(October 2020)
Gold is looking like a good bet right now. The metal has had a very strong year after almost a decade of lagging, and it is no surprise—global calamities are the perfect environment for gold appreciation. But we are clearly past the initial panic of the pandemic, so what is the current case for the shiny metal? The answer is that the roadmap looks very positive. Two tailwinds appear to be in place, one in the short-term, the other in the medium- to long-term. Firstly, the election is likely to cause a great deal of uncertainty and volatility which gold will probably benefit from. Secondly, as a new stimulus package draws nearer, the credit quality of US Treasuries is causing some anxiety. Gold has been rising alongside this fear, with a 1.8% gain yesterday as investors increasingly believed a stimulus package would be passed.
(New York)
FINSUM + Magnifi: While another stimulus package would certainly help the economy, it is worrisome from a fiscal responsibility perspective, which should be a long-term help for gold. If Biden wins the election, the odds of a bigger stimulus deal/s grows, probably hastening gold’s rise.
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