Are Ron Paul's poll numbers inversely related to the price of gold?

There is no relation, of course, to the growing popularity of Ron Paul and the perceived decreasing popularity of gold as an investment.  But watching his Iowa and New Hampshire numbers shoot up this week, while the spot price of gold slipped down again, one can't be blamed for wondering if such a connection exists.  Some might posit that the tick down for gold marks a bad omen for GOP candidate Paul, but such reasoning would be based on poor footing.

Ron Paul's ideology and campaign centers heavily on the notion that gold, not a fiat currency, is real money.  But the day to day or even month to month moves of the precious metal are of little concern to a devoted goldbug.  The notion of gold as a medium of exchange is that it is immune to counterfeiting, unlike modern currencies.  The price of gold can be manipulated.  It can even be inflated.  But ultimately, gold can never be created (well, it can actually, in minute amounts and at a cost of production so high that there is no realistic threat to gold's present status as a secure store of wealth).  Gold has inherent value because it is rare and can't be created, whereas fiat currencies have innate vulnerabilities because they are not.

Paul's belief in gold centers on its utility as a monetary instrument, or more properly, a monetary counterweight.  The recent phrenetic movements in the price of gold have been chiefly caused by global inflation, a consequence of poor monetary policy around the world.  Gold in US dollars was driven higher as more dollars were printed.  Now the Euro is next in line to be pumped, and as the dollar rises and traders sell gold to cover losses in securities, the gold price goes down.  Or maybe it's for other reasons.  In the wonderful mysteries of the free market, no one is ever really certain and fortunes are won, lost, and preserved based on these speculations.  To the extent then that gold goes down (or up for that matter) Paul's ideology holds true.  No matter where the gold price eventually settles, it will never be at zero.  Which is infinitely better than what can be said of the dollar, euro, or other government backed papers.  

This is also an instructive lesson for those looking at Ron Paul's political future in the race for the White House.  Fortunes will rise and fall, but Ron Paul supporters' hopes should not just be pinned on one big up day.  Look at the big picture.

But there is some reason to be optimistic in the short-term.

Polls released yesterday indicate that nationally Ron Paul continues to climb and in early primary states he has gone from contender to, at least in Iowa, co-front runner.  With that in mind, I'm updating my delegate predictions for Ron Paul.  Looking back on my history here, I see I haven't done this since October, when I speculated he would win 10-12% of the vote and one to two delegates in New Hampshire.  I further wagered Ron Paul would need to chalk up 100 delegates nationwide to make his mark on the convention next summer.  I am revising both of those numbers up, and speculating on some other early races.

I must first point out something obvious though.

The GOP primary season is a complete mess.  

Firstly, without a challenger to Obama, there is speculation that many Democrats who live in states with open primaries (races where party affiliation is not required to vote) will participate in the Republican election.  Many of these will likely vote for Paul, given his anti-war stance.  There has never been any evidence that open primaries encourage "strategic voting," that is voting for the perceived weakest candidate in the opposing party in order to increase the chances of one's own, already determined nominee winning.  But if ever there were a time, with social media and other means organizing confrontational behavior around the globe- this would seem to be the era.

Additionally, there is the theoretical rule that any state holding its race prior to April 1 must utilize proportional representation in its distribution of delegates.  This means that if a candidate comes in 4th with 10% of the vote in a state with 40 delegates, that candidate wins four delegates.  Each state has different interpretations of how far down the chain of candidates this division goes, but it should spread the distribution out significantly more than in 2008.  Consequently the likelihood of a protracted season with one or more kingmakers is possible.  Given this and improved, recent polling my hope that Paul achieves 100 delegates seems not just likely, but almost too modest.  I would consider Paul earning 200 delegates to be an achievable and victorious effort.  A candidate needs 1,145 delegates to win the nomination.  If Paul captures 200, he all but secures a speaking position at the convention, possibly gets a say in who earns the nomination, and sets the tone for future candidates.  (None of this is to say he himself won't win, by the way, this is just based on my guess of what is most likely to happen).

Of course, all of this might be setting the GOP up for a Nevada-style throw down this summer.  If, for example, Florida violates the RNC's rules (as Florida claims it intends to do) and awards delegates on a winner take all system, the lawsuits will start flying faster than you can say "this makes the Dems happy."

Anyway, about those early races, here are my guesses (I'm assuming each state prior to April 1 loses half their delegates, per the RNC rule):

Iowa: The caucus is a proportional event, with the actual delegates selected by a straw poll following the caucus.  The conventional wisdom here is that Paul will exceed expectations, based primarily on his strong campaign network in the state.  I see two factors working against this theory.  The first is that the caucus is taking place at a time when universities are on break.  Much of Paul's support comes from students, many of whom will be away from their polling locations at this time.  Given that there is no absentee voting in a caucus (see "Nevada," below), this will hurt.  Additionally, both Bachmann and Santorum have strong roots in Iowa (she was born there; he's practically lived there for the past year).  They're both going to do better than expected and some of that success will come at Paul's expense.  Here's how I see it today.

Paul - 23%

Romney - 23

Gingrich - 21

Bachmann -13

Perry -10

Santorum - 9

Huntsman - 1

The most important thing in Iowa is not the delegates, it's the momentum, but in someways, this isn't the case for Paul.  Considering the media's propensity to dismiss any success he earns and highlight any stumble, the best Paul can hope for is to gain a few delegates.  There's no scenario where they take a win seriously.  Paul should net about 1/4 of the 28 delegates at the caucus, so let's say 6 delegates from Iowa.

New Hampshire: New Hampshire is not an open primary state, but independent voters can vote in either race.  It is also a state which ideologically supports many of the ideas Paul espouses.  Much of what happens in New Hampshire depends on what happens in Iowa.  If Paul posts strong numbers there, it's likely to motivate independent voters to come out and support him a few days later in New Hampshire.  Another factor in (also present in Iowa) is the weather.  A massive snow storm would be a boom to Paul's campaign, which enjoys passionate supporters who would show up to vote for him if it were raining plutonium.  

Romney - 37

Paul - 22

Huntsman - 17

Gingrich - 16

Perry - 5

Bachmann - 2

Santorum - 1

This is where Huntsman has bet the house and recent poll numbers say it is working.  New Hampshire has a well educated retiree community who is moderate politically and would seem amenable to a candidate who is less than rabid when discussing foreign affairs.  Romney obviously has a history here, and much has been made of his summer home in the state.  Paul underperformed in New Hampshire in 2008.  At this point in the race, moderate GOPers will start to abandon Gingrich, which should elevate Huntsman while Paul maintains about the same level of support he has always had.  This primary has 12 delegates.  I expect Ron Paul to earn 2-3 delegates in New Hampshire.

South Carolina: Eleven days after New Hampshire, South Carolina voters head to the polls.  Ron Paul has not polled well here, averaging right around 10%.  Decent postings in Iowa and New Hampshire might move those numbers up.  Exceptional results (as I speculate he will earn above) could move them considerably.  One thing in Paul's corner here: South Carolina is an open primary, meaning Democrats could come out to support him.  I think this point is exaggerated by Paulistas since Democrats in South Carolina are more subsidy driven than ideologically driven, as independent voters might be in New Hampshire.  Consequently, I'm hoping Ron Paul can make a dent here, not necessarily score a victory.  

Gingrich - 41

Romney - 20

Perry - 15

Paul - 10

Hunstman - 8

Bachmann -4

Santorum - 2

Huntsman can score a win here by posting anything above 2-3%.  Ron Paul can expect to earn only a few of South Carolina's 25 delegates; I predict 1-2 delegates in South Carolina.

Florida: Florida is not a bastion of Ron Paul support.  His progress will depend on how much media attention he has earned up to this point in the race.  One hope is that one or more of the lesser candidates might drop out at this point.  I'm also hoping for an endorsement from Gary Johnson, which would gain some headlines.

Gingrich - 34

Romney - 28

Perry - 14

Paul - 12

Hunstman - 8

Bachmann -4

Santorum - (drops out, voters split evenly between Gingrich, Paul, and Bachmann- but there aren't many- he'll endorse Gingrich hoping for the VP slot)

It's really tough to predict how things will break this far out.  I'm going to toss out a guess and say of the 50 up for grabs, Ron Paul will earn 5 delegates in Florida.

Nevada: It breaks my heart to admit it, but I'm scheduled to be out of country the day the Nevada caucus takes place.  This means I won't be able to participate in my own state's selection process, which is a damn shame because I think Nevada is where Paul could really excel.  His network in the Silver State is robust, the ideas of liberty are strong, and his several visits will put him in a position to do very well.  Keep in mind, Paul's second place finish here in 2008 bested the eventual nominee.  Romney's strength in Nevada is the Mormon community, but with two LDS members in the race, that could be fractured.  Here's how I see it.

Romney - 37

Paul - 35

Gingrich - 10

Perry - 10

Hunstman - 8

Bachmann -

(drops out after realizing Southern voters have embraced Perry instead of her, voters split evenly Perry and Paul-  she'll hold off on an endorsement)

The Silver State has 28 delegates.  Because of his campaign's outstanding organization in the state, Ron Paul will earn 11 delegates in Nevada.

So by my count then, Paul will finish the first week of February with approximately 25 delegates, putting him comfortably on course to hit the 200 mark.  Most importantly, it will assure him fundraising well through the campaign and keep him at the top of the polls.

The problem of course, is breaking through.  As candidates drop out (Perry, Huntsman, Gingrich- I can see it now) how much can he expect to gain compared to chameleon Romney?  Regardless, my hope here has always been influence.  The nomination would be nice, but changing the course of the GOP would be a victory.  

I'll update this again after the New Year, when factors have changed and new polls are available.