Betting Against President Obama

Gold has been in the news lately. The University of Texas disclosure that it has been buying gold as part of its endowment investment put gold in the news. Further, the news of gold futures breaking the $1,500 an ounce mark put gold in the news, as did reports that investors were looking to gold due to the weakening of the U.S. dollar and the Standard and Poor's downgrade of the United States fiscal outlook to negative.

Why invest in gold? Gold is considered a safe-haven for investors. When the dollar weakens, when uncertainty rises, and when the economy weakens, the price of gold tends to rise. Essentially, the worse the financial situation becomes in the United States, the more valuable gold is. The same applies to silver and other precious metals.

Investing in gold, essentially, is a bet against President Obama or the Congress taking action that will greatly improve the United States economy. When President Obama suggests hiking taxes, doesn't want to cut spending enough, won't eliminate unneeded regulation, and continues to side with big unions instead of trying to create conditions that will create jobs, grow the economy, and grow revenues, it's a sign that the future of the country's economy is at risk. An economy at risk means that investors look to buy safe-haven investments. Gold has low risk, because it has intrinsic value. Unlike buying stock in a company, there's no risk of gold going bankrupt. You can't make something out of stock. On the other hand, with gold, you could make jewelry or decorations. Some people even have replacement teeth made out of gold.

Were the United States to have its Aaa rating cut or default on obligations, economic havoc would take place. Stocks would decline in value, the dollar would weaken, and then we would see job loss and greater unemployment leading to a cycle of economic slowdown and progress away from prosperity instead of progress towards it. Meanwhile, the price of gold would go up. If the United States dollar were to weaken by 10 percent today, another $150 an ounce would be added to the price of gold making it worth around $1,650. In our recent interview with a middle class American who has invested in gold, she alluded President Obama's failure to stop the weakening of the United States dollar:

The Report: Some say President Obama is weakening the dollar and that sends gold higher and stocks lower. Do you agree?


Nicole: I bought gold when we were seeing a price of $1,000 an ounce and I still have the gold investment. I could make a profit of over $400 an ounce right now. Barack Obama doesn't seem committed to stopping it. However, the economy is recovering and so my strategy is to have stocks and to have gold because I think both will go higher.

Investors who are hoping to earn a profit by buying gold now and selling it later are essentially expecting President Obama to fail, and the price of gold to go up as a result, earning them a profit. So far, they've been right. When President took office, gold was under $1,000 an ounce. An investor who bought gold on the day of President Obama's inauguration could sell it now for a 50% profit. Betting against President Obama worked for over two years, and there's a good chance that it will continue to work for the remainder of his term in office.

Banned in Boston

In the early 20th century, the term "Banned in Boston" was applied to works that were prohibited from being sold, performed, acted, etc. in Boston, Massachusetts due to unconstitutional censorship and abuse in the city. Today, Boston Mayor Thomas M. Menino, a liberal Democrat has brought the banning back to Boston with a plan to ban beverages from city property. We're not talking about banning people from drinking liquor on the job, rather the ban is on the sale of "non-diet sodas, pre-sweetened ice teas, refrigerated coffee drinks, energy drinks, juice drinks with added sugar, and sports drinks." The Mayor has moved forward on this ban with the issuing of an executive order, meaning there was no democratic process or ability for the people of Boston to object.

What Mayor Menino is doing is blatantly attacking the right of the American people to make their own choices and decisions. While it is known that eating/drinking excessive amounts of sugar, whether in beverages or elsewhere, can lead to taking in more calories than recommended which can lead to weight gain or even obesity in the long-run, the choice on what to eat or drink should be left to individual Americans.

Drinking sports drinks or a soda in moderation doesn't lead to obesity. At a gym, you'll see many people who drink a sports drink while exercising. Some of them are obese, trying to get in shape, but many are not. Likewise, many who drink refrigerated coffee drinks, energy drinks, or non-diet soda aren't obese. Some are, but that's because of their own personal choices and bad decisions, not because the government allowed the sale of food and beverage with sugar in it.

Canned and bottled beverages contain nutritional data, including the amount of sugar/carbohydrates and calories on the bottle. Many even prominently feature this information on the front as a result of a movement by the beverage industry to make it easier for Americans to make their own decisions on what beverages to buy or drink. Unfortunately, the Mayor of Boston thinks that he should be able to decide what Bostonians can drink instead of allowing individuals the freedom to make their own decisions.

If you want to let Mayor Thomas M. Menino know that Americans are smart enough to make their own decisions, you can contact the Mayor's Office:

Mail: Mayor of Boston / 1 City Hall Square, Suite 500 / Boston, MA 02201-2013
Phone: 617.635.4500
Fax: 617.635.2851
E-Mail: mayor@cityofboston.gov

A House In Denial

While House Democrats deny the proven concepts of supply-side economics and that Washington has a spending problem, a panel of House Republicans today denied that the world's temperature has risen over the past 150 years. While one cannot prove that climate change is the result of human action (or inaction), the fact is that if take a graph and plot temperatures and years, as we move towards today the points on the graph move higher and higher. Below is such a graph (click it for a full size / clear view):

The blue dots are the data points, the x-axis year, the y-axis is annual mean temperature (degrees Celsius), the solid red line is a trend line, and the bold black line is the 25-year moving average. When the trend line and the moving average both show upward motion, that is a clear indication that the temperature has been rising.

The far-left, scientists, environmentalists, fellow conservatives, and even fourth-graders who have learned how to make scatter plots / trend lines have made a mockery of the Republicans for their inability to understand simple mathematical concepts. While it can be argued that the government should not be concerned with climate change, you can't really argue against the laws of mathematics. How can Representatives be taken seriously when they push for deficit reduction when they screw up like this?

Winning The Obama Republicans

Presidential Races can be close. They can also be blowouts. Ronald Reagan's 1984 defeat of Walter Mondale was a blowout: every state except Minnesota went to Reagan. In contrast, the 2000 race between Al Gore and George W. Bush was so close that a single state going the other way could have changed the outcome of the election. In 2012, the Presidential race may be very close. It is likely that independent and moderate voters, which actually make up a majority of the American people, will be the group that decides the race. The far-left won't vote Republican and the far-right won't vote Democrat. The center, however, could go either way.

In 2008, nearly 1 in 10 Republicans voted for President Barack Obama over their party's nominee, John McCain. These so-called "Obama Republicans" or "Obamacans" helped the President secure the win. Likewise, in 1984 Ronald Reagan was able to win 49 of 50 states because of the support of "Reagan Democrats" and other moderate voters. President Reagan, after all, helped curb inflation, reduced taxes, grew the GDP, and helped create jobs in America. Moderate Americans support those principles, and if President Obama can do the same, moderate Americans -- including, yes, some Republicans -- will vote for him again in 2012.

It is clear that the number one priority of the American people is the economy. Financial issues, not social issues, are what Americans care about. For many Americans, it doesn't matter if something is a Republican solution or a Democrat solution, but rather if something is a working solution. If the far-left ideas of greater regulation and higher taxes created more jobs in America, raised the average families income, and improved the GDP, most Americans would be happy. Unfortunately, it has been shown in the past that the best way to bring prosperity to America is by embracing supply-side economics. As Arthur B. Laffer mentions in the Wall Street Journal, supply-side economics created 21 million jobs between 1982 and 1990.

Unfortunately, for President Obama, should he fail to America on the path to economic prosperity, the people will start to demand change. Not the "change" he campaigned on, but change to a different leader, likely a more conservative, Republican leader. The best way for President Obama to win an election in 2012 is not through charismatic campaigning and the support of large unions, but rather by bringing economic prosperity to the American people.