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August 04, 2015 01:47 PM UTC

Sorry, Walker Stapleton: Price of Gold Plunges

  • 21 Comments
  • by: Colorado Pols

ChartBuilderIn 2010, as the nation was in the grip of a major economic downturn, right-wing candidates capitalized on uncertainty about the economy by seeking to outdo each other with frightening predictions about the future–and what they would do to save us. In the case of then-candidate for Colorado Treasurer Walker Stapleton, he responded to a question in a primary debate about the economy by suggesting the state invest in gold to hedge against what he foresaw as a “hyperinflationary environment.”

STAPLETON: The Treasury’s portfolio has not changed markedly in the last eight or ten years under Treasurer Mike Coffman, under Treasurer Mark Hillman and now under Treasurer Cary Kennedy. And that’s been okay, it’s weathered the storm fairly well. The problem is that we, I believe we are entering a hyper-inflationary environment. We’re going to need to shorten the duration of a lot of the state’s investments, the duration of the portfolio to adjust to a hyper-inflationary environment…

And I think hedging, using using gold to hedge against inflation or another precious metal is something the state needs to investigate. It’s something we haven’t done in the past, and it could be an effective method of dealing with a hyper-inflationary environment.

Fast-forward to today’s news:

“We see further downward pressure on gold prices, possibly stabilising at an eventual rate of US$1,000 a troy ounce,” said Mr Howie Lee, a Phillip Futures investment analyst. “It seems to be an end of an era for the precious metal. Even in a crisis, it has not picked up much appeal.”

Amid the recent turmoil in Chinese markets that spread to bourses across the globe, gold prices have remained weak. According to a Bloomberg survey on Jul 29, traders expect gold prices will drop to US$984 an ounce before January next year. That would be the lowest since 2009.

One factor weighing on the outlook for the yellow metal is a US Federal Reserve rate hike expected later this year that will push the greenback even higher and raise the opportunity cost of holding gold, which carries zero interest.

The traditional sales tactic for gold and other precious metals involves spreading fear about the economy to motivate investors to “hedge” their investments against uncertainty. Since Barack Obama became President in 2009 in the midst of a recession he did not create, a natural alliance has formed between Obama’s political enemies and gold trading companies. Republicans set themselves up for victory in 2010 by making voters believe that the world was about to end, which boosted gold trading companies as rattled Americans bought up gold to survive the coming Obamanation.

But between Stapleton’s dire predictions of “hyperinflation” and today, something else happened: the American economy didn’t collapse after all. In 2010, the U.S. economy was already emerging from the depths of recession, a process that has continued to this day. The economic fears that prevailed in 2010 have slowly dissipated, and as a result the price of gold has plunged by hundreds of dollars in the last few years (see chart above right). There are predictions now that the price of gold could fall even more, below $1,000 per ounce and perhaps much farther.

Safe to say, thank goodness Colorado didn’t fill the state treasury with gold!

Now that the price of gold is dropping like a rock, we’d say the question of what Walker Stapleton was thinking in 2010 is even more relevant. Why did this supposed financial expert make such wildly inaccurate predictions about the economy, and then propose a remedy that now appears absolutely foolhardy? We know there are plenty of theories–we want to hear it from Stapleton personally.

Because as much as everyone rushes to excuse yesterday’s “Tea Party” nuttiness, it happened. He said it.

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21 thoughts on “Sorry, Walker Stapleton: Price of Gold Plunges”

        1. Actually Marvin is the smart one in that family. He's maintained a low profile and hasn't said or done anything embarrassing.

          If Jeb gets his Middle East policy advice from the Shrub, perhaps he's getting coached on banking and financial services from Neil and Walker. The family is a brain trust of talent.

          1. Shhhhh! Mama Bush gets royally pissed when anyone dares to  so much as imply her darling boy was in any at fault in the Silverado disaster. And just google Marvin.  His financial past is hardly above reproach either. Don't know if it's so much that he's smart enough to keep a low profile as that the rest of the Bush family would just as soon not see  him get too much attention.

            Bush Sr. is a legit Phi Beta Kappa but none of his boys seem to take after him. Must take more after their Mama. Not terribly bright and kind of mean. The totally average Jeb is supposed to be the smart one of the siblings. No wonder Bush Sr became so close to Bill. He finally had someone he could talk to.

    2. I took a cursory look through Stapleton's 2010 finances. 344 thousand is a lot to spend on a state treasurer election. I didn't see gold mining, and don't know enough about gold dealers and gold futures speculation to tell. He had a lot of financial firm and developer contributions – Anschutz, Janus, Winston, Cerberus, Brightline, and that ilk. The Bushes, George and Barbara, gave him 1500 total. John Elway gave him 250, Jake Jabs 400. The Stapleton family came through in a big way.  Benjamin Stapleton gave him two 1500 donations, which I think was illegal in 2010.

      In 2009, his own business,  Sonomawest Holdings gave him 1050.
      brownlie wallace armstrong bander exploration, which may be a mining concern, contributed.

       

       

  6. Maybe Stapleton wants to "repatriate" all of Colorado's gold into a state-run gold repository like Texas wants. Then when the economy collapses, we'll all be safe. That hyper-inflation is just around the corner – you wait and see!

    1. Hindsight is always 20/20. In 2010 things were very bleak for the economy. I'm glad it didn't go as badly as it might have, but I don't blame Stapleton for pondering the ifs.

      2. So, taking that thought to its logical conclusion – you would be happy to learn Walker has built a 35,000 sq foot underground bunker with enough food, water and ammunition to last through the impending nuclear holocaust/climate enduced locus plagues/Obama's race wars and live to tell about it. Then, all that gold would come in real handy – good thinking Walker. 

        1. Wonder how things are going with Stapleton's sweetheart deal with SonomaWest Holdings? It's pretty evident that there was some all-in-the-Stapleton-family insider trading back in 2010 – but what's going on now?

          Is Stapleton still consulting with his father's company, Sonomawest, moonlighting as treasurer, making money off of gold speculation? It's my understanding that an options trader makes a profit even if the commodity, such as gold, falls in price.

          Stapleton is apparently still on the board of Sonomawest, and still moonlighting,  even while he is being paid as state Treasurer.

          Someone who knows financial dealings better than I should look into this.

          Who the hell is going to hold our state Treasurer accountable for private deal-making?

           

      3. Moderatus — anyone with the slightest amount of knowledge in the field of economics would see Stapleton as the gold bug idiot that he is.  You protest Pols calling out Stapleton's ignorance as "20/20 hindsight".

        Well if you were paying attention 5 years ago, you would have been forewarned that Stapleton was a fool for gold at that time:

        http://coloradopols.com/diary/12933/ament-and-stapleton-want-to-play-with-your-money#sthash.bnjjnQqi.7R6mVjtY.dpbs

      4. Hooey!

        if that was true, the GOTP would admit that selling weapons to to Iran, laundering the proceeds to illegally fund an illegal war was a really, really bad idea, no matter how much in their hearts they wish it wasn't true.

        likwise, it would realize claims that Medicare was going to be the giant step on the inevitable, slippery slope to Communism were pointless and stupid.

        now, if you want to discuss important things, at the time, Ernie Broglio was a good idea- you get to the deadline, you add pitching.

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