A Melman Minute By: Leonard Melman   August 25, 2008 Markets have entered a new stage of late, sort of a 'wait and see' phase.  First, the powerful and seemingly relentless trends toward higher gold, higher petroleum, lower securities markets, lower US Dollar and higher commodity prices in general finally reversed themselves.  And now, it appears to us that the reversals have run out of steam, placing us in some sort of middle ground and leaving open the question:  "Will the original powerful trends re-assert themselves, or will the reversals resume, perhaps changing into new and powerful contra-trends? As of 8:30 AM PDT this morning, metals price moves have been relatively quiet with gold, silver and platinum close to unchanged, near (all prices US$) $820, $13.40 and $1,415 respectively.  Base metals are also close to unchanged, as are quotes on most currencies, the US Dollar Index and the price of petroleum.  However, we are getting significant moves to the downside in both the Dow Industrials and the TSX, with the Dow off about 140 points and the TSX lower by just over 100 points. Given this morning's sort of 'lull', it is worth our while to take a look at some longer trends, particularly in view of that fact that today represents the beginning of the American political convention season with the opening of events in Denver for the Democratic Party. - - - - - PERSONAL NOTE:  I wish to make it clear that "The Melman Report" will take no partisan political position, particularly relating to the American election since I personally am a Canadian citizen.  However, since our chief interests relate to the political and economic influences that affect the world of precious and base metals, and the exploration for and production of those metals, it would be irresponsible not to acknowledge the tremendous influence of American policies and actions as they relate to those realms.  Therefore, given that importance, it is certainly worth commenting on developments relating to American political activity. And so, since their convention opens today, we will take a look at the records and statements of the presumptive Democratic Party candidates and plan to do the same for the Republican candidates when that convention unfolds next week. - - - - - Generally, mining functions best within a free, open and unobstructed regulatory background.  The more complex the bodies of environmental, safety, aboriginal, property rights and governmental permitting laws become, clearly, the effect on mining becomes more expensive and time-consuming.  In fact, during recent years, it is not unusual for a junior mining company to spend more money on regulatory functions than in actual exploration and developmental work.  Therefore, it would appear to be most advantageous to the industry for the American political world to be led by a President and Vice-President committed to simplicity of law. Unfortunately, based on their speeches and voting records, we are none too optimistic about either (presumed presidential) candidate Obama or his designated Vice-Presidential choice, Senator Joe Biden.  Both have strong support from the environmental community and are publicly committed to that large and ultra-influential group to not weaken environmental protections.  For example, in one of his statements regarding trade, Senator Biden emphasized his concern for the environment by stating that he would vote against any trade agreements that, "...do not include workers' rights and environmental rights."  In fact, the League of Conservation Voters, a major environmental movement, gives Senator Biden a 95% approval rating.  In our opinion, this would appear to make it highly unlikely that his actions would tend to simplify the world of mining regulations. Unfortunately, Senator Obama's voting record is rather sparse on this score, since he has yet to complete his first senatorial term of office.  However, in a response to the same organization, we are able to glean at least a hint toward his sympathies when he answered, "...I understand environmental protection to be a great calling on its own.  But I also see it as part ad parcel of a number of other national priorities, and that elevates its stature even further." Aside from regulatory issues which directly affect mining, another concern for 'hard money' advocates is the degree of governmental interference within a free economic market structure.  In this area as well, we who believe deeply in sound money and free markets appear to receive little comfort from either man.  Each candidate has specifically endorsed increasing spending and legislation for education, health, environmental protection, tax collection, student loans and the handing out of tax rebates to those who do not presently pay taxes.  On the other side of that coin, they both endorse the termination of tax breaks and the imposition of new and higher levels of income tax on middle income through wealthy taxpayers. In fact, one might offer the opinion that both men represent a return to the era of 'tax and spend' liberal policies, the backlash against them leading to the election of Republican Presidents in 1980, 1984, 1988, 2000 and 2004. The public debates over the next few days should be most interesting indeed.   ◄  Previous Minute                                                                                                          Next Minute  ►
		DISCLAIMER The information presented above is based on data which we believe to be from reliable sources, but the accuracy of which cannot be guaranteed.  Any opinions or predictions contained herein are those of the editor and are likewise offered also for information purposes only. Any investment decisions should be made only following consultation with registered investment professionals.