How will our new President impact the price of Gold & Silver<br />Mint State Gold - Weekly Market Report 10/31/16
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Gold
Silver
October 2016 CoinStats is now available
Recommended investment commitment and diversification
Gold closed last Friday at $1,276.80 per ounce, up $9.10 per ounce, but that certainly wasn’t the entire story for the week. It’s important to recap the Gold price action, and the reasons for this action.
Monday 10/24
Gold traded in a narrow range and Gold closed down $4 with no pertinent news.
Tuesday 10/25
Gold rallied $10 per ounce after news that Italian banks are on the brink of a major disaster. Italy’s debt-to-GDP ratio is now at 132%, and Italian bank’s non-performing loans are at 200 billion Euros. The worst part is these loans are considered uncollectable. Italy’s government is struggling to control its debt. In the event of a banking crisis, will the government have the ability, if allowed, to bail out their banking system or will they be forced to ask for assistance from the ECU?
Wednesday 10/26
Gold closed down $7 per ounce after it was reported by the World Gold Council that Gold consumption from India and China will be down in 2016. Although Indian and Chinese Gold demand historically has been thousands of tons annually, this year it will be down about 10%.
Thursday 10/27
Gold traded in a narrow range with Gold closing up $2.90 with no pertinent news.
Friday 10/28
In the morning, Gold was trading at $1,265 per ounce, down $4.50, and then the news hit. It was reported that FBI Director, James Comey, was reopening the Clinton email investigation and the markets went crazy. Gold jumped $20, Silver rallied $0.40, and the Dow Jones dropped over 100 points in less than 20 minutes.
Last Friday’s trading made me seriously consider how the results of this Presidential election could immediately affect the future price of precious metals. That said, I have offered three scenarios (in no particular order, based on current election polling results) that appear to be the most likely outcomes of this election. Certainly, anything is possible, but based on statistical data released by all of the major press sources; here are three scenarios for Nov 9th and the most likely predicted outcomes that would follow.
Scenario #1
Hillary Clinton wins and the Democrats take control of the Senate.
The current popular belief is that Clinton will win the popular vote by 3-5%, and receive over the 270 needed Electoral College votes. Additionally, the Democrats will carry the U.S. Senate. If this scenario becomes reality on November 9th, we should see both the Stock Market & U.S. Dollar go up, and interest rates drop. The price of Gold and Silver should trade down 1%, but, both should rally back to unchanged within days. Clinton and the Democratic Party’s agenda of economic, social, and other reforms should lead to an increase in the deficit. Gold and Silver will continue their bullish move higher.
Scenario #2
Hillary Clinton wins big, and both the House and Senate go Democratic.
On November 9th, we should see global stock markets and the U.S. Dollar skyrocket immediately. Precious metals should initially drop by as much as to 2%, but rally back within weeks. There will be a great deal of speculation on major Democratic spending programs such as reducing education debt and strengthening the military. Once Senate and House Democratic leadership have agreed on these programs, the economic stimulus programs will start taking the National Debt to over $25 trillion within three years. The price of Gold will hit $1,800 and Silver $35 by 2018.
Scenario #3
Donald Trump wins the popular vote and gets 270 electoral votes
If Scenario #3 happens, the Republicans should retain control of the House and Senate. On November 9th, the Dow Jones Industrial Average should drop over 500 points (given that higher values based on a perceived Clinton victory have already been built into DJIA prices) and the U.S. Dollar will dramatically fall in value. Gold and Silver should immediately move up over 5% on record demand. Perceived views of Wall Street, coupled with the fact that many world leaders don’t fully understand Trump’s political views at the moment, will cause some short term economic uncertainty. The combination of this economic uncertainty, the unknown, and the loss of confidence in the U.S., will result in run-away precious metal markets worldwide. Mr. Trump and Republican leadership will aggressively try to restore confidence in the Trump Presidency based on new policies they wish to implement. The price of Gold will hit $2,000 and Silver $50 by 2018.
Today: Today Gold traded within a narrow $8 high/low price range, between $1,279 and $1,271 per ounce. The U.S. 3rd quarter Gross Domestic Product (GDP) positive numbers were released late on Friday. Our economy grew by 2.9%, the fastest pace in the past two years.
Silver ended a volatile week last Friday at $17.80 per ounce, up $0.30 per ounce for the week on active trading volume. Silver is gradually working its way back to the key $18 per ounce resistance level this week. Demand for physical Silver investment items, Silver equites, and future contracts increased last week. As I stated above, the key issue to the short-term direction of Silver price is the election.
The Silver/Gold ratio has decreased to 71.75-to-1.
Today: Silver is also trading in a narrow high/low range. Silver continues to show growing demand at the current price level.
October 2016 CoinStats is now available
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Recommended Investment Commitment and Diversification:
Precious Metal commitment: Minimum of 30% of investment capital
Diversification: Gold 50%, Silver 40%, Platinum & Palladium 10%
Diversification includes 50% in long term investment quality rare coins and 50% short term bullion products.
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All statements, opinions, pricing, and ideas herein are believed to be reliable, truthful and accurate to the best of the Stuppler & Company’s knowledge at this time. Stuppler & Company disclaims and is not liable for any claims or losses which may be incurred by third parties while relying on information published herein. Individuals should not look at this publication as giving finance or investment advice or information for their individual suitability. All readers are advised to independently verify all representations made herein or by its representatives for your individual suitability before making your investment or collecting decisions.
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