While it is not the best of time for some, it is the worst of times for many
While it may not be the best of times for the upper working class of America, it is certainly not the worst of times as it is for the millions of Americans that are out of work. Those living paycheck to paycheck who have jobs, and for those who have lost their jobs and are facing the end of this current round of aid from the “Care Act” at the end of this week, life is extremely difficult at best.
This is not to say that the that those financially well-off Americans who have invested in U.S. equities are not watching their portfolios grow. But it is also not to say that those most affected by the economic shutdown as a net result of the pandemic are not dealing with a tremendous level of stress wondering how they will make next month’s rent or mortgage payment, let alone feed their families.
Without the Congress and Senate allotting additional aid for those truly in need, the beginning of next month will be filled with uncertainty and despair. It is for that reason that the powers that be in both the House and Senate must act in some bipartisan manner to aid those facing evictions or foreclosures.
That being said the additional expenditures will result in billions if not trillions in additional aid which will greatly increase the already swelling budget deficit. The additional expenditures will raise the national debt level to one of the greatest levels in history, and as such continue to devalue the dollar.
A lower U.S. dollar and continued action by the Federal Reserve will most certainly provide tailwinds which will take the safe haven asset class higher, specifically gold and silver.
Today gold traded to a new all-time record high against the U.S. dollar. Gold has been at all-time record highs when paired against other major currencies such as the Euro dollar. Based upon the current economic contraction brought about by the pandemic, it seems that it is likely that gold and silver prices will continue to rise. That is not to say that there won’t be corrections along the way, however the path to $2000 an ounce gold seems to be etched in stone at this point.
As of 4:09 PM EDT spot or physical gold is currently trading up $37 plus, and fixed at approximately $1938 per ounce. The next contract month become the most active gold futures contract is the October 2020 contract which is currently fixed at $1944, up $33.90 on the day. Silver basis the most active September contract is up by 7.44%, or a $1.70 per ounce and fixed at $24.55.
Even as U.S. equities continue to rise investors are becoming more and more focused upon the fact that the coronavirus pandemic is still affecting hundreds of thousands of individuals worldwide. This pandemic if left unchecked could at some point threatened to raise the potential for another series of lockdowns further contracting the economy.
This potential for further lockdowns if realized could certainly have a profound and negative influence on U.S. equities, and make the safe haven asset class even more attractive than it is now.
Wishing you as always good trading and good health,
This report is now free and publicly available to everyone
Gold Forecast: Proper Action
Yesterday, July 26 we sent out this -Trade Alert: Buy October Gold @ the market. Buy GC V20 (October gold) at the market – current $1924.30 . Place stop at $1870
Forex @ $1915 Buy @ market stop @ $1860
Maintain long GLD SLV NUGT
Maintain long gold (Futures and Forex) Maintain stops.
Gold Market Forecast
Since mid-March of this year we have seen gold prices rise dramatically from approximately $1450 to its current pricing well above $1900 per ounce. At the end of this month the aid that was given to those individuals who have lost their livelihood will run out. Without additional aid that needs to be passed by the House and Senate these individuals will be caught between a rock and a hard place. Many will face eviction, some may even face foreclosure if no aid is passed over the next few months.
This of course means that there will be additional expenditures by the government to help these individuals in need. That coupled with the current monetary policy of the Federal Reserve will take an already historically high debt level in the United States even higher. As such we could easily see gold move to $2000 and above.