Hurdles remain for a fiscal stimulus bill to pass | The Gold Forecast

Hurdles remain for a fiscal stimulus bill to pass

October 20, 2020 - 7:37pm

 by Gary Wagner

Although the House, Senate and White House are working feverishly to come to an agreement and pass fiscal stimulus bill before the election, it seems that the differences are split three ways.

Yesterday House Speaker Nancy Pelosi and the U.S. Treasury Secretary Stephen Mnuchin spent 53 minutes on a telephone conversation attempting to narrow the differences and agree on a compromise. Speaker Pelosi said that she “hopes that by the end of Tuesday there will be clarity on whether a coronavirus stimulus bill can be passed before the November 3 elections.”

However today in an interview with CNBC news Mark Meadows, White House Chief of Staff said that, “We are still billions of dollars away from a fiscal stimulus bill that can be passed before the election.”

The difference between the White House, Senate and Congress is the dollar amount that will be allocated for a stimulus bill and where that money will go to. The White House proposed a stimulus bill of $1.8 trillion to help Americans and small businesses who have been greatly affected by the pandemic. While the House of Representatives have proposed a bill that will require $2.2 trillion. The third proposal is by the U.S. Senate which is been labeled the “skinny bill” will require $500 billion and fund additional stimulus checks to American taxpayers and more funding for the paycheck protection program.

Senate Democratic leader Chuck Schumer said that the Republican plan abandons state and local governments in need and has inadequate funding for unemployment benefits.

One key difference between the House of Representatives and the Senate is whether or not there should be federal funding to states which are in great need of a capital infusion. However, the Republicans view this as a “blue state bailout”.

Yesterday Nancy Pelosi said there is only a 48-hour window left to pass a fiscal stimulus bill which means that there is now only 24 hours left.

Many analysts including myself believe that a new round of fiscal stimulus will be extremely bullish for the price of gold and concurrently bearish for the U.S. dollar as the budget deficit in the United States for fiscal year 2021 begins to balloon.

As of 4:24 PM EST gold futures basis the most active December 2020 Comex contract is trading down by $2.30 and currently fixed at $1909.40.

The current price of spot gold is $1905.80 with a net gain of $2.60 on the day according to the KGX (Kitco Gold Index). On closer inspection we can see that dollar weakness today accounted for a net gain of $6.85. Market participants however bid the precious metal lower by $4.25.

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

We are currently flat with no active trades after taking profits as our stops were hit last week. However if a stimulus bill is passed that would trigger buy signals across the board in gold and silver

Trades we closed on October 13
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

Market sentiment has been isolating between bullish and bearish as market participants react to headlines as to whether or not a fiscal stimulus bill will be forthcoming prior to the presidential elections. If in fact the House, Senate and President are able to compromise and pass legislation that would help small businesses and the millions of Americans currently suffering from the economic fallout of the pandemic we could see gold and silver prices rise dramatically.

Therefore, although we will send out a trade alert if and when a stimulus bill is passed. However, this news will cause both gold and silver prices to react very quickly and recommend that subscribers initiate long positions in gold and silver futures, Forex gold, as well as the ETF’s SLV and GLD

 

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