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Oil price is calm when viewed in gold terms rather than depreciating dollars
12:17a ET Friday, August 20, 2004
Dear Friend of GATA and Gold:
CNBC financial commentator Lawrence Kudlow
is, like everyone else at that network of
hype and fluffery, no friend of gold,
but he may have done the gold cause a favor
with his Aug. 12 syndicated newspaper column,
forwarded to GATA by our longtime supporter
in Halifax, Barrie Walsh, and appended here.
In his column Kudlow argues that President
Bush should make a big show of releasing oil
from the U.S. Strategic Petroleum Reserve to
knock oil prices down and knock the wind out
of oil speculators.
Kudlow seems to advocate this more for
partisan politics -- the pursuit of re-election
for the Republican administration -- than for
the good of the U.S. economy. But put that
aside, along with any objections to government
intervention in free markets, and you have a
proclamation that the government SHOULD
intervene in markets for what GATA
statistician Mike Bolser calls stategic
commodities.
To which any gold and silver partisan might
ask: Given their reciprocal relationship with
the U.S. dollar and U.S. government bonds, are
not gold and silver strategic commodities as
well? And what makes Kudlow think that the U.S.
government is not ALREADY draining the
Strategic Petroleum Reserve in the face of
rising oil prices -- or that the U.S.
government has not already mobilized gold
and silver reserves, perhaps through
intermediaries, to restrain the prices of
precious metals? After all, what are central
bank gold leasing and all those central bank
gold swaps about? They don't make any
money to speak of ... at least not on the
gold transactions themselves, but they may
make huge amounts in corresponding
transactions in markets that can be
manipulated with government-mobilized gold
and silver.
GATA has maintained from its beginning
that government intervention in free markets
is more extensive than is acknowledged --
that, indeed, the derivatives business is
largely about suppressing the prices of all
commodities, all things REAL, so that the
financial class may gain control of and
expropriate the productive classes. And here
another Wall Street factotum is arguing for
still more intervention -- no doubt before
returning to the usual denials that any such
intervention occurs.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Solving Bush's Oil Crisis
By Lawrence Kudlow
Thursday, August 12, 2004
"http://www.creators.com/opinion_show.cfm?columnsName=lku"
You might think that George W. Bush will be the
overwhelming choice of shareholders in his bid for
re-election. He cut taxes on capital gains and
dividends, while Kerry wants to undo them. The
Democrats oppose limits on runaway lawsuits
that decimate corporate profits. They also want
to double-tax profits earned abroad and impose
price controls on domestic health-care providers
and pharmaceutical companies.
But the latest reading on the Rasmussen overnight
polling survey of likely voters shows Kerry ahead
of Bush 48 to 45 percent. This shocking result
should be a wake-up call to the Bush campaign.
Investors are a core Bush constituency. It seems
that today's higher gasoline prices and lower stock
market averages are making for a nasty political
mix that's turning off investors to Bush.
Already, the Nasdaq has toppled 18 percent and the
Dow and S&P have dropped 9 percent from their
early-year peaks. Bush might still win despite these
disappointing stock market figures. But if he does,
he will buck the trend of the past four elections.
Over the first nine months of 1988 and 1996, stocks
were up more than 10 percent in pre-election trading.
Both times the party in power in the White House was
re-elected: George H.W. Bush as Reagan's heir in
1988 and Bill Clinton with a second term in 1996.
During the first nine months of 1992, however, stocks
were about flat. Predictably, Papa Bush was defeated.
In March 2000, the stock market began a steady slide,
thereby undercutting the Clinton-Gore prosperity
argument and helping challenger George W. Bush win
by a razor-thin Electoral College margin.
Should stocks continue to slide and oil continue to rise
in the weeks running up to the election, it will be the
handwriting on the wall of a Bush defeat.
While economists in both political camps are intensely
arguing over jobs and the so-called middle-class
squeeze, they ignore the electoral potency of the stock
market. Two decades ago, only about one in eight U.S.
households owned shares, so stocks didn't really
matter in political terms. Today nearly half of all
households own shares, with almost two out of every
three voters belonging to the investor class.
Recent polling data show a big Bush opportunity here.
Sen. Kerry lost 9 percentage points from the investor
vote following his speech at the Democratic convention
in Boston, according to an Investor's Business
Daily/TIPP survey. Surely the president can do a better
job of reminding shareholders of his pledge to make
the dividend and capital-gains tax cuts permanent. A
renewed push on personal savings accounts for Social
Security reform would also be welcomed by the investor
class, as would a surprise move toward pro-growth tax
reform and simplification (as recently argued by House
Speaker Dennis Hastert).
But if you scratch an investor deep enough these days
you are likely to find that their biggest worry is spiking
energy prices. The president has been silent on this.
At the beginning of the year, oil was at $30 a barrel
while the U.S. and Chinese economies were booming
full speed ahead. Now, however, even though the world
economy has slowed, oil has shot up to $45. Why is
this? The answer is that wave after wave of terrorist
threats, especially in Iraq and Saudi Arabia, have
added a fear-factor risk premium of as much as $10
to $15 a barrel. Oil-supply disruption threats have
also come from Russia and Venezuela.
Bush must now answer why the United States would
let terror threats disrupt our stock market and
economy. Solving this is exactly what the Strategic
Petroleum Reserve is there for. As a last resort,
reserves should be used to counter these
terrorist-related oil-price spikes.
Behind the scenes, oil-market traders, knowing they
are backstopped by continuing purchases from the
reserve, keep betting on higher prices by buying
contracts with impunity. As long as the United
States keeps adding to its reserves, traders are
confident of a one-sided market that will keep
pushing oil prices much higher than softening
commercial supply-and-demand conditions can
justify.
If the administration would simply cease filling the
reserve, or better yet begin RELEASING small
amounts of crude oil reserves onto the market, then
oil markets would become two-sided again. This
would force a rapid unwinding of long positions that
would bring down oil prices by $10 a barrel or more.
It would electrify investors (and consumers) and
would surely contribute to a big pre-election rally.
Thirteen years ago, Papa Bush employed a similar
tactic during the Persian Gulf War. Oil prices
crashed.
Sometimes politicians have to act like short-term
traders and weigh in when least expected. In the
political mind's eye of the investor class, a government
action to short oil would make a whole lot of
shareholders willing to go long Bush.
----------------------------------------------------
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
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"http://www.capitalupdates.com/"
"http://www.DailyReckoning.com"
"http://www.silver-investor.com"
"http://www.thebulliondesk.com/"
"http://www.financialsense.com"
"http://www.goldensextant.com"
"http://www.goldismoney.info/index.html"
"http://www.minersmanual.com/minernews.html"
"http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html"
"http://www.freemarketnews.com"
"http://www.investmentrarities.com"
"http://www.kuik.com/KH/KH.html"
(Korelin Business Report -- audio)
"http://www.plata.com.mx/plata/home.htm"
(In Spanish)
"http://www.plata.com.mx/plata/plata/english.htm"
(In English)
Subscription site:
"http://www.lemetropolecafe.com/"
Eagle Ranch discussion site:
"http://os2eagle.net/checksum.htm"
Ted Butler silver commentary archive:
"http://www.investmentrarities.com/"
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
"http://www.blanchardonline.com"
Centennial Precious Metals
3033 East 1st Ave., Suite 403
Denver, Colorado 80206
"http://www.USAGold.com"
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
"http://www.ColoradoGold.com"
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
"http://www.eldoradogold.net"
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
"http://www.gloomdoom.com"
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
"http://www.kitco.com"
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
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"http://www.certifiedcoins.com"
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
"http://www.milesfranklin.com"
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
"http://www.mocoin.com"
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
"http://www.swissamerica.com"
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
----------------------------------------------------
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