Gold inches higher as 2020 grinds to a close; gold up 5.7% in December, silver 16%, DJIA 2.7% (!)

(USAGOLD – 12/30/2020) – Gold inched higher in quiet year-end trading, responding for the most part to a weaker dollar. It is up $4 at $1885.50. Silver is up 10¢ at $26.40. As 2020 grinds to a close and media emphasis remains riveted on stocks, gold is up 5.7% in December and silver is up 16%. The Dow Jones Industrial Average, for reference purposes, is up 2.7%(!). Please see our Chart of the Day below.

Through much of 2020, the Federal Reserve has gone studiously about the business of deploying QE4 – a policy many see as having done the lion’s share of work pulling the economy and markets from disaster’s edge. Two of the most pressing issues markets will need to sort out in 2021 is how the latest round of quantitative easing will play out in the economy, and the effect on financial markets, including precious metals. The speculation will undoubtedly add an interesting twist to the annual flood of year-end reviews and new year forecasts.

“[I]nstruments such as inflation swaps have started to rally,” says analyst Mike O’Sullivan in a Forbes article posted yesterday, “and if anything the market risk here is that central bankers regard a long overdue pick up in inflation as ‘a good thing’, do not adjust policy to it and thereby spur an ‘inflation trade’ in commodities, cyclical equities but that sees an accelerating move out of bonds. 2021 might be the first time in over a decade when inflation forecasters may get what they wish for.”

Chart of the Day

overlay chart showing percentage gains for gold silver and stocks for December 2020

Chart courtesy of • • • Click to enlarge

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