NOV / DEC2007

Universal Coin & Bullion’s

INVESTOR’S PROFITADVISORY

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With national elections less thana year away, noise pollution fromcampaign rhetoric and media buzz isin full roar. Get out the earplugs,because it will only get louder andmore shrill as the months go by.

What’s at stake politically are thepresidency, all 435 seats in the House of Representatives,and 34 of the 100 seats in the Senate. Coincidentally,eleven state governors will also be chosen, and countlesslocal and state elections will be decided.

The 2009 occupants of the White House and CapitolHill will inherit a full plate of serious challenges – the warsin Iraq and Afghanistan, terrorism, tensions with a host ofunfriendly countries (Iran, North Korea, Venezuela, andRussia among them), the economy and credit crisis, traderelations, immigration, health care, social security…andthat’s just for starters.

What’s at stake for gold and rare coins is how the electionwinners handle economic, business, and investment issueswhen they take charge of the political machinery. Wewon’t know those answers until after the final votes are

tallied and the winners are sworn in to office. However,we can make some informed guesses based on what thecandidates are saying they’ll do (taken with a large helpingof salt grains) and how they’ve acted in the past.

In a recent issue, I talked about the historical effectsmany times surrounding a new president have on coinvalues. In this issue, I’ll look at the big picture gold marketand specifics on the candidates. I won’t get into the broaderissues of war, economics, foreign relations, and socialissues. But to help you get a handle on what to expect withregard to your gold investments, I thought it would beuseful to examine the possible scenarios and candidates’positions on issues that could affect gold’s performance.

I’m not politicking here, and my assessments aren’tnecessarily a reflection of what I hope the outcome will beor how I will vote. I’m just laying it out the way I see thereality as the facts indicate.

For gold investors, this is the time to block out thedin, find a quiet place (if that’s possible), pull aside thecurtain of grand promises to see what really lies ahead,and make strategic investment decisions in preparationfor the outcome, whatever it turns out to be.

BY: Mike Fuljenz

Find out what effect the presidential election may have on goldfor the next four years... or beyond.

ELECTION ‘08 What’s at Stake for Gold?

ELECTION SCENARIOSBasically, there are four possible outcomes of the

national elections:• Democrat president, Democrat-controlled Congress• Democrat president, Republican-controlled Congress• Republican president, Democrat-controlled Congress• Republican president, Republican-controlled Congress

Of course, there could also be other scenarios whereCongress gets split, with Republicans in charge of onechamber and Democrats the other. But let’s keep it simplefor this discussion.

Republican control of both the White House andCapitol Hill might be regarded as favorable to business andinvestments according to conventional wisdom and pasthistory. However, the Republican regime has fallen intodisarray and stumbled badly on various issues, resulting ina drop in confidence among voters at large.

Whether it was the Republicans’ fault or not, the factremains that we have had one mild but stubbornly long-running recession already since Republicans gained controlof both the executive and legislative branches in 2000, andwe stand on the brink of another. The federal budget andtrade deficits run at record highs, government spending(and size) is at an all-time high, the dollar is plunging, andforeign investor confidence in the dollar and dollar-basedassets is fading. Even if Republicans didn’t cause theseconditions, they haven’t been able to fix them and standaccountable by the public for them because they were incharge when these things happened. A Republican sweepseems the least likely of the scenarios.

The prospect of a Democrat in the White House and aCongress under Democrat control – which current pollssuggest is a strong possibility – gives many business people(including loyal NRA members) a galloping rash, withgood reason. Democrats generally haven’t been friendlyto business (except for pork on their home turfs, natural-ly). Historically, unchecked Democrat control of thenation’s controls leads to higher taxes, inflationary policies,more regulatory red tape and restrictions on business, andmore interference with free trade.

Possibly the most desirable outcome as far as goldinvestors – and business in general – are concerned is amismatch with one party in charge of the White Houseand the opposing party with a slim majority in Congress(not enough for a veto override). Such a scenario oftentends toward gridlock as each side blocks the other frompushing through partisanagendas. As wasteful andineffectual as this is, from apurely business viewpoint,it’s better for Congress to donothing at all than to dosomething wrong. Marketstend to like government statusquo with no surprises.

Typically this arrangementprevents ill-advised extremespecial interest measures supporting either far right or farleft ideologies from seeing the light of day. The tendencyis for only more moderate and sensible measures that canwin consensus (or at least lack of opposition) to surviverunning the political gauntlet.

Which of these scenarios will be the future? Much canhappen between now and election day to change opinionsand votes. However, the mood indicated by current pollssuggests a general discontent with Republican stewardshipof the nation’s affairs and a willingness to let Democratstake a crack at it.

The Democrats really have nothing great or new tooffer – their record over the last two years of being incharge of Congress is anything but inspiring and earnsthem a lower approval even than President Bush. The atti-tude among swing voters seems to be leaning toward theview that the Dems can’t screw up any worse than theRepublicans, and at least they’ll screw up in different ways.

Disappointed independents and moderate Republicanswho supported the GOP in 2000 could tip the balance inthe Democrats’ favor. The mid-term elections in 2006 thatgave Dems control of Congress served notice that votersapparently aren’t happy with the way things have beengoing and want to shake it up. Republicans so far havedone little to indicate they have any new ideas that wouldswing momentum back in their favor.

So, whether it suits my preference or not, unlesssomething changes radically between now and nextNovember, the odds favor the scenario considered leastfriendly to business – a Democrat president and aDemocrat-controlled Congress. The impact on the marketsis hard to gauge and will depend on how the new presidentand Congress behave.

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From a purelybusiness viewpoint,

it’s better forCongress to do

nothing at all thanto do something

wrong.

Generally, market sentiment seems happier withRepublicans in charge than with Democrats at the helm,though the record shows that’s more perception thanactual fact. It should be remembered that the historic stockmarket boom of the 90s blossomed under the administrationof Democrat Bill Clinton (who may become nation’s FirstLaddie, as some Scots joked with him recently). Whetherthe boom happened because of or in spite of Clintondepends on partisan bias, but the point is that it’s notautomatically bad for the markets to have a Democrat sittingin the Oval Office. It’s also not automatically good forthe markets to have a Republican in the White House, asevidenced by one recession at the beginning of Bush theYounger’s reign and the likelihood of another at the end.

Regardless of the outcome of the elections, gold andnatural resources have an ace in the hole, which I’ll explainin a little bit.

First, though, let’s take a look at the presidential candi-dates to see how they shape up on business-related issues…

TOP PRESIDENTIAL CONTENDERSWith no incumbent running for the

White House, the field of contenders inboth parties is crowded with hopefulstrying to be heard above the din. TenRepublicans and nine Democrats havedeclared or are considered likely to beentered in the race.

At last count, the Republican stable of contendersincludes Rudy Giuliani, Fred Thompson, John McCain,Mitt Romney, Ron Paul, Mike Huckabee, Tom Tancredo,and Duncan Hunter. Giuliani heads the pack, withThompson,McCain, and Romney being the other contenderswith double-digit support in the polls.

Democrats will choose their champion from a field thatincludes Hillary Clinton, Barack Obama, John Edwards,Bill Richardson, Joe Biden, Dennis Kucinich, Chris Dodd.,and Mike Gravel. As of this writing, Green poster-boyAl Gore hasn’t said he’ll run but hasn’t said he won’t.Clinton holds a commanding lead over her Democraticrivals and outpolls the Republican contenders in recent sur-veys. Obama and Edwards are the only other Democraticcandidates able to garner double-digit poll support.

There isn’t space here to cover every candidate in detail,so I’ll look just at the top tier of candidates in each camp,those with 10% or better standing in recent polls. I’vegiven each candidate a letter grade on business/investmentexpectations. I should emphasize that this assessmentapplies ONLY to how I think they would be for businessinterests and investors and is not an opinion of the candidates’overall worthiness for the presidency. I’ll leave that for youto decide by your own criteria.

DEMOCRATSPredictably, Democratic candidates as a group embrace

populist causes that resonate well with liberals, minorities,lower income groups, andlabor but don’t sit well withbusiness and investors. Forthe most part, they stump forhigher taxes on income, capitalgains, and stock dividendsfor upper-income people.Campaign rhetoric generallyfollows the old Robin Hoodtake-from-the-rich-and-give-to-the-poor mantra that haslong been the mainstay ofthe Democratic platform.Trade protectionist sentiment runs high among theDemocratic contenders (though a growing number ofRepublicans have been making protectionist noises, too).

HILLARY CLINTON Unless Hillary Clinton commits apolitically fatal faux pas or challengers Obama or Edwardsconjure up a campaign miracle, Clinton will likely carry theDem colors into the presidential tournament. And recentpolls suggest she has a better than even chance of winningthe White House. It should be noted, however, thatHoward Dean led the Dem pack at this stage in 2004 butfaded in the stretch.

If elected, Clinton would make history as the first femalepresident of the U.S. and the first wife of a former presidentto win the office. Some cynics grumble that it would beHillary’s third term running the country, implying that shewas the controlling power behind hubby Bill’s presidency. Itwould also be the first time in American history that boththe president and the speaker of the House are women.

Of the three top Dem contenders, Clinton is said to bethe most center-leaning, a change in direction from herearlier left-leaning position. Whether she has actually hada change of heart or is just trying to curry favor with middle-class moderates long enough to get in power only she andher closest confidants know. Clinton is still the WickedWitch of the Left in the eyes of conservatives.

But along with its strengths, the Clinton candidacycarries heavy baggage. She is possibly the most divisive,polarizing candidate in the field, both sides included. TheEconomist magazine characterized Clinton as “one of themost hated figures in American politics. During the 1990sshe embodied everything that conservatives hate about femaleprofessionals: a bossy harridan who disparaged stay-at-homemothers, tried to reorganize the health-care system that makesup one-seventh of the American economy, and stayed withher tom-catting husband to further her political ambitions.”

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Democratic candidatesas a group embracepopulist causes thatresonate well withliberals, minorities,lower income groups,and labor but don’tsit well with business

and investors.

The Economist also noted that Hillary-haters are notexclusively right-wingers. “David Geffen, a Hollywoodmogul, gave voice to a widespread feeling on the left whenhe complained about the Clintons' relationship with truth.‘Everybody in politics lies,’ he told the New York Times.‘But they do it with such ease, it's troubling.’ Mrs. Clintonhas some of the highest negatives of any politician in thebusiness,” said The Economist.

Clinton touts her economic platform as "a new eco-nomic blueprint for a 21st century economy." Yet herproposals include little that is new and more or less parallelswhat the GOP candidates are offering, with some variations,says the Wall Street Journal. “Mrs. Clinton and rivalDemocrats agree they would let the Bush income-tax cutsexpire for upper-income taxpayers, while all theRepublicans want to extend them. Democrats generallyfavor mandates to achieve universal health-care coverage;Republicans would rely on market forces,” wrote JackieCalmes in the WSJ.

Clinton talks the talk of a balanced budget and lessgovernment spending but walks a different walk, twicevoting against measures to reduce federal spending andpay down the federal debt. During her first two years inoffice, Clinton sponsored 169 bills increasing spending by$124 billion, yet did not sponsor a single bill to reducespending. Rated a “Big Spender” by the NationalTaxpayers Union (NTU).

On free trade, Clinton’s record is mixed. She votedagainst CAFTA and claims the NAFTA treaty championedby Bill Clinton when he was in office has cost Americanjobs. However, she supported trade relations with Oman,Singapore, Chile, and Vietnam. She favors punitivemeasures against corporations that outsource jobs offshore.

Clinton courts labor unions openly and actively (gets an85% pro-union rating from the AFL-CIO), subscribes tothe Democratic protectionist mania calling for get-toughpolicies against China to bring jobs back, and supported ahigher minimum wage.

BARACK OBAMA The Wall Street Journal places BarackObama “somewhat to the left of New York Sen. HillaryRodham Clinton but to the right of former CarolinaSen. John Edwards” on the political spectrum. Thenonpartisan website OnTheIssues.org rates Obama as a“Hardcore Liberal.”

The Obama campaign has so far been long on feel-good speeches and notably short on any new economicideas. Obama is acclaimed as a stirring orator who wowsadoring audiences, but to critics his speeches are mostlystyle with not much substance.

His economic policy carries a catchy title –“Obamanomics.” However, exactly what it involvesremains a little sketchy, except that Obama generallyleans to making the rich pay for entitlements for thepoor. One of his economic advisors has said, “His viewis not that the rich are doing too well, but he wants tofinance some of the programs to help the poor do better– and the resources have to come from where people aredoing better.”

On free trade, Obama has a sometimes mixed recordbut mostly buys into the protectionist sentiment thathas infected both Democrats and Republicans over thelast couple of years. He opposed the CAFTA treaty andsupports amending NAFTA to include job protectionsfor Americans. He favors conditioning all trade agree-ments with environmental and human rights demands,particularly with China. Obama sucks up to labor, as doall the Democratic candidates, and parrots the “Jobs forAmericans” chant that pretty much all politicians mouththese days.

Obama supported a higher minimum wage, favorsmaking it easier for unions to invade companies, andcredits labor unions for his getting into politics, admit-ting – rather proudly it seems – that he is obligated tothem. “The leaders of service workers unions broke ranksand chose to endorse me…supportthat proved critical to my cam-paign… So I owe those unions.When their leaders call, I do mybest to call them back right away. Ido not consider this corrupting inany way…”

The junior senator from Illinoisfavors rolling back the Bush taxcuts, voted NO on repealing the“death tax” and other estate taxreforms, and consistently favorspunishing investors withcapital gains anddividend taxes.

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Business /InvestmentGrade: C

Business /InvestmentGrade: D+

JOHN EDWARDS Among the front-running contenders,ultra-liberal John Edwards clearly poses the greatest dangerto business and investment. Edwards makes no secret ofhis contempt for people with money and his belief thatthey should surrender their hard-earned wealth to the poor.“Yes, we’ll have to raise taxes,” Edwards proclaims openly.He embraces the theme of shifting the tax burden fromtaxing work to taxing wealth.

Edwards’ obsession is reducing poverty, with the statedgoal of eliminating poverty in the U.S. in 30 years. “Theissue of poverty in America is the cause of my life,” hehas said. He backs a higher minimum wage, tax cuts forlow-income workers, universal health care paid for byrolling back the Bush tax cuts, and housing vouchers forlow-income families.

He champions subsidized housing programs to elimi-nate what he calls “economic segregation.” He has proposeda program to provide 1 million housing vouchers that willallow poor people to live in more affluent neighborhoods.“If we truly believe that we are all equal, then we shouldlive together, too.” Instead of raising standards in poorneighborhoods, Edwards’ solution to poverty seems to beto lower the living standards everywhere else.

Edwards is a huge union man who supports greaterprotection for unionization, banning hiring of replacementworkers for strikers, and raising the minimum wage evenhigher. He gets a 100% pro-union rating by the AFL-CIO.To show solidarity with the working man, Edwards goes sofar as to say that he would accept the federal minimumwage to serve as the nation’s president.

Not that he needs the money. Edwards is already a veryrich man, who by his own admission thinks nothing ofspending $400 for haircuts.

He’s just as free spending your money. The NationalTaxpayers Union rates Edwards a“Big Spender” from his record ontax votes.

REPUBLICANSThe GOP contenders face the gnarly dilemma of

distancing themselves from an unpopular party son in theWhite House without casting the GOP platform in anunfavorable light. The Republican candidates seem toprefer to link their names tothe legacy of RonaldReagan, citing his nameand policies frequently inspeeches and debates.

The Iraq war poses amajor burden for the GOPhopefuls on a number oflevels, but most particularlyon the staggering – andseemingly unending – cost.While the Republican can-didates stump for lower taxesand smaller, cheaper government, Congress has had to raisethe federal budget limit five times since George W. Bushtook office to keep from shutting down the entire federalgovernment. The federal budget deficit has soared torecord heights. This poses a slippery slope that will give allthe GOP candidates big challenges getting traction.

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The GOP contendersface the gnarly

dilemma of distancingthemselves from anunpopular party sonin the White Housewithout casting theGOP platform in anunfavorable light.

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Business /InvestmentGrade: D

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RUDY GIULIANI Rudy Giuliani earned name recognitionas the crusader who cleaned up New York. He takes creditfor cutting crime in half and rescuing the city from a fiscalcrisis that took it to the brink of collapse. He capturedinternational admiration for his calm and steady televisionpresence in the horrifying aftermath of 9-11, a time whenthe national leadership was largely absent from the airwaysduring the critical first hours and days of the crisis.

Now as he makes his bid for the presidency, Giulianifaces the “what have you done for me lately” challenge.He will need to prove that the character, skills, andphilosophies that served him well in New York can scale upto meet the needs of a whole country.

Giuliani fashions his image in the Reagan mold, agrowth-oriented conservative who favors low corporatetaxes to encourage businesses locating in the U.S. instead ofoffshore. OnTheIssues.org rates Giuliani as a “ModerateLibertarian Conservative.” He supports tax cuts as a wayto stimulate economic activity.

He approves of more favorable capital gains tax treat-ment for investors and simplifying the tax code.

He encourages putting welfare recipients back to workto reduce taxpayer burden and turn liabilities into productiveassets for the country. While mayor of New York, he cutthe city’s welfare rolls by more than half.

Though his philosophies generally are favorable tobusiness and investment, while mayor of New York,Giuliani sued two dozen major gun manufacturers and dis-tributors to recover city costs he said their products caused.

The suit was unsuccessful, but taken to its illogicalextreme, the idea that a manufacturer could somehow beheld responsible for willful misuse of its products couldopen the floodgates to many more silly suits against themakers of knives, poisons, explosives, flammable liquids,crowbars and glass cutters, baseball bats…almost anythingthat humans have used to hurt each other or otherwisecommit crimes.

Giuliani also gets a lukewarm response from hardcoreconservatives on some social issues and his rocky privatefamily life, which might subtractfrom his overall appeal oneconomic positions.

FRED THOMPSON Politician-turned-actor-turned-politician Fred Thompson joined the party late, waitinguntil fall to declare his long-anticipated bid for the GOPnomination. He started out basically in a neck-and-neckdead heat with Giuliani in the polls, but his campaignstuttered out of the gate. He lost ground in later polls,jockeying for position with John McCain.

Whether Thompson can regain the his pre-announce-ment mystique and momentum will depend on how wellhe holds up to the elevated scrutiny that entering the racebrings. His first debate appearance was neither remarkablenor disastrous, which the Wall Street Journal summed upmerely as “Thompson Survived.”

Thompson edges his opponents for being business-and investor-friendly.

He is unequivocal in supporting free trade andopposing protectionism, with a voting record consistentlyreinforcing his stance.

He espouses a smaller footprint for government andresponsible spending policies, eliminating wasteful govern-ment programs that don’t accomplish anything and systemsthat don’t work, reducing the federal debt, and forcing thefederal government to manage a balanced budget. “ In afew short years-- – not a generation from now-- – a fiscaltsunami that could imperil our security and economicprosperity will hit our nation and place an unfair burden ofdebt on our children and grandchildren. The tens of tril-lions of dollars in debt that will be accumulated over thenext few decades will do immense harm to our economy,”says Thompson.

Thompson contends that the tax code is broken andadvocates doing away with the Internal Revenue Service “aswe know it” and streamlining thetax system for simplicityand fairness.

Business /InvestmentGrade: B-

Business /InvestmentGrade: B

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JOHN MCCAIN By virtue of his maverick refusal torubber stamp all Bush policies, John McCain was onceconsidered the candidate best able to carry the GOPbanner without being weighted down by the negativeBush baggage. However, his campaign bogged downwith a series of missteps, and he finds himself having tohustle to regain momentum. Recently, his campaignseems like it may be getting a second wind.

McCain’s voting record registers a strong pro-business,pro-investment performance. Although he waffled onraising the minimum wage, first opposing then supportingit, he has otherwise voted fairly generally on the side offree markets and free enterprise. The U.S. Chamber ofCommerce considers his voting record mixed but leaningfavorable.

On free trade, McCain is Pro-NAFTA, pro-GATT,pro-MFN, and pro-Fast Track. He voted YES on CAFTAand trade with Oman, Singapore, Chile, Andean nations,Vietnam, and China. CATO rates him 100% free-trade.

He refuses to give unions a free ride. The AFL-CIOranks McCain as anti-union.

McCain opposes amnesty for illegal immigrant workers,which might be considered anti-business for those compa-nies who depend on cheap, undocumented labor, butviewed as pro-business for those companies who play bythe rules and hire more expensive legal workers.

On government fiscal policy, McCain chides Congressfor out-of-control spending. “Ronald Reagan used to say,we spend money like a drunken sailor. I never knew asailor, drunk or sober, with the imagination of theCongress,” McCain has said. “I received an e-mail recentlyfrom a guy who said, ‘As a former drunken sailor, I resentbeing compared to members of Congress.’”

He advocates vetoing all pork-barrel bills and publicizingthe names of pork spenders, using the president’s veto toreduce government spending, passing a balanced-budgetamendment, and establishing and enforcing spending capsin the future.

McCain champions a simplified tax code, eliminatingthe alternative minimum tax, and cutting taxes. He believestaxes should be flatter, lower, and simpler. He opposed theBush tax cuts but says now theymust be extended.

MITT ROMNEY Mitt Romney’s business credentialsserved him well as governor of Massachusetts and as CEOof the 2002 Winter Olympics in Salt Lake City.

The Salt Lake City Olympics group faced a fiscal crisisthat threatened to wreck it, but Romney turned thingsaround and manage to post a $100 million profit, notcounting expenses provided gratis by contributors.Romney himself contributed $1 million to the Olympicsand donated his $825,000 salary to charity.

When he took office as governor of Massachusetts in2003, the state faced a $3 billion budget shortfall. By2006, the state had a $700 million surplus.

Romney calls for drastic change in the organizationof the federal government to weed out waste and cutexpenses. “Washington is broken. We need to have funda-mental change in the way business in Washington is carriedout,” Romney says.

He supports a balanced budget and working down thebudget deficit. “When a budget is out of balance, there aretwo remedies: cut expenses and raise revenues,” Romneyhas said. He signed an Americans for Tax Reform no-taxpledge, so cutting expenses seems to be his tactic of choicefor bringing the federal budget under control.

Romney encourages developing trade relations in Asia.“To remain the economic and military superpower,America must address competing with Asia. China andAsia are on the move economically and technologically.They are a family oriented, educated, hard-working, andmercantile people. We must be ready and able to compete.If America acts boldly and swiftly, the emergence of Asiawill be an opportunity. Trade and commerce with thesehuge new economies can further strengthen our economyand propel our growth. IfAmerica fails to act, we will beeclipsed,” he said.

Business /InvestmentGrade: B+

Business /InvestmentGrade: B+

CONGRESSIONAL RACES: STILL A TOSS-UPWhether the new president will have a Democrat or

Republican-dominated Congress to work with is hard toguess. The political soothsayers are all over the lot on thispoint. Some say continuing discontent with the Iraq warforebodes further damage to Republican influence evenworse than in 2006. Others counter that the Democratsentrusted by voters to end the war haven’t done anythingabout it and have lost credibility on the issue.

However, the war won’t be the only issue shaping thenew Congress. The usual divisive issues are all still onthe table and will come to bear on electionday. Health care, abortion, illegal immi-grants, gun control, taxes and spending,social security, foreign relations… it’s awitches brew of trouble whose effect ishard to predict.

Every seat in the House is up for grabsalong with about one-third of the 100Senate seats.

As the political sentiment stands now,when all the dust settles, it’s unlikely thatthe Democrats will have lost control ofeither chamber…but that’s not a given. Thecurrent margin is squeaky thin and the balancecould be tipped the other way. A lot is riding on what hap-pens between now and election day to influence voters oneway or the other. It doesn’t seem likely at this early datethat either party will win a landslide mandate.

ALL SAID AND DONE:WHAT DIFFERENCE DOES IT MAKE TO GOLD?

Buying gold and rare coins is – or should be – part ofa long term investment strategy. What’s going to happenin the markets five or ten years from now is moreimportant as what’s happening now. So thepossible impact on your gold coin portfo-lio from the actions, or lack ofaction, by a new president overthe next four or even eightyears is a matter of interest.

Investing mythology gen-erally holds that Republicansare good for markets andDemocrats…well, not so much.The myth manages to ignore thefact that Republican Herbert Hooverpresided over the Crash of ’29 and thebeginning of the Great Depression, whileDemocrat Bill Clinton occupied the OvalOffice during the record-smashing bull market

of the 90s. The record in between is a mixed bag, withuneven correlation between the performance of investmentmarkets and the party in control of the White House.

As far as gold is concerned, over the past 30 years, aDemocrat – James Carter – was in the White House whengold hit its all-time high, while another Democrat – BillClinton – was president during gold’s 30-year low. WhileRepublican Ronald Reagan was in office, gold hit both apivotal high and a pivotal low.

In reality, what U.S. presidents do may occasionallyhave some marginal influence on investment assets, including

gold and rare coins, but the forces in playare so huge and so complex, especially intoday’s global economy, that no singleperson, no single country, typically nosingle factor has deciding power overwhat happens in the markets.Gold, for example, is affected by a wholeslew of influences, as we have discussedmany times before – supply and demand,the dollar, inflation, oil, and geopoliticalrisk among them. As we see on the tickersdaily, any one of these factors can take centerstage and move gold prices up or down for

a short time, but no one of them maintainsexclusive influence all of the time.

The bright news for gold is that it really doesn’t matterwho is the next U.S. president…global forces outside thepower of the White House will set the price of gold.

Though the United States is still the richest economyin the world, Asia is the main engine of global growth thesedays and will be for the foreseeable future. Growth inthe mature economies of the U.S., Europe, and Japan is

incremental; in Asia growth is exponential.While Washington frets over the slowingU.S. economy that huffs and puffs to

grow at 3% or less and could bedrifting toward recession,

China and India barrel aheadwith double-digit GDPgrowth…and they keepdoing it year after year.Other emerging economiesin Asia are catching the boom

fever, too. Singapore, Vietnam,Thailand, Malaysia, Indonesia,

the Philippines are all flexing neweconomic muscle with nothing much in

sight to stop them if they can avoid vaporlock from getting overheated.

The bright news forgold is that it reallydoesn’t matter whois the next U.S.president…globalforces outside thepower of the WhiteHouse will set the

price of gold.

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The Asian boom is significant to goldfor two main reasons.

First, unlike the West, Asia reveres gold. It’s an ancientand enduring part of Asian culture and religion. In India,the largest gold buyer in the world, gold plays a significantrole in wedding and religious celebrations, in gold decora-tions and lavish gifts of gold objects. The Chinese run aclose second to Indians in their respect and desire for gold.Throughout Asia, where people have seen more than a fairshare of revolution and geopolitical dislocation, gold servesas an easily transportable store of wealth when people haveto escape in a hurry (e.g., the fall of Saigon).

Until recent history, however, most citizens of Indiaand China and elsewhere in Asia were too poor to own goldpurely as an investment. In some instances, such as inChina, they were even forbidden to own gold. All that ischanging…rapidly.

And that brings up the second big reason Asia is goodfor gold. For the nearly 2 billion citizens of China andIndia, prosperity has meant a steadily improving standardof living and growth in personal net worth. The streetsand highways of both countries are filling up with newcars and trucks driven by motorists who not so long agorelied on oxcarts or the Ankle Express for transport. Anew generation of consumers in Asia’s emerging marketshas been born from the wedding of globalization and“social capitalism.”

President Hu Jintao told the 17th Communist PartyCongress in October that he expects China’s per capitaGDP to quadruple by 2020. That means a lot more peoplewith a lot more money to spend and a burning hunger toown gold. This is a potent and massive force that pays noattention to who sits in the White House.

That’s not to say the fortunes of Asia and the UnitedStates are completely independent of each other. We needthem, they need us. But whether we like it or not orwhether the protectionist ninnies in Washington admit itor not, we need them more than they need us. That meanswhat happens in the U.S. economy has less impact on themthan what happens in their economies has on us.

The gold fever in Asia will mushroom regardless ofwho wins the U.S. presidential election in 2008. Asianbuyers will be clamoring for gold jewelry, gold coins, goldbars, and gold stocks no matter who takes the oath officefor the White House in January 2009. Indian brides andgrooms will be showered in gold whether the U.S. econo-my slips into recession or recovers from its recent malaise.

That said, gold markets are giving us strong indicationsof a likely huge rise in gold valuations over the comingmonths. The seemingly inevitable Asian demand for goldfor perhaps decades to come imply that the gold bull runwill hold up at least through the next presidential term andprobably the one after. However the 2008 election comesout, I see a profitable outlook for gold and rare coins for along while yet.

C a l l y o u r a c c o u n t r e p r e s e n t a t i v e t o d a y t o l l f r e e . . . ( 8 0 0 ) 4 5 9 - 2 6 4 6

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Anecdotal evidence suggests that rare coin values historically tend to rise in an election year and the first post-electionyear when a new president takes office. However, the broader gold market generally goes its own way, ignoring presidentialpolitics. The arrival of a new resident in the White House has less impact on gold markets than you might think.

Since January 1, 1975, when it became legal for Americans to own gold again, we have had five presidents in the WhiteHouse. Looking at gold performance in the election year preceding the arrival of a new president and the first year of hisbeing in office, gold’s record has been mixed. The U.S. dollar and oil, two primary driving forces in gold prices, have alsotended to obey market trends more than White House occupants.

• 1976-1977 Jimmie Carter – gold dipped in the middle of Gerald Ford’s last year to a reversal low. The sharp bounceat the end of the election year that put Carter in office triggered a three-year blazing bull gold market that turnedparabolic in 1980, hitting the all-time record of $850 an ounce. The nature of the move over a period of several yearsand its spectacular magnitude indicates the election had little to do with it. It was driven by speculative market mania.

• 1980-1981 Ronald Reagan – Gold was in freefall as voters went to the polls to elect Ronald Reagan. The plungecontinued after Reagan took office and was in decline at the end of his term.

• 1988-1989 George H.W. Bush – When Bush I was being elected, gold was in a one-year slide that continued, with acouple of brief Desert Storm-driven rallies, through the end of his term.

• 1992-1993 Bill Clinton – Gold surged briefly in the first few months after Bill and Hillary moved into 1600Pennsylvania Avenue. But it remained essentially flat and going nowhere for the next three years. Then it again fell intodecline over the last five years of the Clinton administration.

• 2000-2001 George W. Bush – Gold was falling when Bush the Younger was elected, but a few months after he tookoffice, the current secular bull market in gold took root. Gold bottomed at $256.25 (London PM fix) on February 20,2001, and never looked back. The six-year bull market is still running, driven by rising oil prices and the decliningdollar along with tightening supply/demand forces.

For nearly four decades, gold market pricing seems to have paid little attention to U.S. presidential elections. Gold is,after all, a global currency whose value is determined by much larger world forces than American political whim

N E W P R E S I D E N T S A N D G O L D

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U n i v e r s a l C o i n & B u l l i o n , L t d .™ • 7 4 1 0 P h e l a n B l v d . • B e a umo n t , T X 7 7 7 0 6 • u n i v e r s a l c o i n . c o m

Some readers have been asking us if they should be trading in their gold for silver in anticipation of a new presidentin the White House. What exactly is supposed to be the advantage of silver over gold in this case is not clear. In any event,any decision about exchanging gold for silver should be made on the basis of market analysis regardless of what happensin the election.

If anything, the record shows that in four of the last five times a new president has been seated in the Oval Office, goldactually gained an advantage over silver. However, the market movements that put gold in this position were already inmotion well before the new president took office. In other words, the momentum of the trend simply carried throughinto the new president’s term without his influence.

The gold-to-silver ratio (gold price as a multiple of the silver price) rose at the beginning of terms for Carter, Reagan,Bush I, and Bush II. It fell at the beginning of Clinton’s term. Recently, the ratio has been rising, now between 50 and 60.

T R A D E G O L D F O R S I L V E R ?

Words to the Wise…We have a lot of kids who don't know what work means. They think work is a four-letter word.

– Hillary Clinton

In case you missed it, this week, there was a tragedy in Kansas. Ten thousand people died -- an entiretown destroyed. (– on a Kansas tornado that killed 12 people)

– Barack Obama

The idea that we’re going to keep incarcerating and keep incarcerating - pretty soon we’re not going tohave a young African American male population in America – they’re all gonna be in prison or dead.

– John Edwards

We don't all agree on everything. I don't agree with myself on everything.– Rudy Giuliani

I'm afraid that the Soviet Union and China are not ever going to do anything that's going to hurtthem that badly but we need to ratchet those up if at all possible.

– Fred Thompson

Why is Chelsea Clinton so ugly? Because her father is Janet Reno.– John McCain

PETA is not happy that my dog likes fresh air. ( – on strapping his dog to the top of the car)– Mitt Romney

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COMING IN THE JANUARY 08’ ISSUE

What’s ahead for precious metals in these turbulent times? In the next issue, Mike Fuljenz reveals the2008 prospects for gold, silver and platinum - where they’ve been, where they are, where they’re going.He also reveals why depleted dealer inventory of high quality rare gold coins could be a leading indicatorfor substantial price increases in 2008.