Bipartisan stimulus package framework could be completed this weekend | The Gold Forecast

Bipartisan stimulus package framework could be completed this weekend

December 2, 2020 - 7:03pm

 by Gary Wagner

In the words of the famous author Mark Twain, “If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re misinformed.”

These words seem to resonate in regards to the current news about the ongoing negotiations to come up with a fiscal stimulus proposal that will be palatable to both sides of the political fence. If you have been following the current news, although you might be not be misinformed, you are certainly uninformed or unaware of the outcome.

There are three proposals currently being considered. One a bipartisan $908 billion coronavirus relief package, this proposal is being considered in conjunction with two partisan proposals. One of which is being put forward by McConnell as the White House’s bid, and lastly a Democratic proposal supported by House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer.

Currently, both Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell are supportive of the bipartisan proposal. Chairman Powell speaking at a Senate banking committee hearing said, “I look forward to reviewing with you the overall package. I do think that more fiscal response is needed.”

However, even though Treasury Secretary Mnuchin supports the bipartisan bill his caveat was whether or not President Trump would be on board, saying that President Trump would sign a narrower relief plan proposed by McConnell.

As reported by CBS News, “The president will sign the McConnell proposal he put forward yesterday, and we look forward to making progress on that, Mnuchin said at the Capitol before a hearing before a House committee.”

Given that House Speaker Pelosi and Treasury Secretary Mnuchin have been deadlocked and at a stalemate unable to put a proposal together that both sides will agree upon. The upside is that they have resumed talks this week, this began with a telephone call between the two yesterday.

Even though it is unclear if a fiscal stimulus package can be agreed upon and enacted soon, it has created extreme optimism that the possibility of additional and greatly needed stimulus will be forthcoming this month. This optimism has led to extremely strong gains in gold yesterday, followed by moderate gains today.

As of 4:51 PM EST, the most active February gold futures contract is up to $15.70 and is currently fixed at $1834.60. Considering that on Monday gold traded to an intraday low of $1757, the last three trading days have resulted in gold gaining approximately $80. The primary question being asked by investors and market participants is whether or not we have seen the lows in gold, and if higher pricing is forthcoming. On a technical basis, a strong case can be made that the lows achieved on Monday, followed by the sharp rises yesterday, and moderate rise today suggest that we should see gold move higher. However, we must acknowledge recent gains have been headline-driven.

Lastly, the government will run out of money on October 11 if no stopgap budget proposal is enacted. This suggests that if a fiscal stimulus proposal can be agreed upon it will be somehow tied into the pending legislation needed to keep the government open.

We continue to be cautiously optimistic and truly hope both sides can agree and implement a round of fiscal stimulus that is so greatly needed in a timely manner.

Wishing you as always, good trading and good health,

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

All traders should be long gold and silver. North American traders who bought at the open in New York entered at $1830

  • Buy February Gold Futures at the market (currently at $1843) and place stop at $1795]
  • Buy XAUUSD at the market (currently at $1841) and place stop at $1792]
  • Buy March Silver Futures at the market (currently at $24.29) and place stop at $23.40
  • Buy GLD when the market opens in morning (currently at $171.50) and place stop at $168
  • Buy SLV when the market opens in morning (currently at $22.30) and place stop at $21.30

Long December gold at $1899. Stop hit at $1918, for a $1900 profit
Long forex gold at $1896.00. Stop hit at $1912, for a $1600 profit
Long December silver at $24.21. Stop hit at $25.07 for a $4300 profit
Long GLD at $180.46 and stop hit at $176.42 for a loss of $4.04 per share
Long SLV at $23.23 and stop at $22.78 for a loss of $0.40 per share
Long December Gold Futures at $1926 and stop hit at $1907.30 for a loss of $19.70 per ounce
Long Forex Gold at $1922 and stop hit at $1903 for a loss of $19.00 per ounce
Long December Silver Futures at $25.13 and stop hit at $24.73 for a loss of $0.40 per ounce
Long December gold at $1890, out at $1909.30 for a profit of $1,930.00
Long December silver at $23.95, out at $24.50 for a profit of $2,750.00
Long Forex gold at $1883.68, out $1907 for a profit of $23.32 per ounce
Long GLD ETF at $178.03, out at $179.80 for a profit of $1.77 per share
Long SLV ETF at $22.66, out at $22.03 for a loss of $0.63 per share
Long December Silver (SI Z20) @ $27.07 - Stop hit @ 25.56 for a loss of $1.51 per ounce
Long GLD @ $183.91- stop hit @ $178.50 for a loss of $5.41 per share
Long SLV @ $ 26.33 - stop hit @ $23.53 for a loss of $2.80 per share
Long December gold (GC Z20) @ $1947.00 - Stop hit @ $1952 for a profit of $500.00 per contract
Long Forex gold (XAU A0-FX) @ $1939.00 - Stop hit @ $1944.80 for a profit of $5.80 per ounce
Long December gold @ $1956.50.Stop hit @ $1960 for a profit of $350.00 per contract
Long December silver @ $27.39.Stop hit @ $27.80 for a profit of $2050 per contract
Long forex gold @ $1948.55.Stop hit @ $1955 for a profit of $6.45 per ounce
Long GLD @ $183.57.Stop hit @ $184.36 for a profit of .79 per share
Long SLV @ $25.10.Stop hit @ $25.75 for a profit of .65 per share
Long September silver at $26.68. Our stop was hit @ $26.87 for a profit of $1000 per contract.
Long December Gold at $1955.50. Our stop was hit @ $1979 for a profit of $2350 per contract
Long Forex Gold at $1947. Our stop was hit @ $1967,52 for a profit of $20.52 per Ounce
Long September silver at $24.40. Our stop was hit @ $25.99 for a profit of $7950 per contract
Bought GLD @ $166.74. Our stop was hit @ $$183.00 for a profit of $16.87 per share.
Bought SLV @ $18.00 Our stop was hit @ $23.80 for a profit of $5.80 per share.
NUGT – we sold all shares and took profits of $33.19 per share
Long December gold at $1997, we covered the trade @ $2035 for a profit of $3800 per contract
Long Forex gold at $1977, we covered the trade @ $2017 for a profit of $40.00 per ounce

Gold Market Forecast

As we have spoken about over the last few weeks it will take nothing less than the passing of an additional round of fiscal stimulus to really take gold from bearish mode to bullish mode. This is the type of fundamental event that most definitely will greatly affect market sentiment.

The question is whether or not the powers that be will be able to come to a compromise and create a bipartisan aid package that can be passed and enacted. Today it seems they are making even more headway. However we are waiting for more clarity if a stimulus bill will be passed before the end of the year. This is why we waited to issue a buy signal in gold and silver futures.

My concern remains that this optimism is based on a potential and not in actuality. As such should the talks break down, and ended in stalemate as they did two months ago we can expect any short-term gains in both precious metals to quickly erode.

If or when we get the news that it is highly likely that any package is forthcoming in a timely manner we will issue a trade alert that will be sent out via email as well as SMS text message. We will issue a TRADE ALERT to begin buying the ETF's GLD and SLV when the market opens in the morning.

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