If the Repubs re-take the House will gold drop?

[Ardent Listener]

If the Republicans re-take the House of Representatives will the price of gold drop? I'm not asking if it would be the end of gold's bull market, but rather will gold drop for a while in November?

[Country]

If PMs are going strong into mid-October, they will need a pullback (the pause that refreshes). I guess if the Republikhans are predicted to take the House sometime in October, that is when a correction could ensue. It probably would be a good buying opportunity, since neither Republikhans nor Demokrats will change anything. QE2 (a further demise of the dollar and further fuel for PMs to go higher) will happen in a big way after the election when the politization of the economic numbers stops and the real economic outlook again looks bleak as more and more Americans become unemployed.

[BamaJoe]

Let's see - how did gold/silver do from 2000 to 2008 when Bush was in the whitehouse and Repubs controlled the house and senate at least part of the time. I just can not seem to come up with many examples of how they were models of fiscal responsibility. I guess I'll still bet on the shiny stuff.

[argent_pur]

As my monetary theory professor said recently, "They're the same party, people!"

I really don't know what I'm going to do come November...

[theo]

"They're the same party, people!"

I don't think its quite that simple. Conservative and liberal (socialist?) economic philosophies are actually like night and day. However, the problem is political. A newly elected conservative congessman or senator may be a staunch supporter of lower taxes and less govt spending; but before long they realize that they want to be re-elected and that means bringing Federal money back to their state or district. While they still pay lip service to their conservative values (and occasionally will fight for them) these politicians will continue make the compromises (usually regarding spending) necessary to stay in Washington. In short the system is set up to continually reward bad behavior.

In terms of the upcoming elections and their impact on PMs; the Republicans' probable take over of the House and gain of at least seven seats in the Senate will put an end to almost all fiscal stimulous. The problem is the Fed (being apolitical) will be able to continue an easy monetary policy including QE. So I agree that Republican gains might cause some short term pullbacks in PM prices, but the long term trends will be positive the for forseeable future.

[Sheikh_yer_Bu'Tay]

It's the same monetary science, people!

Until that changes, not much else will.

IMHO you can expect some minor corrections in prices, but BHO will still be the Prez.

If Republicans take control of Congress, they can cut off some money for Obama's pet projects. The media will crucify them for that just like they did when the Repubs. cut off Clinton. But basically, it will still be business as usual in regards to our long march to bankruptcy.

If Dr. Ron Paul, Libertarians, and the Tea Party magically took over the government in November... Oh, yeah, there would be a lot of changes.

[Ardent Listener]

My thought are that it will likely drop unless some other major world-wide event out-weights the change in the house. It's not so much as what the Republicans will or won't actually do as it is how the investing public will view it. IMO, they would have to not only take the House, but the Senate too and then the president and vice president would have to meet a simultaneous demise for the Republicans to have any chance of making a real difference over the next two years. Even then I doubt they would really do much that was constructive. But a lot of, if not most, investors would see it as a sign that a major shift in US economic policies was on its way.

No offense to us intended, but we are some of the last people who will part from precious metals ...........if we ever do. Most other PM investors aren't so hard-core. It's them and not us who will decide where gold prices are going.

[argent_pur]

"They're the same party, people!"

I don't think its quite that simple. Conservative and liberal (socialist?) economic philosophies are actually like night and day. However, the problem is political. A newly elected conservative congessman or senator may be a staunch supporter of lower taxes and less govt spending; but before long they realize that they want to be re-elected and that means bringing Federal money back to their state or district. While they still pay lip service to their conservative values (and occasionally will fight for them) these politicians will continue make the compromises (usually regarding spending) necessary to stay in Washington. In short the system is set up to continually reward bad behavior.

I think we're talking semantics here...he didn't mean they were literally the same party, of course, but with regard to financial recklessness, though they go about it differently the net result is the same. Both parties promise a free lunch in some form or another...

Honestly, what do the philosophical differences really mean if they don't impact your policy making...there's nothing conservative about spending beyond your revenue and Republicans have amply demonstrated that they are just as capable of overspending as the Democrats are...same party

[argent_pur]

I like to think of it this way...suppose the economy is a gigantic poker game:

If you don't like the hand you're dealt, the Republicans will bribe (i.e. give a tax break to) the dealer in hopes they will give you a better hand and the Democrats will tell you to simply steal your neighbor's hand, provided he has a big chip stack (apparently he deserves to be robbed anyway)...

[DirtyFingers]

Howdy Folks,
There's bound to be some kind of a correction before the end of the calendar year. I don't think the November elections will have much bearing on it. We still have several years of Obama left. As long as the stock market and the dollar remain weak, I think the correction will be minor and won't hold for long. There's alot of money out there doing nothing but being stashed and more to come what with us older boomers pulling out money out of pre-tax and nowhere to go with it because of the lack of good investments. There's only one investment to be in right now and that's the one we're all invested in -- metals, both base and precious. I don't see anything changing significantly. I don't see the economy getting better anytime soon. I may have misunderstood what I heard on cnbc recently but I thought I heard 15000 new jobs have to be created each month just to keep the unemployment rate at it's current level. Somebody please correct me if I'm wrong. What I do see is alot of after tax money that has no direction.
Depending on where alot of that money goes could decide how wealthy or how broke alot of us are going to be.

Besides....if there is a major correction I stop being a trader and go back to being a buyer. Like the rest of you, I got into metals to preserve wealth. With the current state of the economy and well into the foreseeable future, there's no other choice that I can see.

DirtyFingers

[argent_pur]

Hey dirtyfingers, what part of IL you from?

[DirtyFingers]

Hey dirtyfingers, what part of IL you from?

Geographical dead center of IL, argent_pur. Between Springfield and Bloomington.

You?

DirtyFingers

[Lemon Thrower]

As my monetary theory professor said recently, "They're the same party, people!"

agreed. but vote out incumbents and vote FOR libertarians and constitutional party

[argent_pur]

Hey dirtyfingers, what part of IL you from?

Geographical dead center of IL, argent_pur. Between Springfield and Bloomington.

You?

DirtyFingers

NW corner, in the Sauk Valley area. About an hour from both Rockford and the Quad Cities...

[DirtyFingers]

Hey dirtyfingers, what part of IL you from?

Geographical dead center of IL, argent_pur. Between Springfield and Bloomington.

You?

DirtyFingers

NW corner, in the Sauk Valley area. About an hour from both Rockford and the Quad Cities...

Alway nice to meet a fellow Illini. Years ago I fished the Rock River. You near that?

DirtyFingers

[argent_pur]

As it happens, my house is about 2 minutes from the Rock River as the crow flies...some of the best catfishing in the country

[DirtyFingers]

As it happens, my house is about 2 minutes from the Rock River as the crow flies...some of the best catfishing in the country

Yes, very good catfishing there and over at the upper east corner of IL at the Fox River and the Chain O' Lakes.

DirtyFingers

[theo]

"They're the same party, people!"

I don't think its quite that simple. Conservative and liberal (socialist?) economic philosophies are actually like night and day. However, the problem is political. A newly elected conservative congessman or senator may be a staunch supporter of lower taxes and less govt spending; but before long they realize that they want to be re-elected and that means bringing Federal money back to their state or district. While they still pay lip service to their conservative values (and occasionally will fight for them) these politicians will continue make the compromises (usually regarding spending) necessary to stay in Washington. In short the system is set up to continually reward bad behavior.

I think we're talking semantics here...he didn't mean they were literally the same party, of course, but with regard to financial recklessness, though they go about it differently the net result is the same. Both parties promise a free lunch in some form or another...

I disagree, I didn't take it literally. I've heard this sentiment hundreds of times (Democrats? Republicans? Whats the difference?). I responded because I was surprised to hear it from a college professor who really should know better. In fact I believe this way of thinking is a big reason for the election of Obama. Since many voters could not recognize any real differences between Obama and McCain (mostly the fault of the MSM) they choose the fresh face. I have a difficult time believing that McCain (as bad as he is) would have indebted this nation and pulled it toward socialism to the degree that Obama has.


Honestly, what do the philosophical differences really mean if they don't impact your policy making...there's nothing conservative about spending beyond your revenue and Republicans have amply demonstrated that they are just as capable of overspending as the Democrats are...same party

On the Republican side those differences have come in the form of tax cuts, which by the way is not a free lunch. (Subsidies to various industries are of course another matter) The Reagan and, to a lesser extent, the Bush tax cuts pulled us out of recessions. I believe the Reagan tax cuts (mostly on the wealthy) actually staved off inflation by increasing aggegate supply. Neither of these recoveries would have occurred had Carter or Gore won their respective elections.

The problem (as I tried to explain earlier) is that the system makes any real reduction in spending impossible. Most fiscally conservative politicians begin to realize that fighting this system is the surest way to lose the next election, so they go along, compromise and eventually become part of the system. The MSM plays a part as well. I remember during Bush's first term the President and his allies sought to reduce the rate of increase in several Government programs. The media continually referred to these proposals as "cuts" even though they increased spending. Most of these proposals failed and I don't recall the Bush administration making any meaningful attempts at controlling spending after that.

[argent_pur]

I understand that tax cuts are not a free lunch. Those tax breaks aren't just because they want to be nice and have extra cash laying around...they're funded by going into debt (thus being invisible to ordinary citizens). I don't believe in the existence in free lunches, because I'm a forward-looking person--I see the cost down the road, as you do, but most people don't, so it appears to be "free money" from their perspective. So, what I meant was that tax cuts are sold by Republicans as a free lunch because they never explain how the cuts are funded and what the cost will be down the road. And social programs are sold by the Dems as a free lunch because they never explain where the funding comes from and what the costs will be down the road.

[theo]

I understand that tax cuts will have to intially be funded by deficit spending if they are not "paid for" by spending cuts. However, I would argue that tax cuts will begin to pay for themselves after a few years. Tax cuts encourage the creation of wealth, which causes growth in GDP, which then leads to an increase in tax revenue. This is especially true with taxes cuts on the wealthy, capital gains and corporations. For example, tax revenue nearly doubled during the Reagan adminstration (fr 500b to 900b) despite the dramatic reduction in taxes. The reason is that tax revenue is driven by the level of GDP not the tax rates. I believe Reagan's tax cuts funded much of the commericialization of the internet ten years later and ultimately lead to the surpluses during Clinton's last two years.

[Sheikh_yer_Bu'Tay]

theo & argent_pur,

You guys have a terrific conversation going, I hope you don't mind if I put in my 2 cents worth.

There is a lot of talk about stimulate this, stimulate that... tax break for him, tax break for her... help the high income guy, no help the low income guy.

Both the Democrat and Republican solutions result in the same thing. We are spending money we don't have! The government keeps growing at an alarming rate when it should be shrinking to pay down the debt.

We need EVERYONE to pay taxes and at the same time EVERYONE must stop demanding more "free" _____fill_in_the_blank____ programs to help some special interest group (no mater how rich, or how poor they are)!

We need to stop borrowing Federal Reserve Notes from a private central bank corporation, at interest, when we have the constitutional right to print our own debt-free money! Why is the USA in the borrow at interest, then give it away for free, business anyway?! It is absolutely, freaking insane!

We need debt free US Treasury bills in circulation, instead of Federal Reserve Notes (at interest). FIRE THE FED!!!
We need austerity programs to cut an insanely out of control budget process.
We need to grasp the reality of unfunded commitments that are hidden off balance sheets. ($110 Trillion)
We need every citizen to pay their fair share of taxes to pay down this indebtedness. Rich and poor, big and small, alike.

Unless all of us are willing to work together, pay together, sacrifice together... we shall all suffer the same collapse together.

[rainsonme]

In many ways, this IS the correction in silver/gold. We are in a deflationary depression; these ARE the low prices. It is when (and god help us IF) there is a true economic recovery that gold and silver will rocket, as inflation, interest rates, and demand jump. This is still the deflationary period. That said, within this period of low prices, there could still be some further dips, based mainly on relative weakenss in the Euro or Yen that make the dollar by comparison look "strong". All of the major fiat currencies are being debased at an unpresicented rate. Even the Chinese are increasing the number of Yuan in circulation by 2x every 2 years. If not for the deflationary crisis which is intensivying, precious metals would really jump. 1300 for gold, 21 for silver ---- that's cheap. Replubicans in the house won't make much difference, and by sometime in mid October, that should be priced in. I am hoping for $17 silver, but I am not expecting it. But the bull run in precous metals is still a few years out.

[misteroman]

^^^^^^ can't say it much better then that!

[argent_pur]

Thanks, Sheikh I think Theo and I actually agree more than it seems...He said tax cuts encourage the creation of wealth along with private savings and that is absolutely true!!! I'm all in favor of lower taxes, so long as it is accompanied by lower spending, but given the "system" that Theo was describing where politicians of every stripe spend more than they take in, tax cuts in an environment of static or rising gov't spending are simply a promise of a free lunch to the citizens (even though they are absolutely NOT free).

I think we all agree it is that "system" that needs to be changed...and the system is not some computer program that exists independent of people, the system is something collectively set up and embraced by people because of a shared worldview...if the system is to change, the people have to change.

[theo]

Fair enough. I agree that if we, as a society, ask for lower taxes then we have the obligation to live with less Government support.

Regarding the original question of the thread, I think that if the Conservatives do well next month we may be a little closer to re-establishing some version of the gold standard. Most people who truly understand the system know that a limiting factor such as a gold/silver/copper standard is the only fool-proof way to control spending. A Republican-controlled congress would be more likely to hold hearings/investigations on our fiscal situation and/or focus more attention on the Fed.

However, what is just as important are the state races. Realclearpolitics predicts that the Republicans will pick up 7 governorships giving them a total of 31. http://www.realclearpolitics.com/epolls ... r_map.html. Personally I think 33 or 34 is more likley. Republicans will also likely takeover 100s of seats in various state state legislatures. Today states are already showing a willingness to oppose the Federal Government on issues like immigration and health care. This opposition will intensify when new state leaders rediscover the 10th Amendment. For example the inevitable Federal bailouts of California, New York and Illinois will likely draw Constitutional challenges from individual or coalitions of states. Also if and when the dollar starts to seriously devalue, some states would likely begin to issue there own (hopefully commodity backed) currency and there is no guarantee that Washington would have the political power or even the military power to do anything about it.