Monday, 03 April 2017 07:48

Is Gold an Overrated Investment Vehicle?

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When considering the heavy advertisement exposure of gold, silver, and even platinum in print media, online, and television, these are primarily valued as arbitrary investment vehicles, to be secure from the vagaries of stocks, bonds, and even cash on hand.

The promise of these advertisements warn against the periodic equity market crashes, and the losses incurred by monetary fluctuations, as well as the economic impact of inflation and deflation. Although gold, especially, focuses on the security values in times of travail, the history of this glittering metal has the advantage of being associated with great wealth over the centuries, impervious to the constant attrition to which today’s jittery stock and bond portfolios are subject.

While a small percentage of gold as a peripheral, marginal addition to an investment portfolio makes sense, economic history has proven that gold, especially, is no security against massive economic disaster. The gyration of gold prices bring home this point rather forcefully. While the price of gold hit a high dollar mark at a time when that currency rose due to inflation, it has displayed only marginal increases in the period since the “great financial recession,” when the Standard & Poor (S&P) broad measure of the stock market was tripling.

This is due to the fact that long-term holding of gold to maintain buy/sell investment necessities is not for the average investor. This is true for the following reasons:

  1. Gold, as well as silver and platinum, are devoid of income generation until sold, but tie up valuable investment currency for other needs, or opportunities.
  2. While primarily held by major world governments and banks, as a base to be put on the market at times of infrequent high price gold demand, these banks use one-third of the world’s gold as a base for long time periods; when it becomes propitious to move into the markets as peak prices make this advantageous for them.
  3. Gold, unlike silver and platinum, has little industrial/commercial use in manufacturing. Therefore, bullish investment markets can’t be counted on to buy/sell at times of overall economic market opportunities.

It is unfortunate that the largest “holders of gold” organizations seem to advertise for converting IRA’s, 401k’s and other employee fallback positions and profit-sharing plans into gold, which might make these funds unavailable at times of the holders’ needs.

These gold and silver investment organizations do not warn of the short-term consequences, referring primarily to times of economic catastrophe, when even the price of rare metals would probably plummet accordingly.

Although President Trump strongly acknowledged “independent business centrality” in reviving America’s production capability and employment, this presidential imperative has been underwritten by the National Federation of Independents, the official national organization representing the bulk of the near one million independent business entities. The U.S. Bureau of Labor Statistics estimated that such companies, averaging less than 500 employees, make up about 53% of America’s labor force.

As has already been universally stated, the surprise Trump presidential election victory completely reversed the sagging pessimism, which had experienced its worst period of independent business dissolution, and new development in decades.

This sudden change has already been corroborated by a sudden reversal noted in the December survey of the NFIB. This was not only broad-based in its various components covered, but was accompanied by an equal surge in consumer confidence, as measured by the prestigious Conference Board. Also, the University of Michigan’s highly respected confidence survey of consumer sentiment projected the highest level since 2004, when U.S. gross domestic product was growing close to 4%.

Even more encouraging has been the NFIB report in members’ capital spending plans. Twenty-nine percent have said that they would make new capital outlays, matching the high level of 2007, just before the outburst of the “great financial recession.”

What has particularly impressed most NFIB members is the Trump Administration’s intent of emasculating most business-busting regulations, and the commitment of bringing home the offshore monetary “trillions,” while making the current tax muddle more amenable to “small business” interests.

Although most members polled indicated little desire for substantially increased new business loans, many respondents indicated that initial investment funds were readily available, and they were ready, willing and able to move aggressively forward.

Many of the NFIB members’ most current poll participants were mightily impressed with Trump’s 100 day charge out of the gate, and his personal intentions to secure thousands of additional employee positions, while persuading even some of the large corporations to maintain and expand production facilities in the U.S.

After several years of obvious presidential indifference, if not antipathy to business, the vast majority of privately-owned independent businesses consider President Trump to be a true independent business friend, who has made their betterment a top priority.

With the incoming Trump Administration emphasizing fossil fuels (coal, oil, and natural gas) production in general, and energy independence specifically, the previous multi-year emphasis on renewables may find itself on the energy backseat.

Although such alternatives as geodesic, wind, and especially solar power will likely be viewed as supplemental in the forthcoming Trump energy assertion, this could have a particularly chilling effect on the fast-growing ethanol industry, benefitting by Congressional demand of 10% composition in each gallon of gas. This was cobbled up during the oil derivative shortage early in the century, prior to the “fracking upsurge.”

With the current U.S. oil derivative low-priced energy expansion running at full tilt, ethanol would seem extraneous under current and future planned oil production. But this paradox is being strongly contested by the renewable fuel standards Congressional resolution (RFS), which were upped to a new higher percentage just recently. This dramatic change is running headlong into the political power of the “corn-producing states” in America’s Midwest, to which President Trump made strong RFS retention promises.

This upcoming confrontation between fossil fuels and renewables is destined to become extremely political, as coal mining is being promised new life for domestic utility power usage, as well as increased exports.

What seems to be in the cards, as the econo/political contradictions reach full bloom, is a lowering of “renewable energy,” as the future standard in the sectors affected by the renewables versus standard fossil fuels standoff. With President Trump’s Cabinet heavily favoring “fossils,” this issue will have to be resolved on the Congressional floor, as well as in Cabinet level dissertations.

With mid-term elections beckoning in 2018, the future of a major coal revival and the future retention of no longer needed ethanol, and lessened renewables, will emerge as a major political showdown as the next election contest emerges.

While rational U.S. population growth predictions are expected to reach the 450 million mark by the end of this century, surpassed only by China and India, the current “reproduction rate” of multi-generational American citizens has hit the lowest ebb since 1937, according to the U.S. Census Bureau.

Much of the family shrinkage is due to the size of traditional American families, which generated multiple offsprings in the 18th, 19th, and early 20th centuries. While “experts” differ on the reason for this obvious family size reduction, there are several factors that have contributed to this downturn:

  1. The unprecedented emergence of women in the workforce, and all sectors of professionalism. While this was first noted during World War II, with most physically-able young men in the military forces, this slipped back into the pre-war status in the following decade.
  2. The intensive Women’s Liberation Movement in the 1960's seemed to have brought irrevocable family changes. An important statistic, confirmed in the last few years, indicates that more women are graduating from universities than ever before, and the gap is widening. This is exceeding that of male applicants.
  3. Women are proving amazingly adept in an increasing variety of work situations, making large families nearly impossible to manage effectively.

That is why a more relaxed immigration potential is the key behind America’s projected population growth, needed to populate the large open spaces, and resultant job needs that such expansion will require in the second quarter of this century, and the succeeding second half.

While the current concern with the potential surge of a Mideast “Trojan horse” makes headlines, a large majority of Hispanic immigrants have proven positive supplements to America’s potential growth capabilities. Also proving a positive addition are the expanding segment of Asiatics, who will become America’s largest “minority” within the next 50 years— according to the current growth rate.

These developments will also prove to generate a more balanced overall U.S. geopolitical population, as the huge American acreage, west of the Mississippi, and parts of the Southeast are still primarily devoid of active population content.

When viewing the future potential of the U.S. by the end of the 21st century, a strong, diversified population, much more balanced geographically, will solidify America’s status as the world’s most powerful and wealthiest nation, ultimately respected by friends and potential foes alike.

When “small business,” near one million independents at the heart of America’s economy, had its worst year of expansion in 2016, it was directly traceable to the Obama economy. This engendered cheap imports from all over the world, against which the “smalls” could not compete.

This policy engendered American-based major conglomerates to move headquarters offshore, together with the many production units under their corporate control. This policy was in sync with the Obama economic Administration, which succeeded in keeping consumer price rates at rock bottom in the wake of the multi-year financial crises (2008-11). With more than two-thirds of U.S. gross domestic product dependent on the consumer sector, this U.S. Governmental approach succeeded in keeping prices at near all-time lows, while the inflated expansion of manufacturing jobs lost were offset by the U.S. Government’s most extensive “food stamp” enlargement ever.

While manufacturing jobs had collapsed to one-half of the 20 million that existed at the turn of the century, this government policy was putting America’s world-leading consumer economy at the mercy of imports. Hardly any active Commerce Department action was taken during the past eight years to restrain overseas price cutting, as long as quality barely passed muster, based on their tacit acceptance by millions of consumer recipients.

Such an extension of a “user-based” economy would have continued to grow, including an increase of more than two-trillion dollars of U.S. bottom line profits that are festering in overseas U.S.-based corporate balance sheets; were it not for the unexpected results of the November 8, 2016 election.

Trump’s major emphasis on putting American workers and factories back to work is increasingly making itself felt, as “Made in USA: is being revived. This not only reverses the shrinking of existing “small business establishments,” but is encouraging the development of new independent companies, laying their foundations this year.

Along with the expected rejection of the “death tax,” and the already growing surge of previously held-back investment funds, putting billion of dollars into American “independent businesses,” the value of these hardy survivors is increasing daily. It’s expected that this positive reversal, after eight years of emphasis on rock-bottom priced imports, will witness a remarkable positive expansion by “small business” as the year progresses.

When analyzing the winners and losers in gross domestic product advancement for 2017, it’s interesting to note the extremes in both sectors.

While mixing the small, medium-sized, and large economies into winning and losing categories, those on the top rung in each category are as follows:

1) Winners: Myanmar (Burma,) 9%; Ivory Coast, 8.2%; Britain, 7.8%; Laos and Cambodia, once part of Indo-China along with Vietnam and Laos, fall in the 7% range. Vietnam, which was the backbone of French Indo-China, is also expected to maintain its torrid 7% pace, as are Tanzania, Ghana, and Djibouti. But India, which has gathered momentum in the past year, has replaced China as the only economic world leader expected to surpass the 7% mark.

In the losing category, Venezuela takes the prize as the biggest loser. This negative of near 6% is expected to continue its downward slide of last year. Doing a little better on the downside, but not much, are war-torn Libya, Equatorial Guinea, and America’s downtrodden Puerto Rico territory. Somewhat better on the losing side are Syria, Chad, and Azerbaijan, with Ecuador, Trinidad and Tobago, close to breaking even.

With the first 100 days of the bombastic Donald J. Trump administration gathering steam, U.S. GDP growth is expected to easily top the lackluster 1.7% average, typical of the eight year Obama Administration results.

At this stage, however, there are several major factors, such as Treasury debt control, recycling close to two trillion potential dollars of U.S. corporate monetary reserves in foreign countries, a new tax structure, a reformation of Obamacare, and rebuilding U.S.-based manufacturing capabilities, employment, and marketing capabilities. The year 2017 could see a modest improvement over the world-leading U.S. gross domestic product of 18 plus trillion dollars, primarily dependent on a consumer sector, comprising 68% of that huge amount.

With 2017 representing a major transitional economic year, it will likely be the last two years of the current Trump administration before a rational long-term future projection clarifies the realities of the hoped-for forward motion of the U.S. economy. Much will be dependent, not only on the re-structuring of America’s import/export/domestic economy, but unexpected foreign policy factors unfolding in the foreseeable future.

This year, the current German nation is celebrating the 500-year anniversary of the pastoral bulls of “Ninety-five Theses,” posted on the Catholic Church door at Wittenberg, Germany by Martin Luther. This set in motion the Christian split from Roman Catholicism, which became the basis of all subsequent Protestant religions.

This not only spread like wildfire through the German Provinces and subsequently, Northern Europe, but exploded into a fratricidal inter-religious 30-year war in the 17th century (1618-1648), that exterminated one-third of Western Europe’s population and halved the “Christianity” belief system forever after. Based on harsh discipline, rejection of prolific personal wealth, and absolute commitment to the nation’s anointed rulers, Martin Luther laid the groundwork for an eventual German unification of separate provinces, for which historians hold “Lutheranism” responsible, whether for positive or negative influences.

Deeply imbedded in the original belief system of Martin Luther was a fanatical work ethic, unquestioned obedience, and a fanatical sense of anti-Semitism. The latter was particularly personal with Luther, whose demand for wholesale conversion within Christianity by the relatively small, but unified German-Jewish communities was totally rejected.

While England, the Scandinavian nations, the Netherlands, and Finland, etc. adopted their own versions of Protestantism, this became more of a commitment to German nationalism and Christian culture; rather than the cultural bedrock which pervaded the German Provinces before and after the “Second Reich.” This was established in the Paris Versailles Palace Hall of Mirrors in 1871, after the Prussian victory in the six weeks’ war against the French.

Some historians go so far as blaming the absolute German dedication to Hitlerism, as basic to the extremist mandates preached by Luther, which included a Satanic outlook against the German Jewish community. Even though Roman Catholicism also once rejected the “Old Testament,” and its believers, it never reached the equivalence of Judaism’s extermination, preached by Hitler. This final solution was voiced by the worst Nazi fanatics as payback for the “Christ killers”— a misbegotten belief originally interpreted from Luther’s anti-Jewish wrath.

While today’s Germany is roughly 40% Protestant, 30% Catholic (mainly in Bavaria and much of Germany’s south), many of the rest of Germany’s 81 million inhabitants are either non-believers or reflecting a growing Moslem population.

In essence, even today’s Germany, rising out of the Satanic clutches of Nazism, still harbors the Lutheran uniqueness that has seen their rise to the heights of power and subsequent degradation, before its current economic success as a global world leader.

After a two-year period in which more “small businesses” had shrunk and closed, in relation to new “independents” formed, the year 2017 has gotten off to a great start.

The answer lies in incoming President Donald J. Trump instigating a positive reversal, even before being sworn is as No. 45 on January 20. Trump’s magic wand consisted of a promise that a re-employed, productive, and expanded American workforce would be his top priority during the first 100 days of placing “America First” back on track.

In fact, the hundreds of thousands of American-based jobs promised by the likes of Ford Motor Company, Carrier, AliBaba, as well as a major Japanese bank, have already exceeded the American-based job creations by predecessor President Barack Obama. The latter presided over an America that had seen the shrinkage of several million manufacturing jobs, as major conglomerates moved headquarters and production bases to China, Mexico, and anywhere else where lower costs and taxes strengthened their bottom lines.

Although rapid technological evolutions also played a part in this employment/facilities demise, the inability of the Obama Administration to facilitate the maintenance of employment growth in the wake of the “four-year-long” financial crisis increasingly endangered economic growth. The eight years of the Obama Administration averaged less than two percent average growth, even when inflated by U.S. Government jobs, and deflated by a downward turn in military spending.

What is also happily apparent as the new Administration solidifies a hefty U.S. economic comeback is the investment funds’ usage that has evolved from previous corporate stock buybacks. and balance sheet monetary enhancement. This is resulting in increased independent company buyouts or expansions, which are now being manifested.

If the first 100 days are the tipoff of what’s coming in the months and years ahead, the rapid re-acceleration of America’s once-mighty production base, and subsequent employment opportunities are making a reappearance with a thunderous start.

Sunday, 26 March 2017 00:54

Is India Gaining Solid Global Stature?

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As the year 2017 is on the verge of ending its first quarter, the "sub-continent" nation of India appears on the right track economically and geopolitically, while having become the world's second most populous nation (1.3 billion), just behind China. But closing that gap fast, India is outstripping the growth of its more economically mature competition, for the third year running, with China slipping below the 1% annual gross domestic product index increase. India led the 2016 world with a hefty 7.3%.

Much of India's solid post-financial growth can be attributed to the personal leadership of Premier Narendra Modi and his Bharatiya Janata political party, which enjoys a comfortable majority in the Lower House. Despite hostile opposition in the upper chamber, Modi's general popularity, both at home and abroad, has enabled him to lead India in a positive direction. The callback of surplus outstanding cash recall generated earlier in the year is a temporary expedient.

Despite continued intermittent tensions with Moslem Pakistan, and less so with Bangladesh on its Eastern flank, these erstwhile components of India, previously under British Colonial rule, seem to have come to terms with their "big brother." This has brought the chance of military confrontation to its lowest ebb since World War II, after ending British domination.

Similar tranquilities seem to exist in India's overall foreign policy front, with both good ties with the U.S., as well as a long-standing entente with Russia.

While the Indian economy is primarily dependent on major internal infrastructure projects, and a continued attempt to uplift the prosperity of the world's largest consumer sector, Premier Modi's popularity has gained major support for a pro-business approach, reversing such intolerance in past Administrations. This has gained the attention of global investors, who see India as an attractive object for increased investment attention.

While India's basic steel industry represents its largest opportunity for exports, depressed world prices have done little to bring its import/export balance into a favorable position.

In representing more than one-sixth of the world's population, India's overall tranquility and its positive relationships with most other major nations have done much to enhance a bright future for this once intractable global sub-continent.

Although much of the recent media attention has been given to the question of the current Mideast Syrian immigration into the U.S., the more critical question is how its more numerous scope will change the future of Western Europe, in particular.

With France admitting millions of Algerians, after giving that previous component of France its freedom in the late 1950's, and the United Kingdom freely opening its doors to its former colonies in India and Pakistan, these leading Western world powers are already heavily impacted by Islamist citizenry at this point in time.

But what may be the most dramatic internal evolution is the huge wave of Mideast asylum seekers now readily accepted by German Chancellor Angela Merkel and her Administration. With a population of 81 million, and the import of 1.5 million immigrants from war-torn Syria in the last year, Germany is already reporting internal problems in several of its major cities.

While that important world economic entity brought in over two million Turks after the end of World War II to man its factories, depleted by huge battlefield losses, these were trained workers ready to fill desperately needed job openings. They were readily absorbed into Germany’s working class population, and steadfastly contributed to Germany’s impressive post-war recovery.

With the European Community primarily owing its existence to Germany’s leadership and which sacrificed its highly regarded “mark” as the basis for the euro currency, the current Eurocom dissolution possibility, enhanced by “Brexit,” could be hastened. This could happen if the highly disciplined and export-based German economy were to be dramatically impacted by internal unhinging.

This potential impact has already cast its shadow on the political scene, with a recently-developed Alt-right political party performing extremely well in provincial by-elections. While Chancellor Merkel has become the leading pinnacle of Germany’s recent export successes, her reputation is on the verge of plummeting as immigrant-blamed acts of criminality have become a point of major fear to the population in general.

While the post-recession European recovery is mainly dependent on Germany’s economic comeback ability this year, that nation’s anticipated general elections will determine not only the fate of the German nation, but the European Community’s survival in general.

With the awesome 2016 Presidential election campaign now headed for the history books, the screams for a future popular vote decision will be heard louder than ever.

After former Vice President Al Gore lost the year 2000 presidential prize, while eclipsing George W. Bush by 500,000 total votes, and Hillary Clinton succumbed to President Donald J. Trump last year, while posting a 2.6 million national vote majority, the rumbles for sacking the Electoral College are being heard loud and clear. While the lopsided liberal media dwells on this inequity, this shift in electing the ever more powerful presidential winner every four years has no chance of happening.

Even the possibility of approaching this change requires a Constitutional amendment, necessitating a two-thirds approval in both the House and Senate, with a subsequent three-quarters of the U.S. states having their legislatures also jumping on board within a seven year period. It should be remembered that the highly popular 1970's Women’s Rights Amendment cleared all the hurdles, but was sunk, when Illinois refused to even call for a vote as the seven-year period lapsed. Ironically, Conservative woman journalist, Phyllis Schafly, led the fight against it.

While an attempt to project future population shifts into the latter part of this century, even the greater voter emergence of non-white, young, female minority voters would not be able to overcome the “statehood barrier,” even if the other hurdles had been cleared. For those hoping to somehow generate enthusiasm for such a monumental Constitutional presidential election change, a reflection of the loser’s popular majority is in order.

Although the combination of three of America’s most populous states (California, New York, and Illinois) garnered an almost two-thirds vote majority for Democrat Hillary Clinton, the so-called “fly over” country states roundly rejected her nomination.

With America’s future population, now at 330 million, and expected to approach 450 million late in the century , the future U.S. economic growth will likely continue to accelerate in the Southeast, Southwest, and Midwest.

This statewide area, taken in context of totality, generated a resounding majority for President Donald J. Trump. Even more significant is that two-thirds of U.S. state governors, plus their corresponding legislators, have reached Republican majorities, never having been accomplished in the past.

Further strengthening the GOP image from a previous “party of the affluent” has been its ability to focus on strengthening America’s internal economic growth and employment, while the Democrats have been increasingly defined as the “champions of globalism.” The latter has especially hurt the chances for the Democratic vote majorities, due to the ongoing immigration problem, magnified by former President Obama’s acceleration of entry for hundreds of thousands of U.S.-bound Mideast immigrants in the weeks before his leaving the White House.

This ongoing shift from globalism to populism should favor the GOP even more in the future, especially in the majority of states, not likely to surrender their “Electoral College” advantage.

Will Unrestrained Mideast Immigration Unhinge Eurocom?

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