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California breweries support prohibition ... of marijuana

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Battle over pot heats up Californians are nearing a key vote in November on whether to legalize marijuana for recreational use, an issue that has grabbed national attention in the United States. The fight over Proposition 19 on the ballot isn't your traditional business story. Opponents include some police and religious groups, as you'd expect. But also on the "No" side is a group representing the state's brewers, which has put $10,000 (U.S.) toward the campaign fighting the proposition, according to the records of the California secretary of state. Is pot a competitive threat? Some proponents of legalization see it that way, accusing the California Beer and Beverage Distributors of trying to keep marijuana illegal to keep the competition at bay. Kind of like cattle farmers wanting to ban chickens.

The brewers say it's not an issue of a threat to their industry. Rather, their political co-ordinator told USA Today, the proposition would give control of marijuana sales to cities and counties rather than the state, which controls alcohol. "We have a structure they could have used, but they chose not to," she said.

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Known as the Regulate, Control and Tax Cannabis Act of 2010, on the Nov. 2 ballot, it would give local governments the power to regulate and collect the taxes. It would legalize recreational use for people over 21, but possession of pot would still be illegal federally. According to The Los Angeles Times, pot projection accounts for some $14-billion in sales in California.

Gold reaches milestone Gold hit another milestone today while silver reached its highest level in about three decades as the U.S. dollar weakened again. Gold touched $1,300 (U.S.) an ounce, a record, before pulling back slightly, while silver climbed to $21.3875 an ounce.

Gold has gained about 18 per cent this year - Bloomberg News notes it is heading for its 10th annual gain in a row for the longest streak since at least 1920 - and some analysts project it will continue to climb. Normally a hedge against inflation, investors have flooded to the safety of bullion amid rising fears that the U.S. economy will continue to sputter.

Indications that the Federal Reserve could launch another round of measures, coupled with general economic concerns in the United States, are pressuring the dollar, Scotia Capital currency strategist Camilla Sutton said in an interview. And given Japan's recent intervention to push down the yen, "it's added to fears over paper currencies," she said, giving gold a push. Ms. Sutton expects the U.S. dollar to remain under pressure well into the fall.

As for investors losing faith in currencies, Ms. Sutton believes "the answer is generally no, but a small segment would say yes."

Gold has climbed steadily since the U.S. central bank said earlier this week that it is poised for new measures if needed.

"Fears of runaway inflation or a dollar collapse, which underpin some of the most bullish forecasts for gold, remain exaggerated," Capital Economics in London said in a report yesterday. "Nonetheless, prices should continue to be supported by strong demand for a safe haven from other potential economic and financial shocks, such as a U.S.-China trade war and the breakup of the [euro zone]

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Believing inflation will remain low, Capital Economics said any fading demand for gold as a hedge against inflation could be replaced by heightened demand for a safe haven. The report projected prices will remain high for several years, dipping slightly to $1,200 an ounce by the end of this year but rallying further next year to at least $1,400 "as new shocks hit the global economy and financial system."

Wright jumps from Onex to Ottawa Stephen Harper has tapped a Bay Street dealmaker, Nigel Wright, as his new chief of staff, signaling he wants his government to refocus its efforts on the economy. Mr. Wright, in his mid-40s, is a managing director of Onex Corp., and is considered a bit of a star on Bay St. A lawyer with degrees from Harvard and the University of Toronto, Mr. Wright has previous government experience, having worked in the Mulroney PMO as a speech writer and policy advisor. Mr. Harper's office had wanted to wait until Monday to announce Mr. Wright was replacing Guy Giorno for the post, but the rumours began leaking out Thursday night. Conservative Party president John Walsh confirmed the appointment Friday.

Earnings increases outpace inflation Average earnings in Canada are running at more than double the pace of inflation, a sign of the rebound from the depths of the recession. Average weekly earnings in Canada climbed 3.9 per cent in July from a year earlier, to $855.66, marking the fastest year-over-year hike since February of 2008, Statistics Canada said today.

"Some of it is just due to a better economy than at the depths last year," said BMO Nesbitt Burns deputy chief economist Douglas Porter. "That's one of the reasons why consumer spending has managed to post decent gains over the past year."

Given that total hours worked rose just 0.5 per cent in July, much of the increase in earnings was due to higher pay.

Among the sectors with the biggest gains were accommodation and food services, administration, waste management, professional, scientific and technical services, manufacturing and retailing, the federal statistics gathering agency said.

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"Among the largest industrial sectors, manufacturing has had one of the most notable shifts in average weekly earnings since the fall of 2009," Statistics Canada said. "Between July 2008 and October 2009, earnings in this sector had declined by 6.1 per cent. Since October, 2009, however, they have increased by 7.3 per cent, more than recovering this loss. Average weekly earnings in manufacturing were $965.90 in July."

The annual inflation rate in July was 1.8 per cent, dipping in August to 1.7 per cent.

Petrobras raises $70-billion It's the biggest stock offering ever: Petrobras raised $70-billion (U.S.) with the sale of 1.87 billion preferred shares yesterday, a short in the arm for Brazil's state oil company as it moves on new offshore reserves. Middle Eastern and Asian sovereign wealth funds were among those buying its shares, the Reuters news agency said.

GM plans smaller IPO General Motors Co. plans to reduce the size of its return to the markets in a bid to get the best price for the U.S. government, The New York Times reports. GM Is now looking at an initial public offering of between $8-billion (U.S.) and $10-billion, the newspaper said, down from what it initially planned. As well, the U.S. government will probably sell just a sliver of its 61-per-cent stake in the company. The Treasury Department, the newspaper said, has made clear to GM and its bankers it wants the best possible price.

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