To say the least, this has been a very interesting week for nations around the world, but for the United States, this is a week that will be remembered as the week that America’s freedoms were thrown aside by the political correctness of an activist Supreme Court. It appears that the left controls the Presidency, the Senate and the Supreme Court. Make no mistake about it, you are living through the decline of what was once “the greatest nation on earth.”
For those of you that are only interested in the price of gold, be patient because I am going to tie the two major events that occurred this week together in the end, as we look at how politics affects the price of gold.
First, Let’s Examine The Ramifications of The Court’s “Legislative” Action
There are numerous constitutional scholars that are claiming that the Supreme Court’s ruling strengthens and limits the government’s ability to create mandates by restricting the commerce clause, but the ruling does nothing of the sort. What Chief Justice Roberts did was to rewrite the Obama Care bill, changing it from revenues generated through the commerce clause, to taxing so that the court could slip it through because they wanted to pass it, based on the “shared interest” that the bill represents to the nation.
No where in the Constitution of the United States does it state that the Supreme Court can rewrite legislation in order to find it constitutional. They clearly should have reviewed it as written, declared the mandate as unconstitutional and said no to the entire bill because it contained a no “sever-ability” clause.
Instead Chief Justice Robert’s rewrote the bill by declaring the mandate penalties as taxes, which do not come under the commerce clause. The Supreme Court, in essence, rewrote the bill for the Congress in order to pass it. The Court’s action is as unconstitutional as the Obama Care bill is. This is a very sad day for the Republic, because the Court’s actions greatly increased the Federal Government’s ability to tax whatever they desire in the future.
Taxing “actions” has always been the law of the land. This week, the Supreme Court rewrote the law so that Congress can tax the “lack of action”. That is a landmark, precedent setting change to our basic freedoms. Add to the ability to tax in-action, the 21 other taxes that are contained in the bill and the Supreme Court has written the largest tax increase bill in the world, into law.
This all adds up to a tax increase of roughly $1.5 trillion over ten years, if you can believe the CBO’s estimates. When have you ever heard of a government program that performs as it was sold to the public and comes in on budget? In a word, NEVER!. Obama Care will cost three to four times what they estimate and the rationing of health care will be severe. “The Liverpool Option” will be a major factor, as government bureaucrats decide who gets treatment and who does not as the more and more people look for care which the plan cannot sustain.
In the end, we are left with an inferior health care system that takes money from small business and middle income people right in the middle of a recession/depression. If the productive people of the country presented a plan that would increase care and competition in the health care field through private enterprise, the Marxists would not accept it, because Obama Care is not about better health care, it is about greater government control over more and more of the U.S. economy.
The European Ministers New Plan
European finance ministers put a new plan in place that will, theoretically, deal with the the expanding Euro-zone banking crisis. Somewhat like the Obama Care Plan, you have to wait until the dust settles in order to see what exactly is in the package, but it is purported that essentially, the plan is to lower the borrowing costs of troubled banks without adding to their indebtedness. Nice trick if you can pull it off! Included in the plan are indications that Germany may become more flexible in how they will participate in dealing with the crisis.
The EU leaders agreed to a plan to recapitalize Spain’s banks directly from the euro-zone’s bailout funds, without adding more debt onto the Spanish state. They also suggested that this plan would be available to Ireland as well. As a result of this announcement, Irish government bond yields fell on Friday to levels that were last seen before the Irish bailout of 2010. Investors are, obviously, anticipating a decline in the Irish government’s debt burdens because of the process agreed to at the European Union summit in Brussels.
Everyone is happy, right? Maybe not! Could there possibly be a fly in the ointment, or a “gangsta in da hood” if you don’t recognize the first reference? Data suggests that European consumer spending fell off in May due to slow job growth. Does this scenario sound familiar? It should, because the USA has been mimicking this scenario for some time. We are told that everything is ok, and then we get hit with massive tax increases and joblessness continues to fester.
The EU is pumping “quantitative easing” to keep the banks afloat with a new twist, they don’t put the debt on the bank’s books. The U.S. is embarking on a totally unfunded massive new entitlement in Obama Care in the midst of a recession/depression. How far behind Europe are we. Not far, I contend!
Gold is Once Again the Bellwether!
The gold market understands that the EU plan is “quantitative easing”, aka printing money, with a new twist, and the market understood immediately that the Supreme Court’s ruling unleashed a destructive force into the U.S. economy that would require “QE-3, 4, 5″ and more as we go forward. Friday’s New York spot gold close of $1599.10 came after a surge through $1600 per ounce, ending with an increase of $47.10 0n the day!
This may be a knee jerk reaction to the events of the week, but it is a very good indication that the gold market sees more worldwide currency debasement on the horizon. Don’t be alarmed when you see profit taking because the trend for gold is up. Europe is a mess and the USA is in worse condition. Just look at the Stockton bankruptcy as a prime example. It is simply amazing to me that no one is pointing to the governments as the cause of all of this. They promise, don’t deliver and the people have to pay. The day of reckoning for the Marxist/Socialist policies of governments around the world is rapidly approaching. Just look at the “Arab Spring” if you want to see the results!
Stay the course, accumulate gold and silver on weakness, as well as strong gold stocks. When the world finally catches up, the run on metals and metals stocks will be breath taking to behold!
Have a happy 4th of July and enjoy it, because I don’t think the barbecues (assuming, of course that the EPA allows barbecues at that point) will be as fun when they move the celebration to May Day.
Till next time, good luck and good trading!
More Gold Market Analysis:
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- Gold Update 2-25-09
- It is Time for Gold Investing!
- The Gold Bull Is Dead! The Case For $750 Gold and $8.00 Silver