver exploration and development - will be maintaining exhibition booths at the conference. Mining enthusiasts in the Pacific Northwest are urged to attend.

There is a most interesting coincidence when we compare the flow of news events for the past few weeks and the somewhat dramatic fall in precious metals prices in the same time frame. As the fortunes of the Obama campaign have ebbed with the Benghazi events, the prices for gold and silver have also declined.

Please note that the sharpest part of the decline began in the early part of October, just as the Obama account of the Benghazi events began to unravel. While other political commentators have offered their recapitulations of the situation, I would offer mine and then attempt to tie this into the price of the precious metals.

In my mind, the President made a severe error during the second debate, an error compounded by the intervention of “even-handed” Candy Crowley, the supposedly objective moderator of that debate. In that now-famous interchange, the President stated clearly, before tens of millions of observers, that in the Rose Garden at the White House, the very morning after the September 11 attacks, he had clearly labeled that attack on the US Embassy which resulted in four deaths as “An act of terrorism.”

With that statement, at least to my mind, he destroyed the credibility of his subsequent actions. If he had credible information that it was indeed an “Act of terrorism” – and he could not have conceivably made the statement without valid confirmation – then his subsequent comments blaming the murderous attacks on an obscure film which virtually no one has ever seen makes no sense whatsoever – and this is compounded by the fact that Obama himself made such statements, his Secretary of State, Hillary Clinton made such statements and Ms. Rice, the US ambassador to the United Nations made such statements – and all of those numerous statements were unequivocal in nature.

The problem is compounded by the fact that subsequent Congressional hearings have provided specific details relating to the information provided to the White House which completely discredited the “film” story – yet the White House continued to spread that story for two weeks after testimony at those hearings disproved the protest concept.

Either the President and his confederates lied – there appears to be no other appropriate word – or they completely misinterpreted the facts which then would promote serious questions regarding their entire information gathering procedures as well as their actual competence.

But there is a much more serious question and it is one which candidate Romney might use to his advantage in tonight’s debate. The President stated in his early campaign statements that Al Qaeda has been virtually destroyed as a force with the death of Osama Bin Laden. However, the details of the Benghazi attach show a well-coordinated and planned attack with significant advanced weaponry – hardly the kind of information which would support the “weakened al Qaeda thesis. But it goes even deeper.

Obama has made great capital gain out of decrying the entire war in Iraq and most of the war in Afghanistan. Presumably, those wars were fought for the purpose of insuring that no bases for terrorism would ever be permitted to take root in those nations. However, all American fighting forces in Iraq are now gone and plans have already been announced to withdraw such forces from Afghanistan as well.

But what is President Bush had been correct in the first place? What if it should have been an essential ingredient of American foreign policy to maintain forces in those nations until civilian forces were truly able to provide genuine security?

Given these questions, it would appear that tonight’s debate may be the most important of the three and the one on which Obama’s fortunes may rise or fall. It should be quite a show.

Overall, we are receiving the impression that an Obama victory would be bullish for the precious Metals while a Romney victory might have the opposite effect.

We shall see.

All quotes US$ unless otherwise indicated.

Next Melman Minute scheduled for Thursday, October 25

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