Goldman Sachs Likes Silver; Trump Wants Even More Stimulus / Commodities / Gold & Silver 2020
Gold and silver marketsslumped this week as stimulus talks faltered again in Washington.
Even though the White House upped its offer to $1.8trillion, House Speaker Nancy Pelosi refused it – not wanting to give PresidentTrump any kind of political victory ahead of the election.
Meanwhile, the President continues to campaign forstimulus. He is bucking Senate Republicans by offering to go even higher than$1.8 trillion.
Here’s what President Trump told Stuart Varney of FoxBusiness on Thursday:
Stuart Varney: You don't expect a phonecall from Speaker Pelosi, but you would go higher. How much higher would yougo? How much higher would you go?
President Trump: Yeah, I would, and the Republicans will too, because we likestimulus, we want stimulus, and we think we should have stimulus because it wasChina's fault. It was not the American workers' fault or the American people.
Stuart Varney: If you want to up youroffer above $1.8 trillion, what would that extra money go to?
President Trump: It would go to the worker. It would go to the people, directly tothe people so they can live nicely and their lives won't be shattered becauseof China.
Stuart Varney: Okay. Have you told theSecretary Mnuchin to get out there and offer more than $1.8 trillion?
President Trump: I've told him. So far, he hasn't come home with the bacon.
Even if an agreement were suddenly reached to bring homethe bacon, it would be nearly impossible this late into the calendar foradditional relief payments to arrive in Americans’ pockets before they go tovote.
Perhaps that will clear the way for a deal to be reached.It’s a near certainty that more stimulus will be coming sooner or later, oneway or the other.
A case can be made that sending cash directly to millionsof Americans is a fairer and more efficient way of artificially stimulating theeconomy than other alternatives. Feeding stimulus through a labyrinth ofprograms run by federal and state bureaucrats will inevitably produce waste andcorruption as a byproduct. Alternatively, having the central bank pick winnersand losers by buying up certain types of financial assets would inevitablyfavor Wall Street over Main Street.
Of course, “free money” however doled out isn’t withoutcost. The national debt recently topped $27 trillion. That represents anobligation of $216,000 per taxpayer.
It also represents a massive amount of future inflationif policymakers wish to keep kicking the can down the road and putting off theday of reckoning for unpayable debts.
On Wednesday, the Labor Department reported the producerprice index rose in September by 0.4%. That was a bigger increase thaneconomists had been expecting. Food costs surged by 1.2% for the month. Thatmeans struggling consumers can expect to pay more for groceries.
This week, though, the U.S. dollar strengthened versusforeign currencies. Gridlock over stimulus is producing de facto fiscalrestraint in Washington, however unintentional and temporary it may be.
A rising U.S. Dollar Index put downward pressure onprecious metals prices through Thursday’s close.
Will metals markets rally as the election draws nearer?Many analysts think so.
Goldman Sachs recently released a report painting a bullishpicture for silver in particular. Goldman strategists believe the “risks areskewed toward dollar weakness” with a possible blue wave in November.
A Biden win and a Democrat takeover of the Senate wouldclear the way for unimpeded spending. Every item on the left’s wish list wouldbe able to get rammed through with only token opposition from Republicans.
Of course, Democrats now risk being overconfident aboutJoe Biden’s apparent lead in the national polls. The election will bedetermined state by state, and Donald Trump seems to remain competitive in thekey battleground states he won last time around.
In 2016, most pollsters completely missed Trump’s hiddenstrength in states like Pennsylvania, Michigan, and Wisconsin. He could affordto lose two of those three this time around and still be able to recreate awinning electoral map by hanging on to all the other states he previously won.
Trump’s poll numbers may have hit bottom around the timehe announced he had contracted COVID. If so, then the race can be expected totighten.
And if it’s still too close to call after election dayamid chaos and controversy surrounding mailed-in ballots, then marketvolatility can be expected to heighten.
Investors would be wise to brace for uncertainty andcover their bases. One of the most important bases to cover is holding physicalprecious metals outside of the financial system.
By Mike Gleason
Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.
© 2020 Mike Gleason - All Rights Reserved
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