Gold pushes higher as Wall Street mulls over the massive Biden borrow and spend economic program

(USAGOLD – 1/20/2021) – Gold pushed higher in early U.S. trading as Wall Street mulled over how the big-spending, debt-driven Biden economic program will play in financial markets. It is up $16 at $1858.50. Silver is up 24¢ at $25.53. Degussa’s Thorsten Polleit has some clear ideas where all of this will lead us in general and what the impact will be on one market in particular – precious metals.

“Global debt,” he writes in the firm’s January market report headlined The Great Gold and Silver Bull Market Is On, “has reached a level where it is no longer likely that central banks will allow interest rates to rise for the foreseeable future, and central banks will continue to finance government spending sprees willingly. Taken together, it does not take much to realise that the purchasing power of the US- dollar, euro, and other currencies will be further debased in what lays ahead. It is against this backdrop that we remain bullish on precious metals. We believe (and of course acknowledge the uncertainty that surrounds such a statement) that the price of gold could reach 2,450 USD/oz towards the end of 2021 (based on current prices, a 32% gain); the silver price could go up to 47 USD/oz (+87%) …” 

Chart of the Day

chart showing cycle of emotions from optimism to euphora to despondence and back eventually to optimism again

Chart note: “A speculative frenzy is sweeping Wall Street and world markets,” Bloomberg reported at the end of December. Cedric Ozazman, chief investment officer at Reyl & Cie in Geneva, commented at the time that “sentiment indicators are moving to euphoria.” Things have gotten even more frenetic since. In that same article, Bloomberg pointed out that global stocks are now worth $100 trillion and that “some $3 trillion of corporate bonds are trading with negative yields.”

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