Some Are Betting On Red, Some On Blue; I'm Betting On Gold

October 13 2020

(October 13, 2020 - Frank Holmes)

The Wall Street Journal reported on Friday that the White House is preparing a coronavirus stimulus offer valued at $1.8 trillion, despite President Trump’s earlier comment on ending negotiations. It’s been seven months since the last relief package, the CARES Act, was signed, and in that time, the number of Americans filing for jobless benefits has remained elevated.

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With the national debt now topping $27 trillion, such a package isn’t good for the government’s balance sheet, but it’s good for gold. Indeed, the yellow metal traded up as much as 1.8 percent on the news.

And I believe there’s additional upside potential—no matter who wins the election. In 22 days, millions of Americans will be betting on “red,” millions of others on “blue.” I’ll be betting on gold.

I’m far from the only one. Leon Cooperman became just the latest billionaire investor to buy gold. In a recent interview, the Omega Advisors chairman and CEO said: “I bought gold for the first time in my life a week ago. I understand the case for gold. We’re on the way to some banana republic situation. Nobody’s worrying about the debt that’s being created.”

Meanwhile, ETFs backed by physical gold climbed to a record amount last Monday, touching 111.05 million ounces. According to the World Gold Council’s (WGC) September report, global gold ETFs saw their 10th straight month of inflows last month. For the first time ever, such funds added more than 1,000 tonnes of gold so far this year, the equivalent of $55.7 billion.