Well, well. Who would have though even a couple of weeks ago that $US Gold would actually set new 2004 (and bull market) highs in the last full week of trading before the US elections. Yet so it has. Spot future Gold closed at $US 429.00 on October 25, corrected down as low as $US 421.70 in intraday trading on October 28, and then bounced all the way back to close at another bull market high of $US 429.40 on the last trading day of October - October 29.
There is one more trading day (and three more campaigning days) left before the official "election day" of November 2. We say "official" election day because an astonishing number of Americans are already voting. It seems that early voting, which was allowed in only 13 states in 2000, is now allowed in 31 states. Reports are that the number of US voters taking advantage of this early voting is astonishingly high, so high that there are estimates that as many as ONE-FIFTH of the Presidential ballots will be cast BEFORE Tuesday, November 2. Here is another gigantic "October surprise".
These "early voters" are being divided into three categories. There are the party "faithful" who vote their party no matter what and who are voting early simply because the candidates are urging them to do so. There are those (a larger group according to the "analysts) who are simply eager to get their vote in as soon as they can. And, we suspect, there is still another group - likely overlapping the first two - who are voting early because they want to be as far away from a polling booth as they can get when the real circus hits on November 2.
Whatever the size and makeup of these groups, the reports are unanimous. Their numbers are straining the voting mechanisms set up in the various states to, and in some cases beyond, their limits.
It is clear that, whatever their individual reasons may be, Americans have decided that this election MATTERS. The biggest phenomenon thrown up by the campaign so far has been the HUGE number of eligible voters registering to vote for the first time. The estimates have been increasing ever since this was first noticed, and they are now at or beyond the 20 million mark. This election is CERTAIN to radically reverse the trend of the past 40-50 years, a trend in which the percentage of eligible voters who actually cast a ballot was declining with every election.
The stakes are surely seen to be high, as demonstrated by the fact that despite this huge upsurge in voting intentions, there is no clear cut "winner", at least not according to any of the polls or most of the pundits. The expected sources have predicted a Bush victory, while analysts as diverse as Charley Reese and Hunter S Thompson (of "Fear and Loathing" fame) are predicting a Kerry victory. The polls - which are being taken at a rate of dozens if not hundreds a day - can't separate the two.
The build up is actually quite fascinating. While the REAL issues have not been presented in anything resembling a clear-cut fashion by either candidate (they never are, after all), the fact that the voting public perceives real and important issues to be resolved at this election is obvious both from the "advance" turnout and from the massive increase in those intending to vote - either before or on "the day".
The one obvious issue is between those who approve and those who do NOT approve of the Bush Administration's actions post 9/11, specifically the unprovoked attack upon and occupation of Iraq. But there are many other issues, issues which almost certainly have had an influence in this huge voter turnout. Which issues these are, and how big an influence they have had, are unknown and probably always will be.
How big an issue is the plethora of lies of the Bush Administration, not the fact that they have told the lies (every Administration does that) but the fact that the lies have been exposed so blatantly and so often? How big an issue is the domestic conduct of the Bush Administration since 9/11, specifically their trampling on the rights and freedoms of the American people? How big an issue is the fiscal insanity involved in grotesque increases in government spending combined with tax cuts? How big an issue is the yawning gap between the US economy as experienced by Americans and the description of that economy as issued by government agencies? How big an issue is concern over the future purchasing power of the US Dollar? How big an issue is the desire to say that the adventurism of the Bush Administration was NOT done in the name of the person casting a ballot? How big an issue is the circus which the Presidential campaign has become?
Both in the realm of finance and of politics, October has thrown up a host of surprises. There has been no notable pre-election rallies on the markets (with the partial exception, over the past week, of the US stock market where the Dow managed to claw its way back above the 10000 level). Instead, the Dollar has continued to fall. Oil, despite its $US big drop this week, is still well over $US 50.00. And Gold, the fundamental danger to both politics and economics "as usual", has set new bull market highs this week.
This is what we said here last week about the condition of the US Government:
"The US government today oversees a typical empire in the terminal throes of over-extension. The wealth of its people has long-since been unequal to the "ambitions" of its rulers. Now, the "tribute" of the rest of the world - extracted and tendered by the rest of the world's Central Banks - is inexorably falling short. Just as they always do in the terminal stages of every empire, the tribute states are slowly but surely breaking away. They are doing so as the dangers of breaking away become perceived to be lesser than the dangers of slavishly continuing to send tribute."
This week, as if to confirm the analysis, both China and India announced official interest rate hikes. This was the first hike in many years in both nations. Even more important, the Chinese government has abolished the "cap" on the interest rates which Chinese banks were allowed to charge on loans. Previously, that cap had been 70% more than the official rate (for example, if the official rate was 5.00% the banks could charge no more than 8.5%). Now, there are no regulations pertaining to the level of rates. And on top of that, for weeks now, the Europeans have been actually extolling the virtues of a "strong Euro policy", to the great discomfiture of every US Treasury Secretary from Mr Snow stretching all the way back to Mr Rubin.
Voting in the US Presidential elections have already begun. It will continue until the evening of Tuesday, November 2. We are certain that Americans SHOULD see this election as both a vital one and a potential turning point for their great nation. The actions of Americans makes it clear that they DO see it as such. What is unclear is the precise reason or reasons WHY this is so. At this point, we only know that it IS so.
Over everything, of course, hangs the dire prospect of an election "boondoggle" of a size and severity to put the month of wrangling before a winner was announced back in 2000 totally in the shade. Above all else, we fervently hope that the voting system holds up, that disruptions are minimal, and that a clear-cut result can be swiftly and CREDIBLY announced. We hope that all this will be the case, but we're not holding our breath.
Gold is now at new $US bull market highs, but only just. The US is now in the process of voting in the most important election in at least half a century. As we see it, the choice is between pushing ahead on the present course with the guaranteed result of a financial crack-up waiting in the wings, or of changing course and gaining at least the possibility of a change in direction back towards comparatively sane fiscal, financial, and geo-strategic policy.
That's how we see it, but we're not voting. It will be fascinating to see how the person who REALLY matters, the individual AMERICAN, sees it.