The Laurel Comment

“Nations are formed and kept alive by the fact that they have a program for tomorrow.”
-José Ortega y Gasset

Commentary

Unfortunately for America, the Democrats and most of the civilized world the primaries will continue to be of importance through to April 22 when the Pennsylvania votes are counted. The happiest souls to be found out and about the political spectrum this month are the Republicans, who now look forward to 6 weeks of mean campaigning from the Hillary camp who are deviously delighted with the late gains achieved from their attack ads in Texas and Ohio.

The math still largely favours Obama and we fervently hope that he remains a high roader rather than a gutter player…no matter what the cost.

This year’s election in the U.S. is far more important to Canadians and everyone else in the world than any political machinations that occur here in the sane sector of North America where high oil, wheat and base metal prices make governing an incredibly simple task that even some of our more challenged officials cannot screw up.

The issues before the American electorate should be simple this time around: the economy, the war, medicare and the deficit. The side issues will however be evident among some media types (read Lou Dobbs) and the Christian Right, these are the usual candidates: immigration, guns, gay marriage and the “right to life” movement.

John McCain, the Republican nominee has promised to campaign on more of the same, more war, more tax cuts, more deficits, and more pandering to the nutty extremes.

Hillary Clinton promises to end the war sometime, create a medicare plan and tax the rich.

Barack Obama promises to end the war more quickly, create medicare plan and rejig the tax system at the expense of the already wealthy.

Well we all know how the McCain plan works because it’s the one we have seen for 7 years. An outrageous and immoral war funded by deficits at no cost to its perpetrators (the wealthy) and at a great cost to the middle class in both treasure and lives. The McCain campaign will attack the Democrats for being weak on terrorism while the economic issues and medicare will remain largely ignored except for the usual conservative mantra of private health and low taxes.

Tragically it appears that Democrats response will be a gutless expression of “half a loaf” solutions that will include some mistaken diatribes against free trade, (Ontario did not steal jobs from Ohio and NAFTA has been a net positive for all so let’s drop the subject) when in reality they should be arguing the case for a massive infrastructure buildout rather than the puny Barack proposal of 60 billion over 10 years or roughly the cost of five months in Iraq.

Iraq, the Three Trillion Dollar war as Nobel economist Joseph Stiglitz and Linda Bilmes have called it in their fact filled book, must end immediately because it is the most easily identifiable source of America’s current problems. When George Bush took office, oil was $20 a barrel, the Euro was at $0.83 to the U.S. dollar and Canada’s Loonie was $0.65. The U.S. Federal government was in surplus and gold languished in the $250 per ounce range.

Yes, there was 9/11 and maybe it could not have been prevented, but Iraq had nothing to do with the attack and the Bush/Cheney reaction to the event has proven to be far worse then the attack itself. This idiocy must end and a new America must emerge from the ashes of the Bush Administration.

America does not just need a change in policy, it needs a bottom up change of spirit, one that Barack Obama has the best chance of providing.

Markets

As readers of this column are aware, our long held bearish views on U.S. and world markets changed following the mid-January lows. Our five year bullish opinion on gold has not as our short term $1000 target plays out and our one year level of $1500 comes into view.

Many bears have been calling for a retest of the January lows and some for a possible breakdown of the Dow Jones to the 8,000 level. The retest may have already occurred and the Dow 8,000 has already been achieved if one wishes to relate the index to Euros, Canadian dollars or gold, because the entire movement of U.S. markets is mistakenly seen by most in “greenbacks”. We have said it before and will now repeat it. The United States is on sale and now is the time to buy it. By the time we get to November and a Barack Obama Presidency the entire picture may have a new and positive look about it.

Democrat themes are infrastructure, technology and bio research which should bring the nanotech and stem cell stocks back into play. The constants of world growth will be agriculture (there is a small list of stocks) base metals, energy and the aforementioned precious metal play. Learn more about ETFs and special situations.

Remarkably

The total amount of gold in circulation is about 5 billion ounces.

The U.S. money supply as formerly measured by M3 has risen from 800 billion in 1971 to 12 trillion today.

The largest proportion of the rise has taken place since the late 1990’s.

Gold traded at 850 1980 dollars, it now trades at 990 2008 dollars. You do the math.

On the positive side 2 billion new consumers have been created since the early 1990’s in Asia, the sub continent of India and in Central Europe, Russia and South America. This new world is no longer solely driven by either the U.S. economy and its profligate consumption or by its foreign policy blunders.

The United States remains the world’s largest economy but it is no longer the world’s fastest growing economy. Last month we quoted the former Governor of Hong Kong Chris Patten who said that China had been the world’s largest economy for eighteen of the last 20 centuries and would be again in this one. Nothing has changed in the last 30 plus days to change that view.

Geoff Ryan
March 5, 2008
[email protected]
514-795-8450