Thursday, 1 September 2011
September should prove to be a very important month for gold. The month starts off with President Obama’s “new” game plan for the US economy. Whatever the plan, it will be taken as part of his re-election effort, whether it works or not.
If the President can’t get Congress to act, which I don’t think he can, his plan will likely be dead before its announcement. He has little choice but to find a way to pull things together. He looks amateurish getting his speech date getting pushed back today.
The President is going to propose permanent tax changes. The depth of the changes is up for grabs. Corporate taxes as well as taxes on high income individuals will be mentioned, but hard to get reformed. He might be better off by focusing on taxes that currently curtail employers from new hiring. Head taxes of any kind should be on the chopping block. Government reform is another issue as he can attack this given the popularity of doing so with voters.
A speech by the President on Wednesday morning focused completely on infrastructure projects. It was interesting that he picked yesterday to float it, not on Labor Day and that it focused on infrastructure. Certain highway construction programs expire at the end of September. If allowed to expire it would cut the deficit and about 4000 people will go unemployed. My take is that this speech was a “test run” on his upcoming speech, now shortly after Labor Day.
Another wild card for gold is Europe’s sovereign debt issue. Finland will probably get from Greece the collateral it wants and get it placed where it wants. The German Parliament on the other hand is seeing a ground swell against further bailout measures. The rift is so large that it puts the re-election of Chancellor Merkel along with her coalition in Parliament in question, which puts the EU rescue plan at risk.......
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