Mr Clinton has now done as much as a President can do, he has served two full terms in office. By the time the next Gold commentary appears on this page, the U.S. will have a new President. Our preference (for what it's worth, we don't get a vote) is Mr Bush, if only for the fact that he does not seem as eager as Mr Gore to continue with present U.S. foreign policy. We also suspect that Mr Bush might not be quite so prone to scatter "Executive Orders" around like confetti, as was Mr Clinton and as would probably be Mr Gore. But, as has been the norm in recent elections (not only in the U.S.), there ain't much to choose between the two "mainstream" candidates.
Actually, if we did have a vote, it wouldn't go to either Mr Bush or Mr Gore, it would go to Mr Browne. To say that a vote for a "third party" candidate is a "wasted" vote is like saying that living a life in adherence with considered principles is a wasted life. Neither is true.
What we ARE looking forward to is the beginning of what could be called the "long term" in the U.S.. No, this does not pertain to the length of office enjoyed by the new President. It pertains to the fact that for most of the past year, the time horizon of many Americans, and most investors in the U.S. and elsewhere, stopped on November 7, 2000. That was the date that everyone was looking towards. Not many have been looking beyond it. Well, next Wednesday, we will all BE beyond it.
To Americans, it is a strange but true fact that Gold has been one of the best investments of this year, if you are not an American. In fact, even if you ARE an American, Gold has not done too badly. Up to November 3, Gold has dropped 8.11% in U.S. Dollar terms this year. The Dow is down 5.91% (thanks to the recent 1000 point rally), the S&P 500 down 2.90%, and the Nasdaq down 15.18%.
In fact, in $US terms, every major stock market we follow is down thus far in 2000. The only stock markets which are down less than Gold this year are the Dow and S&P 500 in the U.S. and the French and Swiss markets in Europe. This time last week, as the $US Dollar was beginning to head south, the only markets in the world which qualified were the Dow and the S&P.
It is in this context that the latest trashing of Gold is taking place. When $US Gold refused to "rally" this week in the face of a fast descending $US, the chorus was deafening: "Gold has no more excuses! The Dollar is tanking and Gold STILL can't get off the floor!!"
It's true. As pointed out in a different commentary, Gold did rally when the Dollar fell in June and again in September. This time (so far), it has simply stopped going down. And since it has not rallied in $US terms, the past week has seen Gold fall in terms of most of the currencies it was setting records against a week ago.
Nonetheless, Gold's comparative performance this year compared to most other investment alternatives remains highly respectable. Note, we said Gold - NOT Gold stocks. Gold stocks have done very poorly indeed. To take one example, the Australian Gold index is down 28.83% in $A terms (much more in $US terms) this year. The Aussie stock market (again, in $A terms) is showing a rise of 3.62% on the year.
Stock markets have not had a good year this year, and Gold stocks are STOCKS. They are not Gold. On top of that, the investor attitude towards Gold has been almost universally negative in the extreme for months. On top of that, most Gold companies are starting to get into quite hot water with their hedge programs. Small wonder Gold stocks have suffered
And, of course, Gold stocks will continue to suffer as long as Gold languishes and stock markets remain in the red. We have every confidence that this situation will remain in force until November 7. We are not sure that it will remain in force for any length of time AFTER November 7.
Recent commentaries have analysed the increasingly "tight" situation which the global financial system in general and the U.S. financial system in particular is in. So far, nothing has been allowed to badly rock the boat, although U.S. markets were on the verge of breaking down catastrophically two weeks ago.
We remember an old slogan which used to be trotted out at U.S. election time: "It doesn't matter who you vote for - as long as you vote". That is, of course, the whole shabby secret. The voter gets to do just that - vote. The candidates are selected for him or her to "choose" between. The most important aspect of modern government for those choosing the candidate is not who wins, but that the system is perpetuated and is seen to be functioning normally.
As the gyrations on all markets, including U.S. markets, have shown, keeping the system functioning "normally" in the run up to election day has been a very tough task this year. But it has been managed. In the process of managing it, a lot of intractable problems have been stored up. They will continue to be there after November 7. So will Gold. And so will a situation in which the ONLY well-performed investment of 2000 - the U.S. Dollar itself - is coming under increasing pressure.
The "long-term" starts on Wednesday, and (although Mr Keynes is no longer with us) we will all still be very much alive.