A Melman Minute By: Leonard Melman   NOTE: In order to complete Mr. Melman's forthcoming book on the essential fundamentals of the developing international financial crisis and its relationship to gold and silver, new "Melman Minutes" will be posted only three times per week, each Monday, Wednesday and Friday. Since the work has been expanded to include potential solutions to the growing list of seemingly insoluble dilemmas, the working title of the book has been revised to 'REVERSING THE WAY IN!"   MELMAN MINUTE - July 9, 2010 - - - - - As regular readers know, our most common focus is on those items which appear likely to influence the price of both precious and base metals as well as other information regarding the potential profitability of mining ventures, such as the regulatory and taxation background.  However, we also are on the lookout for information systems which might enable potential mining share investors to better evaluate projects in which they are interested. One difficult such a potential investor might encounter has to do with the manner in which exploratory information, particularly drilling assay results, are presented.  For the most part, a detailed study of such data involves poring over lengthy listings of drill hole assay returns, many times involving several pages of numeric information.  In fact, there is frequently so much information presented - many times as required by government regulations - that the investor fails to obtain a clear picture of the company's project(s). With that problem in mind, we were delighted to meet with Jonathan Longe, President of the website "Corebox.net".  Longe's site takes hosts of numeric data and transforms that information into an array of graphics which allows the visitor to examine where assay returns have been positive, what metals are involved and the relative quality of assay results for each area of a project.  The visitor also has the capability of having the computer images rotated to view the results from different angles and, when desired, to have the computer pin-point the actual assay returns from any portion of a particular drill hole. We note that a long list of mining companies have already subscribed to "Corebox.net", giving them the ability to relate information regarding their projects to actual and potential investors in a more graphic manner than had been previously possible. A visit to Corebox's site (www.corebox.net) might very well turn out to be a rewarding experience which could easily add to the investor's knowledge of a contemplated commitment.  We must also point out that there is no commercial connection of any sort between The Melman Report and Corebox.  This information is presented simply to provide additional information for our readers. ................ Many market moves can be truly confusing when viewed from a short-term perspective.  Changes in direction occur with disturbing frequency, with black pessimism quickly replaced with rosy optimism, seemingly on the turn of a dime.  That is what we have been seeing in American financial markets during the past few days.  Last week's bleak outlook has somehow been reversed and roaring optimism is once again in style as the Dow Industrials have risen from 9,600 to 10,200 in just five sessions. When we step back and take a longer look, our perspective changes as this is clearly the THIRD such rally since the Dow peaked at 11,200 in late April.  The first carried over 1,000 points from about 9,850 to 10,900 in early May.  The second rose from 9,750 to 10,600 in early June and now we have had the most recent burst of elation. We might make two observations.  First, each of these rallies have been contained inside a down-channel from the peak.  Second, we are still well inside a pattern of "declining tops" which has not been broken.  Therefore, we do not take this rally - so far - as a true reversal of the downtrend which began in late April. We believe the opposite is true of the chart on gold.  While the huge one-day drop in gold of last week interrupted the short-term uptrend, it can be clearly seen that the intermediate term chart appearance remains bullish.  In fact, sharp contra-moves against the prevailing trends are more the norm than the exceptions. ................ A column of particular interest and possible major import to the future of gold and silver was written by John Fund and published this morning on the Wall Street Journal's Op-Ed page.  Fund's thesis is that there are already strong indications the Democratic Party will suffer huge losses in the mid-term elections scheduled for early November, perhaps losing their majority in the House of Representatives, which would also mean that the all-important position of "Speaker of the House", now held by Democrat Nancy Pelosi, will fall into Republican hands. Fund believes that the more doctrinaire Democrats (read 'Leftist/Socialist'), recognizing that the loss of their House majority would end their control of Congress, are busy organizing a legislative push which will take place in the 'lame duck' period between the election date and the date newly-elected Representatives actually take power in mid-January 2011.  This last ditch effort by House Democrats, if they are successful, could enact laws enlarging the role of government with such new laws remaining on the statute books for years to come. Some of those measures might include a union-desired abolition against secret ballot elections; locking in increased agency spending plans; laws to have federal election systems override states' systems; adding carbon taxes and more intense environmental regulations; and a host of new spending measures under the general heading of 'special pork benefits for local districts'. We believe that the November elections could provide stunning results, given the growing awareness among American voters of the enormity of the federal budgetary deficits, the staggering growth in their national debt and the perception that the Obama Administration is profoundly anti-corporate in philosophy. On that last note, apparently the Obama Team is aware of that perception and they are fighting back, trying to paint Obama as pro-business.  That, however, might be a very difficult sell, given the following realities noted in a separate WSJ editorial comment which, tongue-in-cheek, wondered how the public could have formed an Obama anti-business idea in the first place:  "Perhaps the feeling set in sometime between the President's public trashing of Chrysler bondholders and his use of the insurer Wellpoint as a piñata to pass ObamaCare.  Or maybe it was sometime after his Administration's fifth or sixth tax increase proposal, its disdain until recently for trade promotion and its unleashing of new regulations across any industry you can name." If we try to speculate on the possible results of this political period for gold and silver, we would speculate - and we do mean SPECULATE - that if Republicans win a smashing victory on an anti-stimulus platform, the precious metals might react negatively.  However, if the Democrats follow through with massive lame-duck stimulative legislation in November-December, the metals could rally.  Then, when the new Congress takes its position in late January, if the rhetoric is followed by actual action to control debts and deficits, the metals could fall back again - before those actions already 'cooked-in-the-book' present the American economy with insoluble dilemmas. That's a lot of 'ifs', but we believe the situation will become clearer as election day approaches. Financial markets this morning seem to be taking a breather and at 10:00 AM PDT the Dow Industrials were close to unchanged while Canada's TSX was up by about 80 points, mostly on higher precious metals and a positive Canadian jobs report.  Gold and silver were stronger, ahead by $14 and 14 cents respectively, while base metals and mining share indexes also advanced strongly.  Crude oil is close to unchanged, long term interest rates continue their recent move upward and the Canadian dollar is ahead by more than 100 basis points on good economic news. - - - - - All quotes US Dollars unless otherwise noted. Next Melman Minute scheduled for Monday, July 12, 2010.  Due to a heavy travel schedule, we will be unable to provide a "Minute" for Wednesday, July 14 but will return on Friday, July 16.            ◄  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.