Gold and silver are now in a perfect storm scenario

Sadly, the events that began in March when the Covid-19 epidemic officially became a global pandemic has led to the current state of the economy. Actions by the Federal Reserve and the U.S. Treasury have resulted in a perfect storm of events that have taken gold to its highest price ever in August 2020.

The fundamental events that have led to the series of massive rallies in gold and silver are still very much with us. The announcement that multiple pharmaceutical companies have completed their third stage trials and are now being granted emergency use by the FDA could not have come soon enough.

However, the timeline for the vaccines to become available to the general public is still many months away. This means that the economic contraction which has affected millions of Americans leaving them unemployed, and the millions of Americans that we're able to stay in their homes due to the moratorium on eviction are still in an extremely fragile and tenuous situation.

It is for these reasons that the current proposal of a financial aid package costing approximately $748 billion is almost certain to pass both the House and Senate and be enacted before the end of the year. Once the proposal has been voted upon and passed it will address extending the unemployment benefits to those who would face additional hardship as their benefits were set to expire on December 26. It will also extend the eviction moratorium set to expire on December 31.

For the first time since the pandemic began global citizens have hope as they can see a conclusion to the most devastating virus, the world has known since the Spanish flu. However, this light at the end of the tunnel although visible is still 3 to 6 months away.

Globally to date over 74 million individuals have contracted the virus, and the world has lost over 1.6 million souls. The most recent data indicates that the last few weeks have produced the largest daily death toll since the pandemic began. On Wednesday of last week, the United States reached the highest daily death toll of this crisis when over 3,000 people had died in a single day with their deaths directly attributable to the virus. ICU beds in hospitals across the country are filled to the highest level since the pandemic began. According to Dr. Fauci, the central federal architect of the virus response has warned us that daily infections will continue to rise until the vaccine is available to the general public.

This means that the fundamentals which have been at the root of recent gains throughout the year in gold remain fully intact at least until the beginning of the second quarter of 2021. More alarming is the fact that once the vaccine is available and enough individuals have created a herd immunity, the economic fallout that will occur will continue to grow, and the financial repercussions that this will cause will continue.

This is why I believe that we currently have a perfect storm scenario in which gold pricing will continue to rise, and over 2021 will trade to a new record high, as the U.S. dollar’s value will continue to diminish.

Wishing you as always, good trading and good health,