-- Posted Thursday, 5 March 2009 | Digg This Article
| Source: GoldSeek.com
April Gold: Open= 906.8 High=937.5 Low=906.2 Last= 933.0 +26.3
Gold prices held off another probe of the $906 price level for the third day in a row and rallied impressively as the stock markets soured. The turn in gold came around 7:00AM PST when stocks began to weaken in what would turn out to be a 200 point loss in the Dow, erasing yesterday’s gains.
Most other major commodities ended negative, as jobless claims were above 600,000 for the 5th week in a row. Business productivity numbers took a nose dive as well, and perhaps most damaging was an audit report of GM stating that there is “substantial doubt about its ability to continue…” Worries about bailouts of GM, Chrysler, and AIG are failing are beginning to mount. In the near term, however, it seems as if the Obama Administration is willing to string out more taxpayer money to keep these giants afloat.
Staying afloat for the moment is the US dollar, but big time traders are losing long term confidence. An interview with Jim Rogers, the other day, led to his admission that he plans on selling the dollar at some point this year. For those that do not know, Rogers moved to Shanghai to seek a better business climate.
One might be led to believe that as the world’s largest economy, the United States would be a bastion of business and opportunity. Quite frankly, after reviewing how corporate tax structures from around the globe, it is no wonder than multi-national companies have been seeking shelter outside of the United States over the past decade. The United States, the leader of the ‘free market’, will have a maximum corporate tax rate of 46.2% in 2010 when President Obama’s tax increases become law. For all the Republicans like to hammer at ‘socialist’ France, its corporate tax rate is only 34.4%. All 50 states in the US have higher corporate tax rates than France, which has the 5th highest tax in the world.
This information does not get better. State-controlled China, communist China, taxes its businesses at only 25%. And that is after they cut the tax rate from 33% in 2008. Is communist China more business friendly that the capitalist United States?
In the face of the most burdensome corporate taxes in the world, US businesses have managed to keep America a dominant force in the global economy. But this begs a few questions to be answered? How much further along could the US be if we had a friendly business climate? How many more multi-national companies would flock to the US if we welcomed them?
Unfortunately, the face of one of the worst recessions in the past century, other countries are moving away from punitive corporate measures in order to encourage economic growth. In the United States, our leaders seem intent on leveling the playing field by tearing the top down, not bringing the bottom up with new jobs and economic growth.
Certainly, one may argue that perhaps the US tax structure, of high corporate taxes and lower personal income taxes, is obviously the right combination because we are situated at the top of the economic ladder, and that view could be true. But we must consider that no government has ever taxed its way into lasting prosperity. As we continue to look over our shoulders at the BRIC economies, are we trying to step on the gas or are we hitting the brake?
The correction in gold prices may be over. Traders should wait for a close above $940 before getting long. The chart pattern looks little in the way of a top formation and merely that of a sharp correction as seen during the first two weeks of this year.
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Thomas Hartmann
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-- Posted Thursday, 5 March 2009 | Digg This Article | Source: GoldSeek.com
