As the rest of the global economic community attempts to stoke inflation, extend stimulus programs, and devalue their currencies, the U.S. dollar is naturally soaring. Displaying strength, as the leader of global reserve currencies is a good thing for calming concerns and maintaining status. The problem however is the fact that it’s a short term scenario. A strong dollar that needs to stay in front of the inflation curve has to implement programs that will continue to increase interest rates causing; equity markets to struggle, foreign trade to be inhibited, and debt servicing costs to soar. Add to that the President-Elect’s plans for infrastructure repair and expansion at a time when global economies, including our own, have all but ground to a halt and you have perfect conditions to foster stagflation.
There is no doubt that gold is down from its July high this year of $1,367.20 and probably no reason to believe it couldn’t go lower still, in light of the inevitably coming interest rate hike. If you don’t already have the 5% – 15% portion of your portfolio, typically recommended by financial advisers, holding precious metals, then perhaps Christmas has come early. If you do have the typically recommended portion already set aside, but you’re concerned about the possibilities of; an IMF-sponsored One World Currency, a bursting of the equity market bubble, or a move to global digital currencies, then the safety and security gold and other precious metals are an excellent investment consideration.
The economic threats mentioned in the last paragraph are very real considerations and fiscal policies presented by the President-Elect only strengthen the case for gold. Whether gold goes up or down from here through the end of the year is a mute point, the increase in value of gold if any of those scenarios play out will be great and rapid. Trying to time the market is never a good idea, but in this particular case it could potentially be a horrible decision. Initial phases of all those scenarios are currently in the process of playing out. The only thing yet to be determined is the trigger to unleash the economic beast.
Confiscatory taxes, negative interest rates, and India’s recent dismissal of 500 and 1,000 rupee notes as legal tender are just some of the initial steps in the coming conversion to a cashless and digital economy. Corporate stock buybacks, excessive executive bonuses, and a general lack of preparation for corporate growth have the equity market completely unprepared and ill-equipped for the coming business burst being planned for by the incoming U.S. administration. All of which, makes today’s precious metal prices and availability – a Black Friday Sale not to be missed!