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What Others Are Saying
Ed Reiter, Executive Director,
December 2014, Week 2 EditionGold stayed above $1200 for most of last week but fell slightly below $1200 on Friday’s close. This week, gold opened at $1195 but shot up $10 to $1205 in just a few minutes around noon Monday, due to short covering. Gold continues to fight the headwind of a strong U.S. dollar, which reached a new 6-year high of 89.3 over the weekend, up 12% from a reading of 79.8 last June 30. This means that gold keeps rising in terms of most other currencies, but not in U.S. dollars. Silver Bullion Coin Demand is Setting RecordsDespite silver’s rapid price decline this year and last year, demand for silver bullion coins at the U.S. Mint set annual records in 2013, which are about to be beaten for the full year of 2014. The U.S. Mint just announced that November silver Eagle coin sales reached 3,426,000 ounces, which is 49% above the totals for November last year. The 2013 annual sales record will likely be eclipsed sometime this week. Through last Friday, December 5, the Mint has sold 42,368,500 ounces of silver American Eagle coins. Since the 2013 record stands at 42,675,000 ounces, the record is sure to fall. The Mint said its 2014 supplies would be depleted soon and that the 2015 coins would be offered on January 12, 2015. The same trend is evident in some other global mints. The Perth (Australia) Mint just announced sales of 851,836 ounces in November, its highest monthly sales since January and 30% above October’s total. In India, silver imports are up 14% for the year (through October 31), setting a record for that period. India Repeals its “80-20” Gold Import RuleSpeaking of India, the government of India surprisingly repealed its rule that Indian gold dealers must export 20% of the gold they import, which was a costly proposition due to the 10% import duties the government imposed on domestic dealers. The government apparently realized that smuggling was rising to the extent that they were better off removing the 80-20 rule, even though the 10% import duty remains. Kumar Jain, the owner of a jewelry firm in Mumbai (formerly Bombay) said “This was the trigger to get wedding demand going…The shops are crowded now. This move will remove the monopoly enjoyed by the bigger traders and allow more supplies to smaller jewelers.” (The World Gold Council estimates that India holds about 22,000 tonnes of gold, which at recent gold prices is worth nearly about $850 billion.) The Republican’s Victory is Stunning…Especially at the State LevelAs a result of November’s mid-term elections, Republicans took control of the Senate with a stunning 10-seat majority, including the Republican victory in the Louisiana runoff in December. With nearly all of the close races now settled, the Republican landslide is even more stunning in the state-level races. Here’s a brief summary of the strong Republican majorities in Congress and at the state level:
Source: Ballotpedia.com Nearly half of all states (23 of 50) scored a “Trifecta,” with a Republican Governor and Republican control of both houses of their state legislature. Only seven states scored a Trifecta for the Democrats, with the other 20 states having a division of powers. This is an amazing switch from President Obama’s first term. From the 2008 election to until the mid-term elections in 2010, the Democrats controlled 62 state legislative chambers to the Republicans’ 36. Before the 2014 elections, Republicans were already in control of 59 of the 98 state legislatures. After the November elections, the Republicans gained control of nine more state legislative bodies for a total of 68. When Obama took office, the 49 states with bicameral legislatures were controlled by Democrats, 62 to 36. Now it’s 68 to 30 for Republicans. The balance of state power has totally flipped under Obama. His Party has now lost a net 32 of 98 state legislatures. The last election showed how voters across the nation repudiated President Obama’s agenda. This was a “learning opportunity” for the President, but apparently he failed to listen to the repudiation of his agenda by the American voters. In response to the election results, he seemed to blame the “non-voters” for the huge Republican victory. Twenty years ago, something like this happened and the incumbent Democrat learned his lesson. In 1994, when the Republicans pulled off an equally stunning repudiation of the drive toward nationalized healthcare spearheaded by the President’s wife, President Bill Clinton said “the era of Big Government if over,” and he proceeded to work closely with the new Congress on some historically important bills such as the “end of welfare as we know it” and balanced budgets by the end of the 1990s. By contrast, President Obama has doubled down on his agenda after the strong Republican mid-term victory in 2014. He has vowed to “go it alone” with Executive Orders, starting with immigration amnesty for five million formerly illegal immigrants. After the election, Obama only made one concession: He said he was willing to sit down with Mitch McConnell and have a glass of bourbon with him. (In 2012, when someone asked Obama if he should have a drink of Kentucky bourbon with Republican Senate Minority leader Mitch McConnell, he said, “Why don’t you have a drink with Mitch McConnell?”) One month later, the President and new Senate leader finally met, but there was no bourbon consumed, and no real breakthrough in the chilly relationship between the “loner” President and a defiant Congress. But since Congress – not the President – controls spending legislation, we might see some significant budget cuts in the next few years, which could lower the growth of our budget deficits, which is a vital to the future of our nation. In the meantime, Republicans may have to wait until 2016 to see their Trifecta.
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