Biden vs gold.
As the mayhem of U.S election comes to fruition, with Biden building momentum, what does this mean for the price of gold?
Joe Biden edged further ahead of current president Donald Trump for the White House, gathering more votes than any US presidential candidate in history.
A Biden win could have some major implications for gold.
Expect a huge economic stimulus spending spree on areas such as health, infrastructure and other sectors, to try and boost the U.S. economy.
Higher taxes would likely be introduced to pay for all the new spending, which would most likely be targeted towards corporate companies. This could have a knock on effect by reduced profits hurting the financial markets.
The frictions between China and the U.S. are not going to go away, even with a Biden win, so expect the hostility to continue.
The FED.
The monetary policy of quantitative easing by the FED will likely have to continue in order to maintain some kind of stability in the financial markets.
The Federal Reserve will continue to keep interest rates low, as any increase in interest rates at this stage would have catastrophic financial consequences.
All this continued uncertainty and low interest rates, historically is very good for gold prices.
Stimulus.
A big economic stimulus is on the way.
With continued expansion of the U.S. dollar supply, this will add fuel to the fire and could send gold prices soaring.
The injection of large quantities of cash in U.S. dollars, is essentially making those dollars less valuable.
Gold.
As the U.S. dollar is the World’s reserve currency, it seems that the U.S. dollar is losing its appeal among investors.
Many investors are poised, checking on any news on more monetary stimulus from the U.S. federal reserve, all adding to the uncertain future of the U.S. dollar, even with a Biden win, and that makes many investors want to run to the safety of gold.
Gold is looking very likely to benefit from this current financial and political environment.
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