What Gold and Silver Can Tell Us About Job Creation

President Obama's upcoming jobs proposal just might be the final piece of the puzzle to guarantee a huge upswing in gold prices and silver prices .

Why? Well here's what we know so far:

  1. He plans on spending money to create more jobs.
  2. He plans on tackling the deficit.

We know that the Federal Government has spent lots of money in the past on creating jobs. The problem of course is that they only have that money in the first place because of their self-granted authority to take it from producers and make it from thin air.

These two tools: taxation and the printing press are the very same tools that have been used as weapons against savers, investors and producers.

And yes, before I get accused of being a right wing mouthpiece: both Democrat and Republican alike are responsible for wielding these tools. Indeed, while wages have fallen in the private sector, and the standard of living has flattened out for the average American, the political class is as healthy as ever.

Politicians have necessarily increased their power, wealth and influence at the expense of regular folks .

So when President Obama utters the words: "I'm going to spend money on _____" it just doesn't matter what he's spending it on.

Because it will inevitably serve his interests primarily and your interests will take the scraps of any coincidental benefit.

Any sane person realizes that the Government can not create jobs. If that were the case, then we would have zero unemployment, because we could simply vote for people who would make those jobs possible. One half of the unemployed could dig ditches and the other half could fill them.

But that's not employment, and no one would be fooled for long.

So the end result will be more spending. And that's almost always bullish for government and for commodity prices.

Why? Well because more spending means we need more bureaucracy to manage that spending. We need inspectors and underwriters and accountants and overseers. We need a whole army of Cat-in-the-Hat underlings that only exist to suckle on the teat of this new spending.

And why does more spending equate to higher commodity prices? Simply because our leadership has been unable to raise taxes fast enough to catch up with new spending. So all new spending is conjured out of thin air. More currency units chase the same amount of goods, causing their prices to rise.

So, you probably know how I feel about Obama's plan to reduce the deficit.

On the face of it, it sounds great. But when our leaders tell us they plan on reducing the deficit, notice how carefully they choose their words. They don't say, "we're going to eliminate the deficit."

Nor do they say, "we're going to create a surplus."

No, they just mean that they will reduce the size of our annual deficit, all the while fully recognizant that their plans will still add more debt to the total.

That's why the debt ceiling of over $16 trillion will be met - because our leaders are still spending more than they take in.

So my advice would be to take Obama at his word: we will spend more. And we will continue to spend more than we have.

And you and I will continue to trade in the duplicitous dollar for the safety and surety of precious metals.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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