NEW YORK, Mar. 4 - Today gave us a hint of a bottom as gold made a nice move to $395.20 until the squaring of currency portions in front of the Jobs Report settled it back to $393.20. The financial world has a habit of fixating for no apparent reason on one report or another.
It will take much more than we are seeing on the job front these days to re-establish employment levels back to where they were four years ago. Keeping in mind the fact that the Jobs Report on both sides is not a reliable indicator of the actual state of employment and you have high anxiety over nothing.
The real mind teaser was brought up twice today. Early this morning I received a note from CL Jr. from Edina, Minnesota and this afternoon Monty Guild called to discuss the same subject. At the time, I had just handed the paper to Victoria, my CFO, for her thoughts.
Since I do not believe in coincidence, the subject matter we discussed is high on my agenda as a "need to know more" item. What I am referring to is the Chairman of the Federal Reserve being specific enough to re-focus attention on the impossible financial condition of the Social Security program and the problems that seem to surface time and time again at Fanny Mae and Freddie Mac.
Those problems are, in my opinion, the natural outcome of too much dealing in over-the counter, interest-sensitive derivatives. Then last evening we heard a statement by the Secretary of the Treasury that categorized Fanny Mae and Freddie Mac as stand-alone businesses not guaranteed by the government.
I was quite surprised to hear that and also the fact there was no back-tracking away from the statement today - only silence. So what is it that we are being prepared for? Is this a way of pandering to those conservative think-tanks that put forward the privatization scenario for numerous government services from Social Security and Medicare to prisons and the FAA? Or are we being prepared for the inevitable result of a US fiscal budget deficit gone wild and getting wilder by the minute regardless of who is president in 2005.
What would it take for the AARP (the nation's leading organization for people age 50 and older) not to send an army of grey hairs to lay siege to the Congress, Senate and White House? Are we seeing early signs of the platform of the incumbent which contends that in a financial crisis it takes a strong man to run a government and country? Are we headed for such a crisis where the situation might be presented that anyone new in command would be inadequate and the country must be guided by the experienced team presently running the show?†
In any event, I see gold staying strong well past the election so the fundamental case that is required to sustain the technical conclusion cannot be one of calm. Of course gold will ebb and flow over time but my technical conviction tells me that everything that happens to gold before the election is only a prelude to what comes towards the end of the present budget projections in 2012.
My strengths have always been in seeing ahead and thankfully I have a significant record of good insights into the future. So here is the question. We have just seen two key administration personalities in high office sound an alarm concerning the financial viability of key government institutions. Such pronouncements are usually to be found in newsletters that are considered rogue by the establishment types. (Iíll let you decide whether Jsmineset is one of them).
This is very much an anomaly in performance and procedure, signaling a change of course at the Treasury and the Fed towards an end game event. Why has this occurred? Whatever the answer is, it is good for gold.
The generational bull market in gold appears now to have solid fundamental and developing technical evidence certifying the conclusion I have given you. It is sufficient that we have identified and are now focused on the anomaly in the behavior of the Fed and Treasury leadership. It is enough to know that whatever their plan is, it will certainly be good for gold.
We will monitor the developments in order to determine exactly the order of events.