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Auguries Gold ♥ Obama


November 9, 2012

gold, obama, bernake

Obama and Bernanke: A match made in precious-metals heaven.

Gold was up (at press time) $49 (+2.9%) for the week to $1,726, and silver was up $1.37 (+4.4%) to $32.24. GoldCore argued October 7, “Obama’s election means that quantitative easing, ultra-loose monetary policies and currency debasement are set to continue in the world’s number-one economy, which is bullish for gold—and indeed silver.”

One hopes that no Auguries readers made the mistake of betting money on the Presidential prediction that appeared in this space last week. Your columnist should have read his own analysis more carefully before venturing into wish fulfilment.

Hurricane Sandy has become a government-mediated FUBAR of almost-Katrina proportions. After running out of water, FEMA has now fled the scene due to “weather.” Yet an NBC exit poll shows that 68% of Obama voters agreed that “Obama’s hurricane response” was an important factor in their decision. And the nature of his response? He showed up, looked concerned and was photographed with the Governor of New Jersey. Welcome to the United States of Reality Shows. Expect sales of bomber jackets to soar.

Blogger Vox Day, who was similarly wrong about the election, confessed, “I think it is safe to conclude that I should stick to economics and societal predictions rather than political ones. Polling clearly trumps pattern recognition with regards to the latter.” Seconded. He was wrong for the same reason as this column: “Twenty years ago, or even 10 years ago, a president who eked out 1% quarterly GDP growth (which is artificially inflated by a $1.2-trillion ‘G’ spending deficit) and jobs numbers that don’t even keep up with population growth would be doomed.” Oh, well. Obama promised “change,” and by God, he’s delivered it.

In any event, the sun will still shine; birds will still sing; and precious metals will continue to appreciate. Stocks perhaps not so much—the Dow Jones is down 434 points since Tuesday. Jim Rogers told CNBC that Obama’s triumph is “not going to be good for you, me or anybody else.” Except for one group of investors. “Today, I’m going to short more bonds, more US government bonds. I’m going to buy more commodities, both base metals and precious metals. It looks to me like money printing is going to run amok now; spending is going to run amok.”

Jonathan Ratner reports in the Financial Post November 8 that Edel Tunny of UBS concurs. “Now that roadblock [of electoral uncertainty] is removed, gold investors can refocus with more clarity and pre-position themselves ahead of the important event risks up ahead, not just of a fiscal nature but also monetary policy…. Gold could not have asked for a better outcome. Now it’s up to buyers to step up to the plate.”

At Gold-Prices.biz, Bob Kirtley sings from the same hymnal: “The so-called fiscal cliff will not be met head on; the approach will be one of extending some of the tax cuts now in place and a watered-down strategy of fiscal prudence. Budget ceilings will come and go, and the deficit will grow ever larger…. The demise of the dollar and other fiat currencies brings with it an increase in the price of hard assets.”

The chorus grows louder at the Gold Report November 7. Jeffrey Nichols, managing director of Precious Metals Advisors: “The best of all possible worlds for gold investors.” Adrian Ash of BullionVault: “Selling gold short—in anticipation of further falls—has proved a foolhardy move plenty of times in the last five years of crisis. And Obama’s second victory has so far only confirmed gold’s jump against a backdrop of everything else sinking.” Peter Cooper of Arabian Money: “With President Obama safely back in the White House, investors in precious metals can justly feel that the President’s promise that ‘The best is yet to come’ is aimed at them.” Axel Merk of Merk Investments: “The Fed’s increased emphasis on employment is here to stay. The market rewards this certainty by bidding up gold, selling off the dollar versus all major currencies.” Chris Vermeulen of the Gold and Oil Guy: “Gold looks ready for a run to $1,800.” Jack Farchy of the Financial Times: “The vote for a continuation of the status quo…could set the scene for a strong gold rally toward the end of the year, analysts and traders said.”

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