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November 2020 - Week 1 Edition

November 2020 - Week 1 Edition

Gold Falls, Rises and Falls Again Based on Changing Election Expectations

Gold shot up to $1,950 Thursday morning, and silver topped $25, on continuing election uncertainty, based on the likelihood of an eventual Biden victory and a weakening dollar on higher future federal spending. Stocks are also up in a “relief rally” based on hopes the Republicans will maintain control of the Senate and gain some seats in the House, which could put some brakes on any extreme spending programs, but recall the earlier predictions of Goldman Sachs and Bank of America – that we could see $50 silver and $3,000 to $5,000 gold within the next 2-3 years if we see a Biden victory in the current election.

Election day at first looked like a surprise victory for the incumbent, so gold fell from $1,912 at 7:00 pm Tuesday night (Eastern time), when the first polls closed and results began coming in, to $1,885 at 11:00 pm (EST), when various swing states were counted in President Trump’s win column, including Florida, Ohio, Iowa and Texas, with Georgia and North Carolina also leaning in his favor. The most surprising development was that the Upper Midwest “blue wall” of Wisconsin, Michigan and Pennsylvania was also leaning in the President’s favor as the calendar turned over into November 4th at midnight Eastern time.

Overnight, however, hundreds of thousands of late-delivered votes came into the counting centers from mail centers in urban precincts in Michigan and Wisconsin, pushing former Vice President Biden ahead in those states, with indications that many more pro-Biden votes may emerge in Pennsylvania over the next two days. As many pundits now favored Biden to win over 270 Electoral College votes, gold recovered to $1,910 by 8:00 am Eastern, but it appears that the election would not be finally decided until Friday or later.

In the meantime, the Republicans could be reasonably satisfied with the likelihood that they will retain a slim margin of control in the Senate and also gain a few more seats in the House of Representatives (although the Democrats will still control the overall House). This all goes to show that you can’t count your chickens before they’re hatched – as happened with so many in the 2016 election, when pundits bid the price of gold and stocks up and down overnight, based on minute-to-minute trading waves.

When we know the outcome with more certainty (probably next week), we’ll update you with our investment outlook based on the likely outlook for Congress and the White House next year.

Silver and Gold Still Lead the Scorecard for the First 10 months of 2020

Through the first 10 months of 2020, silver and gold are still leading the way, with the tech-heavy NASDAQ stock market index being the only other double-digit gainer on the board. In this regard, it’s a cautionary tale to recall the disputed Bush vs. Gore election of 2000, when it took five weeks to resolve the vote in Florida and thus the overall Presidential winner. The Dow and S&P 500 declined a modest 1.7% and 5.0%, respectively, then, but the high-flying NASDAQ fell 17%. At that time, gold rose about 3%. If this election is disputed for several weeks, that kind of stock market reaction could happen again.

U.S. Mint Continues to Meet Skyrocketing Gold & Silver Eagle Demand

Despite the occasional work stoppages at the U.S. Mint, due to COVID-19 risk, the total sales volume in Troy ounces for Gold and Silver American Eagle coins has eclipsed last year’s totals by at least 500% for gold for the month of October and the year-to-date, and between 70% (YTD) and 200% for October silver sales. 

 

There’s a similar trend in the American Buffalo bullion coin sales.

 

This demand is part of the reason why gold and silver continue to lead the investment scorecard for 2020, and the newer investors who enter the bullion market, the more investors will graduate into the rare coin market within one or two years. There’s something magic about the “heft” of a heavy gold or silver coin, along with the beauty of their design. Even with the newer mintages, it’s like holding a piece of American history in your hands. This causes investors to investigate the noble history of American coins.

 

 

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