Given the eight year cycle in gold, and given that gold will be entering its upcycle by the end of this year:
How will the elections affect this upcycle?
First, in an election year it is highly unlikely that either the Fed or the Treasury will do anything (on purpose) to overtighten the economy going into November. However the Long and Variable Lag of economic action means that their conrol over what happen as we approach the election if far less than they would like to think. So a shock of some kind coming near the election (due to the recent tightening jag) is certainly not out of the question. The response of course will be to add even more liquidity than normal to inusre that the economy is flooded with liquidity going into the election and this should give a strong boost to gold.
If there is no shock you can bet that the Treasury will use every facet of their copious means of suppling liquidity to make sure the economy appears to be sailing along as smoothly as possible. Liquidity means money printing which is always gold positive.
So this fall should be a good time for the start of the gold upcycle.
What about after the election?
Well, if Biden wins we can expect massive spending. There will never be budget cuts because no politician will ever touch social security, medicare or defense. So it's always just a question of how much more spending. And even without the support of congress there are so many ways the Treasury can control the supply of liquidity to the various markets. And the Fed is certainly at the end of its tightening regime and no matter how many cuts you might expect, it is clear they will be easing liquidity by lowering rates and expanding their balance sheet as needed - especially to help buy the massive issuance of Treasuries and to bail out the 2 trillion dollars of corporate refinancing on line over the next 2 years.
So this will provide a good tailwind for Gold.
If Trump is elected there will be also be massive spending - because without it the stock market would crash and we all know Trump measures success by the Stock Market. On top of that there will by massive Tarrifs and Trade Wars which will send inflation into overdrive. There's no need to explain the obvious: it is the consumer that ends up paying for every penny of every tarrif.
This is very Gold positive.
And finally Trump has pledged to replace the Washington Beaurocracy with loyalists which will certainly extend to the Fed. He will have his stooge at the Fed drop rates back towards zero as he will see this as positive for real estate (as it would be - at least for the owners of real estate) and the stock market. This will send Gold into Hyperspace. Gold will certainly double and triple under this regime. The gold price doubled uinder his last tenure, and that was during a gold 8 year downcycle!
Low rates, high spending, deglobalized inflationary pressures, and trade wars - and hot wars - during an upcycle will lead to unprecedented heights in the gold price.
Think Japan. Because either way, that's where we're headed. The long end of the yeild curve is the only thing the Fed and Treasury and the Government have no control over. Unless they institue Yeild Curve Control. Which is exactly what they will have to do. Which will put us in the exact same position Japan is in now: Contol rates and let the currency devalue (which also whittles away the debt) or let long rates blow out and watch credit markets implode. The choice is easy.
So Trump will be ideal for gold. And Biden too would be very gold posisitive.
Either way, if nothing else, the next four years should be very good ones for Gold.
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