DAILY MARKET REPORT
Gold drifted marginally lower in advance of today’s FOMC results to be announced later in the day. Following that announcement, we should get a read on gold’s true intentions – up, down or sideways. As it is, gold is $1 lower at $1225. Silver is down 11¢ at $14.46.
The markets, it appears, are still sorting out how the elections might affect the economy. The one immediate development that stands out on the economic front, though, is Trump/McConnell’s reach across the political divide on the possibility of a bipartisan infrastructure bill. Though the bulk of Americans might agree that such a program would be good for the country, the downside would be adding even more fiscal stimulus to an already strong economy leaning towards inflation. If one thing stands out from this election it is that neither side is interested in anything approaching genuine fiscal discipline.
Quote of the Day
“The best thing is, don’t play the game, because it is pros against you. We spend hundreds of millions of dollars a year to get an edge, and others do that too. So it’s very difficult for the individual investor to assume that he [or she] can pick something better. The best thing you can do is know how to have a balanced portfolio … because you ain’t going to win that game.” – Ray Dalio, Bridgewater Associates, speaking at the Harvard Kennedy School’s Institute of Politics
Chart of the Day
Chart note: Gold gets its share of press, not all of it good. In recent months, the financial media has hammered away at the mistaken notion that gold does not do well in a rising interest rate environment. Nothing could be further from the truth as revealed in our Chart of the Day. Since the Fed started raising interest rates in late 2015, gold has been in a sustained uptrend punctuated with bouts of weakness. The Fed funds rate has gone from .12% in November 2015 to 2.25% now. Gold simultaneously has gone from $1062 to $1225 for a gain of 15% – even at the current lows – during the initial stages of this rate raising period.