One of the frustrating things for investors, and particularly precious metals investors, is seeing prices that you know should go through the roof remain stagnant instead. Gold investors who have a long-term view of the market know that gold has made great strides already, but they know that it also has significantly more potential for future growth. Investors who have recently purchased gold also likely did so because they believe that gold is going to make great gains in the near future. So the current trend of gold trading in a narrow band around $1,900 an ounce is frustrating to watch.
When will the big breakout occur? We all know it’s going to happen at some point. When gold reached close to $2,100 this summer, breaking its all-time high, everyone thought it was going to continue climbing. But the recent retrenchment has some investors second-guessing themselves.
Thankfully, many investors realize that the current gold price steadiness is likely just a temporary pause before gold continues to climb again. And it’s due to two major factors.
Unease About the Presidential Election
The big thing on people’s minds today is the election in November. With the White House and Senate up for grabs, the election outcome could play a huge role in how markets react the rest of the year.
There’s no denying that Wall Street has been pretty happy with President Trump and his tax policy. And with the rhetoric coming from the Biden camp about higher taxes on the rich, financial transaction taxes, etc., a Biden win plus a Democratic takeover of the Senate could result in markets taking a nosedive, fearful of heightened taxation and regulation and a less business-friendly political climate.
That’s causing markets in general to kind of sit back and wait and see who wins the election. A Trump win would mean business as usual, while a Biden victory might call for a change in strategy. But with only a few weeks before the election, many are holding their cards close to the vest.
Even after the election, it could be awhile before we find out who the winner is. With an election this hotly contested, expect litigation, court fights, and any manner of dirty tricks. Until we find an undisputed winner, it could be some weeks before markets are able to fully react to the consequences of the election.
Uncertainty About Future Stimulus
Will they do it or won’t they? The government has been discussing stimulus packages for months, with President Trump, Senate Republicans, and House Democrats floating various plans. But like much else in Washington, any potential stimulus package has been held hostage by the November election.
Normally any controversial or semi-controversial legislation needs to be finished before the beginning of July in an election year, so the fact that there’s even discussion of stimulus is unusal. But with this year being so far out of the norm, that’s not entirely surprising.
The last stimulus package was a $3 trillion monster that had to be 100% funded with new debt issuance, causing a massive increase in the national debt. And any further stimulus package will similarly cause a spike in the national debt, potentially pushing it to over $30 trillion as soon as next year. Once again, we’ll likely have to wait to see until after the election to see what Congress comes up with.
A large stimulus package, while it would be welcomed by Wall Street, would likely also be bullish for gold prices. Not only would it mean more money flowing into financial markets, and thus potentially more money for savvy investors to spend on gold, it would also be an indicator that the economy remains weak. Further stimulus packages would serve to reinforce that notion.
Since one of the primary reasons many investors are moving into gold today is to protect themselves against a weak economy and a potential financial crisis, more stimulus should mean a higher gold price. But first Congress has to act.
If Congress continues its political posturing and doesn’t make a decision on stimulus one way or another, it risks waiting until the economy really starts to crash before it passes another stimulus package. And that too could end up boosting the gold price, as a weakening economy and crashing stock market will have investors fleeing toward the safety and security of the yellow metal.
Why Wait to Invest in Gold?
While other investors may be waiting to see who wins in November or what Congress does on stimulus before making their investment decisions, why should you continue waiting? Waiting until the economy weakens or until Congress passes a major stimulus package just means that by the time you start buying gold, the price may have increased.
Right now gold is trading in a fairly stable range, but that could change very quickly. Why miss out on potential gains by waiting too long?
With a gold IRA, you can roll over or transfer assets from existing retirement accounts with relative ease. That allows you to lock in the gains you’ve made in your current retirement accounts, move funds into a new gold IRA, and invest in physical gold coins and bars. Doing so gives you the ability to benefit from the wealth protection gold offers, the price growth potential it gives, and the same tax benefits as any other tax-advantaged retirement account.
So what are you waiting for? By the time you know the election results for certain and know which way the country is headed, so does everyone else, and that means gold prices may already start rising before you have a chance to invest. Don’t miss out on the opportunity to invest in gold before prices rise again. Contact Goldco today to start putting gold to work in protecting your retirement savings.