With that said, I cannot understand why people would put money into gold when they can buy oil at a huge discount. As I type this, WTI oil is pricing at $80.91 per barrel. We haven’t seen this level since Feb. of 2009. That was the midst of the biggest financial crisis our generation has seen. Guess what, since then our economy has improved. I know it may not feel like it, but it has. Matter of fact, usage is up since January where oil was trading well over $100 per barrel. It is a fact that most oil production companies and countries cannot make a profit selling oil below $80 per barrel, so it is in their best interest to keep the prices at these levels. Believe me when I tell you that they have the power to do so. The only exception to this rule is Saudi Arabia. They can make money all the way down to $70 per barrel.
I don’t want to confuse this situation too much. The real comparison is to gold. Gold traded up to about $2k per ounce and has since traded back down to the $1,600 level. That is a potential of 20% upside from here and will really only materialize if the dollar falls off a cliff with that of the Euro. Remember though, that is the only real catalyst for gold… hell breaking loose. As for oil, there are many factors that can contribute to it going back over $100 per barrel which is a 25% gain. U.S. growth, improved employment numbers, a resolution of the “Euro crisis,” any strife in the middle East, or the upcoming trade embargo with Iran can shoot prices back up. I don’t know about you, but I’m thinking if I have to pay $4.00 at the pump I would rather have at least made some money on its climb in prices.
July 1st is the deadline for the Iran situation. Any lack of complete agreement with them will result in a trade embargo which will significantly decrease the world’s supply of oil. I honestly hope that things don’t deteriorate, but it is a catalyst that can raise prices. If someone would like an idea of how to play it, one could buy the ETFs USO or UCO. UCO is trading at $25.63. It is a leveraged ETF and should return to $40 per share if oil trades back up to the $100 range giving you a 56% increase if you hold it that long. USO is trading at $30.49 and was trading at $40 plus when oil was in the $100 range. That would give you an approximate of 33% should oil trade back up to $100 levels. The beauty of all this is that there is a pretty damn good chance that oil will return to $100 per barrel at some point. I wouldn’t bet against it!
Again, so that no one tries to sue me, this is not an advice piece. You should consult your advisor before making any decisions based on this information.
As we close in on Memorial day, my mind drifts to images to two soldiers dug into a fox hole sharing a lucky strike. One has a bit of a Bronxified Italian accent, the other has a the diction of a news reporter. They talk about the girls from back home they want to take to a drive-in picture show. For the moment there doesn’t seem to be any immediate danger of a Nazi soldier sneaking up on them even though you can hear the shells landing in the not-too-far-off distance. Later the conversation drifts to the Yankees and Joe DiMaggio. Neither one of them are old enough to buy a beer, but both enjoy another cigarette.
Almost every ten years we go to war. Men and women die; we remain free. I don’t mean free as in, I’m not an in shackles free, but something much more than just that. I can wake up on Sunday and go to any kind of church I want. At the beginning of the work week, I can mop floors or study at the university of my choice. If I feel disenchanted with the government, I can voice my opinion at the top of my lungs, and go out to vote. I can blog about it, update my Facebook status, or shoot out a tweet. Bottom line, as long as I am not stepping on someone else’s rights, I can do just about any damn thing I like.
These freedoms have been paid for with blood, someones son, daughter, husband, wife, grandson, lover, etc. There are no words to explain the gratitude, just an understanding of what it has taken to get here. The problem is that we are not holding up our end of the bargain. Soldiers have died on our behalf to uphold our freedoms and we are allowing a failing government to ruin what our forefathers intended us. Our nation has become bought and sold. Our lawmakers campaign and fundraise the vast majority of their political lives. While in office they fight for the people who put them there, their campaign donors.
Our veterans and those that we have lost did not fight to protect the corporatocracy of USA, they are fighting for the U.S.A. and our democratic values we are slowly, but surely, losing. We owe it to them to research the people we vote for. A thirty-second commercial does nothing to tell you about a candidate. Look up their voting record. Write a letter to your local congressman or woman about the stupidity of campaign finance and existence of Super PACs. Do something to hold up our end of the deal we made with our sons, daughters, husbands, and mothers that fight for our rights!
Ok, I have conversed with many via twitter that think speculators are the devil. While I agree, as a speculator, that they are a part of the problem, I disagree that they drive price. Instead, speculators only carry the momentum that is already pushed upon it by outside factors. I am excited to point out the latest example of speculators being neutral when it comes to price. Natural Gas is a commodity that is played just like oil. There are a hundred different ways to play this commodity, but the most important point is that it is at multi-year lows. Has demand gone down? No, but supply has gone up. Due to fracking (no comment on the legitimacy of this process here) they are finding it under every rock in the U.S. I exaggerate this on purpose. Because the notion that it is everywhere is speculation. Speculators are getting out of the trade because of an assumed over-supply. They are correct! This lowers the price to unheard of levels. It is almost a 1/3 the price is was in 2010. Where are the Senators now? Why aren’t they out congratulating us?.. Hypocrites!
The major difference between Natural Gas and Gas at the pumps is that there are more factors for gas at the pump. When it comes to gas, we are far more subject to feuding countries that supply it, and profit lines of major refiners here in the U.S. Remember that it is Oil that is speculated, not the price of gas at the pump. Big oil companies are profiting huge on the difference between the price of oil per barrel and what they can get at the pump. Here is what I mean: Last April price of light sweet crude was $125 per barrel and oil companies were still able to make a good profit at $3.25 per gallon. Now that oil is only $103 per barrel, they are able to charge over $4.10 at the pumps. This isn’t speculation, but profit.
Before I begin, I must be very clear that I am not a conspiracy theorist kind of guy nor an anti-Republican! Therefore, it is an internal struggle to put this out there, but after several months of introspection I feel it is time. The Republican Party seems to have conspired to keep Buddy Roemer out of the race for president. He would never come out and say it because it opens him up for an all out attack from the party. He would then have an even smaller chance to win an election.
What are the facts?
Buddy Roemer has all the experience you would want for a commander-in-chief. At Harvard, he earned a BS in Economics and later an MBA in Finance. From 1981 to 1988 he served as a Congressman. From 1988 to 1992 he served as Louisiana’s Governor. While there he cut the unemployment rate in half, reformed their campaign finance laws, and balanced the state’s budget. I don’t mention this to get readers to vote for him, but to show how qualified he is to have been a candidate. The problem isn’t what he has done, it is what he hasn’t: He has never accepted Super PAC, or special interest money. Matter of fact, this has been his platform to get elected. The fact that he doesn’t accept this money makes him an enemy of the state, if you will.
Imagine running Buddy out there when his platform of campaign finance reform and getting SuperPAC’s out of politics could make your party look bad, as a whole. Fox News network, a GOP slanted news network, hasn’t even hinted that Buddy Roemer exists. He was left out of all debates. Why you might ask? At first they told him he wouldn’t be allowed in the debates until he officially signed on as a candidate. That makes perfect sense until you realize that several others hadn’t that they allowed in debates. So, Buddy officially announces his running. Then they told him that he had to have at least 2% of the votes of a given state to qualify. Again, you might think that this is a fair request. We cannot have everybody and their brother in a debate, but you have to know that when they required this from Buddy, John Huntsman, Michelle Bachmann, and Rick Perry didn’t have 2% yet they were invited into these debates. Despite the hypocrisy of the situation, Buddy attained the 2%. Then they said he had to have 5% of the votes. At this time only Perry and Bachmann didn’t have the 4% but they were allowed in the debates. Matter of fact, Buddy was ahead of both of them in the polls. You still saw no mention of his existence on Fox News and he wasn’t allowed into the debates. Buddy Roemer was working hard to get the 4%, and then they dropped the bomb. They told him that he had to have a minimum amount of money raised for his campaign to get in the debates that was far beyond what he had raised to that point. This, they knew, went directly against his platform. He will not accept more than $100 per campaign donation.
As a result, Buddy Roemer has dropped out of the GOP race and decided to run as an Independent via the American’s Elect process. Although I’m voting for Governor Roemer and love his platform of Campaign Finance Reform, this is not my point. I hate the fact that politics has come to this. Republicans snubbed one of their own because he was a threat to their pocket-book. Democrats would have done the same thing if the situation was reversed. It is a bi-partisan problem. They will do anything they can to “keep the money in.” This is why we, as a Republic, have to fight our own apathy and do something about it. We have to support someone like Buddy. Even if you don’t plan on voting for him, you should want a man like him in upcoming presidential debates. His take on money in government shouldn’t be silenced or big corporations will continue to own our democracy. We have to get the money out, and supporting people like Buddy is a way of going about it.
There are several different kinds of PAC’s (political action committee). You have your connected PAC, un-connected PAC, Super PAC, and Leadership PAC’s. They all boil down to one thing: raising and then throwing money at a particular issue or political campaign. For the purposes of this article, I will focus on the campaign type of PAC. In theory they are an avenue for people of like mind to support their favorite runner in a campaign. The thought behind this is that it is a form of free speech. “By donating my money to this Super PAC that supports (insert potential candidate here) I am voicing my support for him or her.” Leadership PAC’s are very similar but they allow for spending on “non campaign costs” and the party or elected official can start this up themselves. They can spend said money on traveling, paying administration staff, and setting up the party for which they fundraise. So, a presidential runner might have a leadership pack to pay for everything not directly related to campaigning and a Super PAC that pays for all advertising. The major difference is that they are not supposed to coordinate with their Super PAC.
Lets examine the idea of “coordination.” The Webster’s dictionary defines “coordination” as 1. the act of coordinating, 2. the harmonious functioning of parts for effective results. So to put it in political terms. A politician is not allowed to speak with his Super PAC to achieve a common goal of ultimately winning an election. Let’s take that a step further. Would showing up to a Super PAC fundraiser be coordination? As the law is defined, it is. Also, have you ever heard the end of a political commercial where they say something along the lines of, “PAID FOR BY WINNING OUR FUTURE, WHICH IS RESPONSIBLE FOR THE CONTENTS OF THIS MESSAGE, NOT AUTHORIZED BY ANY CANDIDATE OR CANDIDATE’S COMMITTEE. WWW.WINNINGOURFUTURE.COM.” This is at the end of a commercial attacking Mitt Romney for his Bain Capitol involvement. The committee is supporting Newt Gingrich by attacking Romney. It is their “free speech.” It is run by Becky Burkett and Ricky Tyler. Tyler is his former Press Secretary and Becky Burkett was his Chief Development officer for his 527 called American Solutions for Winning our Future. 527’s aren’t allowed to expressly campaign for one candidate or against another. Weird how their names are virtually identical. In the above picture you will see Newt with his staff. Two feet behind him is Ricky Tyler, but they are NOT coordinating. That would be absolutely wrong, not to say illegal. I would never imply that Newt’s staff includes a manager of his Super PAC. I could be held liable for slander so I will not imply that he would do such a thing. I’m sure that Tyler just happened to walk into Newt’s staff office accidentally. While there, he didn’t speak to Newt about where his campaign was going or what messages he was trying to get across. They certainly didn’t discuss that they should put out more commercials attacking Mitt Romney about Bain Capitol. Again, that would be illegal and unethical.
What am I getting at here? Super PAC’s are simply an avenue to dump unlimited amounts of money on a campaign. There is no way of proving coordination unless we tap their phones. Is Newt any worse than the other candidates? No, he is playing the game in front of him. It’s time to change the game. The only free speech is that coming from the candidates. The only difference is that they can get untapped donations to voice their political agenda. You might say, so what… It’s free speech. Is it really? Understand that campaign donors are being rewarded for their donations. As these donations get bigger, so do the favors they expect in return. Just look at what donations of $2500 to $5000 are getting donors: http://thelobbyisteffect.com/2012/02/28/earmarks-are-a-microcosm-of-how-government-works/ Casino owner Sheldon Adelson has donated untold millions towards Gingrich’s election bid. Does anyone really think he wants nothing in return? It goes the same for all the Presidential candidates. Our government is for sale and the price is only getting bigger. Money is NOT speech.
Protests used to mean something. We would protest Vietnam, equal rights, and equal liberties. I think that OWS peeps are onto something. Just as our forefathering protestors before us, we have real issues at the heart of this movement. Because these issues are not as overt as a sign outside a restroom door saying, “whites only” it doesn’t mean they aren’t extremely important. The difference is that our government no longer has our best interests at heart. They are far more concerned about justifying the huge donation they got from Corporation X. They are in debt to their campaign donors. It is dividing our country.
When Occupy Wall Street first began, I immediately thought of them as misguided. Why? Because they are protesting the rich in general. What good is that? I’m not mad at my neighbor because he has more money than I do! Just the same, I’m not mad at the stock broker on Wall Street if he is successful enough to drive a Lamborghini. Who we should be mad at is our elected officials for allowing our country to be bought off. Heck, they didn’t just allow it, they encouraged it. They paved the way for eliminating the Glass-Steagall Act, increased the potency of Super PAC’s, forced lenders to lend to unworthy candidates, etc. etc. In the never ending quest for campaign funding, they have sold our Republic’s soul.
I understand the frustrations of Occupiers, I just wish they focused their attention on the “fix.” If OWS decided they wanted real change, they can force it. If every occupy movement started communicating with each other, they could come up with common goals. They all agree that money has corrupted our system, so why not take up campaign finance reform. If they were to put together a piece of legislation and bring it to a Congressman/Senator that agrees with them, they could use their vast voting leverage to push it through congress. They could call on media to help spread a single message and reach every single state. The power of Twitter and Facebook is at their finger tips to help get this message across.
My message to you Occupiers: Stop talking about what is wrong, focus on a goal, coordinate your voting leverage, and try to get legislation into effect that “fixes” the issues.
Today’s government has become incredibly dependent upon money. It is as simple as that. Forget, for a moment, the idea of corruption, and move onto the fact that politicians didn’t become politicians to raise money. Despite this fact, members of the House and Senate spend between 30-70% of their time fund-raising. This is not an exaggeration. There is constant pressure to raise money. If not for their own election, they are expected to do so on behalf of their respective party. It is outrageous the time spent, and the money they are continually asked to conjure up.
Now, knowing that politicians are constantly raising money, we have to wonder what effect this has on their work. Corporations and Lobbyists are always looking for an in. What do I mean by this? They are looking to survive financially, and who could blame them. If a House Representative is looking for campaign money and they call you, you have to answer. You WILL find the money they are asking and you WILL show up to the fundraiser they ask you to attend. It is in your best interests to do so. That Representative will eventually vote on something that you want their ear on. You might even have an earmark in mind, you will need them to sponsor. It is not Quid Pro Quo, necessarily, but you have to remain in good graces in order to get your idea looked at. If you have developed that relationship and always backed them financially, you have a much better chance of them working in your favor.
What is wrong with this? Quite simply, you get a system where a Representative or Senator is working for lobbyists and Corporate dollars instead of the voters that put them in office. Who is going to get their Senator on the phone first: a lobbyist that has continually been at fundraisers with a bundle of checks from donors, or a voter in their district with a question about campaign finance reform. The answer is obvious, but not acceptable. This is not the system intended by our forefathers.