The Election, Gold And Emerging Markets

It's funny how some publishers welcome or reject articles. I wrote a piece yesterday for a financial publisher along the same theme as my post here yesterday although a little less political and more investment oriented. The editor flat out rejected it and told me to reduce the political rhetoric and focus on the investment impact. I followed the instruction, loaded the piece with charts and analysis, eliminated the "Obama wants to lose" theory and resubmitted it. It was rejected again, for one because the editor claimed I hadn't made the case as to which candidate would be better for the respective investments, gold (the SPDR Gold Trust ETF GLD and the SPDR S&P 500 Index ETF SPY).

Nevertheless, I did not resubmit the piece. The editor missed the point. I don't think it matters much who wins, at least far as investing is concerned. I think there is a big difference between the two candidates and I do have my preference. I do not think either candidate is ideal, nor am I a partisan ideologue (if anyone cares I am a registered Republican, once a registered Democrat, with heavy Libertarian leanings that likes to think of himself as an Independent and possibly schizophrenic).

There will be a reaction to the election in the immediate days following. The last few weeks of the year may be volatile. But the future has been carved in granite over decades of governmental mismanagement. For gold anyway, the future is obvious and nearly incontestable. Many will disagree and get mired in the minutiae, but the fact is that the dollar is in intentional decline as it has been for a very, very long time. The government will continue to overspend regardless of who wins the election. The world will continue to slowly diversify away from the use of American currency in reserves and trade. With a more diverse currency environment ownership of precious metals will become far more necessary. All arrows point to lower dollar, higher gold prices.

Let me be clear, I am not predicting the end of America, although a catastrophic collapse is certainly possible. But the world is mutually dependent. American exceptionalism as it relates to global economic dominance has been in decline for a long time. This is also indisputable. What is disputable is the pace of decline and the impact on the domestic economy.

If you are an investor, as I've covered for other publishers, you need to heavily diversify your holdings to emerging markets but to far more places than the BRIC countries (Brazil, Russia, India, China). The BRICs are are not all following the same path, but the best growth rates are behind some while smaller, lesser accessible countries have their best years ahead. And thanks to the proliferance of new Emerging and Frontier Market ETFs the individual investor can readily gain exposure to some of the better performing up-and-comers.

I'll close today with one chart:


I drew this chart for that ill-fated article yesterday. I've been drawing this chart since back when I was predicting a double top, the peaks of March 2000 and October 2007. This macro-perspective allowed me in 2007 to move to cash and avoid the crash. Unfortunately I wasn't publishing at the time, but I've been predicting the "Triple Peak" since then, having first written about it in 2010.

In two article written for a financial publisher in Dubai,I asked one main question: what will propel the market not just to match the previous peaks but exceed and stay above them? Sheer stubbornness on the part of investors and traders can make this happen. Outside of that and an infinite flood of cheap money, what is the catalyst, the "Next Big Thing" that will make it so?