Market Update: Election Hangover?

The US just voted in a Democratic incumbent, left the Senate to his party and gave the House back to the Republicans. Are we back to square one, or can we reasonably expect reverse motion away from the fiscal cliff? The markets didn’t think so last week, with gold closing up at $1,738 and silver at $32.16. As indicated last week by astute analysts, the election was a non-event for the markets, though it has made it clear that hedging in gold and silver is a very good idea. Have you talked to one of our precious metals specialists yet? It’s time to ready yourself for the likely paper burn as inflation picks up. And don’t delay: In order to back future infrastructure projects, China is expected to import a record 860 tons of gold this year. You may reach us at (800) 355-2116.

Precious metals on the move

Spot price of each metal at week’s end, and change over previous Friday:

  • Gold: $1738, up 3.2%
  • Silver: $32.16, up 0.8%
  • Platinum: $1,559, up 0.5%
  • Palladium: $612, up 0.7%

In the news

It’s the fiscal cliff, stupid!
“Going headlong off the [fiscal] cliff risks a U.S. recession and a flight to safety which will likely drive gold higher.” — Paul Herber, Forward Commodity Long/Short Strategy Fund (link)

Gold pries open the doors of the Indian Stock Exchange in time for Dahnteras; coin merchants ready for a 20% surge in sales
“All the signs are there. We recommend to our customers, if one has to buy, it has to be now, otherwise prices will rise further.” — Santosh Mehta, Santosh Jewels (link)

QEternity may need to be as large as $600 billion
“It’s going to take a long time for unemployment to come down and growth to really pick up. A policy tool with uncertain effects should not be discarded. Conducting monetary policy always involves striking the right balance between the benefits and risks of a policy action.” — John Williams, Federal Reserve Bank of San Francisco President (link)

With the confirmation of the US election, gold is set to surge in value
“I do think when the (gold) market is ready, and I think it’s setting up to be ready, it’s not just going to creep higher. It’s going to go through these resistance levels the technicians talk about with a great deal of power. I would say the things that have been driving gold are still intact. At the end of the day, the conditions we had going into the election are reinforced. So I would say from gold’s point of view, all systems continue to be go.” — John Hathaway, Tocqueville Gold Fund (link)

Spotlight on Silver

What You Need To Know About The Coming Gold & Silver Move
“If there is one investment that can possibly rival gold, it’s silver. People don’t realize this, but at some point governments may say to their people, ‘We need the silver and you have to stop buying it.’ When that point comes, silver is likely to be at $150 to $200. So there is still a lot of room in the silver market.” — Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management (link)

The week ahead

  • The White House tries to move economic policy forward, er, backward away from the fiscal cliff
  • EU finance ministers to sign off on new loans for Greece?
  • Economic data releases due for retail sales, producer price index and consumer price index
  • Gold mines in Southern Sudan and South Africa opening/re-opening
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