The Only Market Winners Of This Presidential Election Are...
Chris Vermeulen | Nov 13, 2016 12:57AM ET
HSBC is projecting gold to rise to $1,500 an ounce, since the ‘real-estate magnate’ triumphed up from behind in the election results. It is protection against everything!
The U.S. Debt-to-GDP ratio is 125% and will be growing. ‘Main Street America’ has been told that these are measures required to stimulate economic activity, to prevent crises, increase employment, and soothe the financial markets.
There are those who believe that we can keep spending money that is not generated from economic growth by continued borrowing. This “mindset” believes that the debt does not have to be re-paid. It is this mentality that will make gold soar to new unprecedented highs.
The Congressional Budget Office is showing that the interest on our current debt is about $250 billion for fiscal 2016. These annual interest payments will be growing to over $800 billion in less than 10 years. We are on an “unsustainable” path.
President Elect- Trump has promised more spending. The budget deficit will probably balloon by at least $450 billion. The key part of Trump’s platform is massive deficit spending on infrastructure and a lot of pro-growth policies Then comes jobs.
There is a better chance that governments could coordinate their timing on a spending plan after the German and French elections in 2017.
While Helicopter money (fiscal stimulus) is not the “sea of cornucopia” to our financial woes, it could complement the ongoing easy monetary policy and potentially generate some real economic growth. In a good scenario, it could help to normalize interest rates. Fiscal expansion could allow the Fed to raise interest rates. Vice-chairman Stanley Fischer has suggested that every one percentage point of GDP growth would allow rate rises of 50 basis points.
Global Central Banks will need to continue to purchase their own bonds otherwise, yields will need to rise to attract more investors into the market to purchase up the additional supply.
The clearest message sent by President-Elect Donald Trump was delivered in his election victory speech, a focus on greater infrastructure spending in the U.S. Goldman Sachs Group Inc. analysts said in a Nov. 9th, 2016 report. “Without specific details, it is hard to quantify the impact on commodity demand, however, such policies would support steel, iron ore, zinc, nickel, diesel, and cement.”
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This week I locked in spur investors’ dash for cash . The real direction of the market’s next move is the most important.
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There will continue to be sharp price swings in all markets, especially precious metals and currencies, usually up at first and then down towards the end. However, when one begins the other ends. It will be fireworks that last at least a couple of weeks if not longer.
Famous investor, Jim Rogers, calls the US dollar ‘the most flawed currency’. The yen is a ticking time bomb, considering the unmanageable debt of Japan and the actions of the Swiss Central Banks led to large bankruptcies in January, 2015.
This brings us to the final safe haven which has stood the test of time; Gold. It has maintained its value during the last five-thousand years and the current rise in gold during the market collapse is proof that its’ safe haven status is intact. Imagine how high gold will go when the real crisis hits the world economies. Gold is money.
Everybody I talk to are holding unprecedented cash positions, they are scared and do not know what to do. So, they believe the only way out right now is to play the stock market. This is an ‘illusion’ as all hope in a new bull market will not be realized. We have just experienced the second largest bull market in history.
How high can gold go? I believe it can go as high as $5000/oz. during a full-blown financial crisis. With a limited downside risk and huge profit potential, readers should accumulate gold. In fact, with this week’s start of the 5th and final leg down in mining stocks we should have a great opportunity to get long metals and miners shortly.
I will inform my subscribers about the next asset class that will go up, as and when I see a pattern developing. I have advised many times that one wants to set aside cash for future investments as a reserve for liquidity and buying in volatile markets.
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