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Strategies & Market Trends : Natural Resource Stocks
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To: Jim Willie CB who wrote (3006)11/6/2003 8:54:06 AM
From: austrieconomist  Read Replies (2) of 108767
 
Jim Willie, where would this fall into your analysis:

John Doody ("Gold Stock Analyst) has raised a concern about a move in the US Congress. The Senate has approved, and the House Ways and Means Committee is evaluating, a special piece of legislation that would open a one-year tax break window for US multinationals. This window would allow them to repatriate overseas earnings which had been taxed at the foreign rates, back to the US at a tax rate of only 5% compared to the existing 34% rate. Presumably, this act is designed to send a huge flood of repatriated dollars back into this country to be used to stimulate domestic investment and job creation. Note that the term would cover only 2004, (election year coincidence??). JP Morgan estimates that the dollar amount would range between $135 and $300 billion. If this is the case, the multinationals' foreign currency holdings would have to be converted into dollars for repatriation. This would put a huge prop under the dollar, perhaps sending it higher, and reinforce the Bush administration's so-called "strong dollar policy". Maybe this is one reason the dollar has remained relatively strong over the past several months, defying predictions of a steady decline.

Doody concludes that such an election year gimmick could have a distinctly negative impact on the gold price, insofar as it trades inversely to moves in the dollar index.

Thanks for any thoughts.
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