The Days Ahead

23 Sep

The Days Ahead

“Fasten your seatbelts!” 

“Please keep your hands and arms inside the monorail at all times.”

“Should the cabin lose pressure, oxygen masks will drop from the overhead area. Please place the mask over your own mouth and nose before assisting others.”

Okay, we’re just trying to set the tone for the next couple of months.  There’s some bad road between now and the end of the year.  That’s because the American divide is as sharp as ever.

  • There will be a bruising battle over the Supreme Court vacancy, one that could very well make the confirmation of Justices Thomas and Kavanagh look tame.  Commentator Glenn Harlan Reynolds wrote in USA Today this week that “When your political system can be thrown into hysteria by something as predictable as the death of an octogenarian with advanced cancer, there’s something wrong with your political system.”
  • Already hordes of lawyers, protestors and ruffians are lining up in precincts and states across the land to drag out the presidential election.  Those who remember the 2000 Bush-Gore contest know that the presidency isn’t necessarily decided on election day. To say that we could face a Constitutional crisis is to understate a grim outlook.
  • We haven’t seen the end of the “mostly peaceful protests,” and uncontained street violence in our major cities, and expect them to continue for some time.  Postal workers in Chicago where mail carriers have been shot are threatening to stop mail deliveries.  “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds,”  but barbarians can even stop the mail.
  • Battle lines have been drawn in the Covid lockdown divide, and at least in some places, things are about to come to blows. Notice for example that in England the military is being call in to help enforce lockdown restrictions.

And then there are the economic issues, unknowns about the recovery and knowns about the mushrooming debt and the rampaging Federal Reserve. 

Our point is this: troubled times makes gold more desirable.  They make the price go higher.

Watching the dollar bounce higher has created a correction in precious metals prices, and an opportunity to buy at prices from a few months back.  But the dollar bounce has done nothing alter the fundamentals of deficits and debt.  And it will not ease the social conditions that threaten us.  

We’ll leave you with a few recent price forecasts, none of which explicitly take into consideration highly volatile social conditions in the US.

Last week we told you about the forecast from a senior Bloomberg Intelligence Commodity Strategist who expect to see gold at $7,000 by 2020.

Mike McGlone says that gold in on an even more sound footing for higher prices that it was “at the onset of the 2001-11 and post-financial-crisis bull markets.”

As a friend reacted to the forecast. “That’s more than a thousand dollars a year” in gains.

That’s right.

Another observer, Yeoh Choo Guan, UBS head of Asean Global markets, sees gold trading between $1,850 and $2,100 next year.  Despite the perhaps intentionally understated forecast, Yeoh said on CNBC, “We are very bullish on gold. We think that the prices will go higher and what is interesting is we think it will stay higher for longer than expected.”

Finally a longer term and higher price projection.  Charlie Morris is an investment manager at UK-based Atlantic House Fund Management.  He sees a combination of interest rate and inflation factors driving gold to $7,345 by 2030, with a market performance similar to the inflationary 1970s.