FINSUM + Magnifi: Why the Biden Administration May Be Bad for Gold
(January 2021)
Gold has been hurting recently, with prices currently around $1,800 after some strong gains over the course of 2020. The big question is where gold is headed now that the vaccine is rolling out and a new administration is coming in. The bottom line is that the Biden administration may pose some difficulties for gold. The reason why is that Biden is planning a multi-trillion Dollar stimulus package that could boost inflation. Gold generally falls as rates rise because of its zero yields. Therefore, the administration’s plans for ongoing stimulus—which will boost the cash flowing into the economy—are a net negative for the metal.
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FINSUM + Magnifi: Why Gold is a Good Bet Right Now
(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.