Monday Morning Wrap Up – November 9, 2020
Posted onGold Soars after Historic Election
It was a long week. No matter what side of the political aisle you sit, the markets have an important message for you. Here it is:
Investors want to own gold.
Indeed, as the election results became clear, gold soared over $100 an ounce over the past seven trading days. Spot gold recently traded above the $1,950 an ounce.
Yes, there could still be many more twists and turns on the political front ahead.
Here is what we know now.
The pollsters got it wrong. Again. Terribly wrong. There was no Biden blowout. No massive Blue Wave.
Nonetheless, at the end of a very long week, it became clear that Democratic contender Joe Biden earned 290 Electoral College votes – more than the 270 needed to win the presidency.
What’s next?
Trump has not conceded. He is casting a wide legal net to contest the results.
The Trump team is pursuing an aggressive legal strategy to dispute the vote with lawsuits in Michigan, a call for a recount in Wisconsin, and an attempt to invalidate ballots in Georgia and Pennsylvania.
Nancy Pelosi will control a smaller majority in the House of Representatives. Democrats lost at least 7 seats in last week’s battle.
Republicans will likely maintain control of the Senate. However, there are two run-off races that could sway the results. All eyes are now on Georgia with two open Senate seats that will go to a run-off race on January 5th.
Stock market embraces idea of divided government. The stock market climbed last week, rallying on expectations that our country will have a Republican Senate and a Biden presidency. Stock investors bought into the idea that divided government could mean no tax increases and a limit to curbs on the business regulatory environment.
We are in uncharted political territory.
Even though the election has been called for Joe Biden, many experts expect a period of uncertainty as votes are recounted and lawsuits begin to work their way through the courts.
The political situation remains combustible with potential for civil unrest. Over the weekend, Trump supporters amassed in the capitals of Pennsylvania and Michigan waving flags and signs claiming ballot fraud and blaming the media.
This period of uncertainty will be especially positive for gold as a safe-haven asset.
Looking ahead…
How to prepare your portfolio for the next four years.
A Biden presidency will mean more stimulus, larger federal deficits and more inflation. That is bullish for gold.
Soon, the stock market focus will return to the fast-spreading coronavirus and its impact on the economy. Expect this stock rally to be short-lived.
In fact, the COVID third wave in the United States continues to get worse. The U.S. set a new record high of 125,000 cases in one day last week. The U.S. is closing in fast on 10 million cases, with the count at 9.8 million on Sunday, according to Johns Hopkins University.
The Fed remains impotent.
While the Federal Reserve met last week, the central bank is out of bullets. Interest rates are at zero already. They left policy unchanged and have pledged to keep interest rates at zero percent for years.
The U.S. economy remains hostage to the coronavirus – and until the virus is under control, the economy can’t get back to normal.
The new president will indeed face many challenges. There will be no magic wand to instantly solve the health crisis, the high unemployment or the massive federal debt.
The money supply will continue to climb. And gold and silver will rise as investors yearn for tangible assets. Rare coins and precious metals are proven vehicles to store, preserve and grow wealth. While much uncertainty lies ahead, all the ingredients for massive inflation have already been baked into the economy. It is only a matter of time before inflation explodes higher.
Opportunity is knocking.
There are only 72 days before a new president is inaugurated.
Act now to prepare your portfolio with an increased investment in gold and silver to prepare for the next four years.
Until next week…
David
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How The Gold Dollar Emboldened National Identity
Posted onAs the California gold rush introduced more gold into the economy the U.S. Congress resolved to design and issue a gold dollar. The decision, however, was not without detractors. The Mint director at the time, Robert Patterson, was opposed to the idea. When a bill was introduced to support the initiative, some argued that it would lead to problems like counterfeit currency, and confusion with other coins. Others, in favor of the idea, cited benefits. They advocated for the coins by explaining that they would enable currency circulation in small communities where banknotes were not used. The arguments prevailed and in 1849 the bill passed.
Chief Engraver James B. Longacre began work on the designs. He made the work of preparing the coin his singular mission. As an artist he wanted to own the entire process stating that he would “execute this work single handed.” The original piece was the profile of Liberty with a coronet with the word “Liberty” across the top. The design was simple, but elegant and earned largely positive reviews. The first production began in early May of 1849.
In time, the gold dollar rose in prominence. This outcome, however, was not due to the beauty of the design, but instead for more prosaic reasons relating to the rise of silver prices. As silver became more expensive more U.S. silver coins started to exit the country for melting. An imbalance started to occur as the value of the silver within coins was surpassing the face value of the pieces. Silver coins began to disappear and soon the gold dollar was the sole federal coin in circulation that filled the gap between the cent and the quarter eagle. These circumstances led to an increase in the minting of the gold dollar. Eventually, silver coins returned to circulation in 1853 when Congress allowed silver coins to be minted in smaller weights.
Later, the Type 2 (1854-1856) and the type 3 (1856-1889) $1 gold pieces featured Liberty as a Native American princess with a headdress in feathers. The look of these coins was inspired by the sculpture Venus Accroupie or Crouching Venus on display in Philadelphia.
Mintages eventually decreased as the 1850s passed and 1862 marked the last year in which production exceeded one million pieces. During the following year minting plummeted to less than 7,000 pieces. Over the lifetime of the coin’s minting the vast majority came from the Philadelphia Mint. Smaller portions of the total came from San Francisco, New Orleans, and Charlotte. Certain portions of the total issuance remain exceedingly rare today including the 1861-D coin of which only an estimated 1,000 were minted. Today, it is believed that no more than 60 are accounted for.
Today the coin remains a sought-after piece representing the fervor surrounding the California gold rush and the formative years of the nation’s currency system. The deep cameo finish is a powerful look that brings the beauty of the profile into contrast with the mirrored background.
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The 1936 Columbia Silver Half Dollar Commemorative
Posted onAn Early Southern Gem
After the end of the American Revolution, the state capital of South Carolina – Charleston at the time, was considered vulnerable to attack by sea, and also too far from the magnificent plantations and agricultural lands that were being developed throughout the state.
The South Carolina legislature took action.
In 1786, they named Columbia, alongside the Congaree River, the new state capital of South Carolina. This made Columbia one of the first planned cities in the country.
Fast forward 150 years.
In order to finance extensive celebrations of the 150th anniversary of the founding of Columbia in 1936, the Columbia Sesquicentennial Commission asked Congress for permission to strike commemorative coins. The Act of March 18th, 1936 authorized the striking of a commemorative silver half dollar. However, the celebration which took place March 22-29, 1936, began less than a week after the passage of the commemorative coin bill. That meant no silver half dollars would be on sale at the event for the fairgoers.
Indeed, this classic U.S. commemorative coin has a unique claim to fame. It was, in fact, the first commemorative coin to be authorized in 1936, but it was the last to be distributed.
The Sesquicentennial Commission chose a local artist – sculptor A. Wolfe Davidson from Colombia’s Clemson College to design the coin. Davidson’s initial designs were rejected by the committee, which held the coin to exceedingly high standards.
In the end, the Commission of Fine Arts collaborated with the artist to make major changes to the coin design before his models were finally approved in July 1936.
The coin design.
The obverse of the coin reveals a full figure of Justice. She is flanked on the left by the Old State House and on the right the new State House, with the years 1786 and 1936 etched below. The motto LIBERTY stands above the Old State House. The coin is encircled with the inscriptions: SESQUI CENTENNIAL CELEBRATION OF THE CAPITAL and COLUMBIA SOUTH CAROLINA.
The reverse symbolizes the strength of South Carolina’s native palmetto trees.
The state symbol – the palmetto tree dominates the reverse of the coin. The magnificent tree stands triumphantly above a broken limb of an oak. That symbolizes the rich history of the South Carolina’s strong palmetto trees – which formed the walls of Fort Moultrie in Charleston and held back gunfire of the British navy’s ships built from oak.
Around the tree, 13 stars are featured, highlighting South Carolina’s unique status as one of the original 13 colonies and states. The reverse is inscribed with E PLURIBUS UNUM, to its right IN GOD WE TRUST. The words UNITED STATES OF AMERICA and HALF DOLLAR encircle the coin.
Comprised of 90% silver and 10% copper only 9,007 of this gems were struck. These commemorative coins were apparently handled with care as many specimens have few marks or abrasions.
Monday Morning Wrap Up – November 2, 2020
Posted onCountdown to Election Day.
In a watershed event, Americans will conclude their voting in the 2020 U.S. Presidential election this Tuesday evening. A record number of early voters have already voted. And, the clock is ticking before polls will close on Tuesday evening for good.
What’s at stake? The White House, 35 Senate seats and 435 House of Representative seats are on the line.
Election officials have widely broadcast that final tallies won’t likely be available on Tuesday evening in light of mail-in ballots used during the COVID-19 health crisis. Many states, by law, are unable to begin counting mail-in ballots until the polls close on Tuesday evening, which could mean final results may not be available for several days to a week.
Gold wins no matter which party controls the White House.
Looking ahead, we use history as a guide to forecast higher gold prices ahead no matter who wins the presidential election. In fact, gold’s performance has been roughly equal under both Democratic and Republican presidencies.
“Since 1971, gold returns were 11% on average per year during Democratic presidencies and 10% during Republican ones,” the World Gold Council said.
Stocks plunge – worst one week sell-off since March.
It was a rough week last week on Wall Street.
Rising COVID-19 cases and political uncertainty drove the S&P 500 down 5.6% in only 3 days.
As the virus rages across the world and expands aggressively in the United States, Wall Street investors pulled out of stocks. With hopes of an economic stimulus package on hold for the foreseeable future, the U.S. economy faces a bleak couple of months. Stock investors know this – and that’s why they are running for cover.
The second (or third) wave is here.
COVID cases hit new all-time highs here in the U.S. last week as the health crisis expands unabated.
Several countries across Europe were forced to lock down as the virus spread again there. France made global headlines after announcing a nationwide stay-at-home order in response to the surging COVID cases and hospitalization rates there.
GDP data mostly a wash.
Gross domestic product data last week revealed the U.S. economy grew 33.1% in the third quarter.
So what.
That comes after falling 31.4% in the second quarter. The third quarter gains can largely be chalked up to the economy reopening after the spring shelter-in-place orders and the massive emergency stimulus measures passed by Congress. That stimulus money has run out. The economy must now hobble along on its own going forward.
Fed meets this week.
The Federal Reserve meets after the election this week. Expect the central bank to take a backseat to the election results, or ongoing election wrangling. There are no changes expected to the Fed’s zero interest rate policy. The Fed is “all-in” on juicing the economy with zero interest rates and massive money printing. It has already set the stage for future inflation here in the U.S. with its unprecedented actions this year – and no matter what it does going forward it will be difficult to put that genie back into the bottle.
Many black clouds on the horizon.
No matter who wins the White House, that will not instantly erase the COVID pandemic, the economic challenges, the high rate of joblessness, the historic levels of U.S. government debt, and a politically divided nation.
Whoever wins the White House will face perhaps the greatest challenges of a U.S. President ever.
In the midst of these crises on multiple fronts, what’s the world’s favorite safe haven? Gold.
Yes, gold and silver are posting double digit gains in 2020 amid market volatility, political strife, economic recession, joblessness and the worst health crisis in 100 years. Bank of America projects gold to climb to $3,000 an ounce in the months ahead.
Precious metals are acting as a haven in the current economic and political storm. No matter what happens this week, the country still faces incredible challenges ahead and the historic bull market in precious metals is just getting started. You can take that to the vault.
Until next week.
Regards,
David
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How ESG Initiatives Will Drive the Future of Gold Investing
Posted on — 1 CommentThe importance of environmental, social, and governance (ESG) issues to investors is playing an out-sized role in decision-making today. More individuals and businesses are trying to understand how their actions will impact others. An example of this phenomenon can be found in one of the least expected places: a colony of 25 rare chinchillas.
The short-haired chinchilla is an endangered species after being hunted to the brink of extinction. However, what makes this particular colony of rodents especially valuable is not just their endangered status, it’s what sits below the ground they inhabit. The colony is atop 3.5 million ounces of gold in the Salares Norte open pit mine in Chile.
Today, the mine is still in the permitting phase. The project, headed by the South African Gold Fields company, represents an $860 million investment. To move forward the project is obligated by Chilean law to relocate each of the 25 chinchillas. The latest reported figures show that Gold Fields has spent approximately $400,000 in an attempt to safely trap the animals. The expense illustrates that capturing the chinchillas and relocating them is harder than it sounds.
Chilean environmental manager Luis Ortega explains that two, non-lethal, attempts must be made to capture each rodent and each can last for a maximum of 10 days. If unsuccessful, the mining company must pause their efforts for 20 days before trying again.
Abiding by these regulations before mining begins is more than a legal requirement, it is also characteristic of business today. Consider research from FTSE Russel which found that a little over half of investors globally are implementing or evaluating ESG characteristics in their investment decisions. These investors are driven by more than a sense of responsibility to society and the planet. They are also driven by the search for annual returns.
Studies show that ESG investing strategies offer a long-term growth advantage. “Investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments,” concludes research from The Morgan Stanley Institute for Sustainable Investing. This finding makes intuitive sense because businesses that focus on sustainability prioritize renewable resources and a reduction in waste. Both of these practices reduce expenses in the long run which, in turn, improve profitability.
Another study from Harvard concluded that investing $1 in an equally weighted portfolio consisting only of high sustainability firms at the start of 1993 to the end of 2010 would out earn the same investment in a non-ESG portfolio by 46 percent.
The Gold Fields chinchilla project illustrates that gold mining operations can also abide by ESG standards. What makes ESG investing so powerful is the confluence of environmentalism, efficiency, and ethos. Businesses become more responsible to the planet while benefiting from improved use of resources while fulfilling investors’ growing need for ethics in their portfolio.
The World Gold Council has codified this movement with their “Responsible Gold Mining Principles,” which is a list of ten characteristics that, as a whole, represent responsible gold mining. These principles include things like safety and health, human rights and conflict, and working with communities. ESG-driven plans are a rare instance in which all parties benefit.
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“What Happens If…” New Supreme Court Justice Amy Coney Barrett Rules on Election Challenges
Posted on — 1 CommentWill Supreme Court Rescue Trump Presidency? 
A global pandemic, wrenching unemployment and political polarization have created one of the most uncertain presidential election environments in modern history.
In late October, polls show the presidential race tightening between President Trump and Democratic nominee Biden. The president has been casting doubt over mail-in ballots for weeks and the Republicans have been busily filing hundreds of lawsuits across the country designed to limit how mail-in ballots can be counted.
Issues like postmarks, when the ballot arrives, does the signature match, did the voter fill out the ballot correctly or did the voter move recently are all items being contested in court now – ahead of the election.
In our final election series installment we outline a potential legal battle over the results.
It’s November 4th: Day after Election
Wednesday morning November 4th, U.S. citizens wake up to the news that neither candidate yet has the required 270 Electoral College votes to determine a winner.
Thousands and thousands of mail-in ballots are still being processed and counted. In several key states across the country, mail-in ballots cannot be processed (verified) and then counted until after the polls close.
Local election systems are overwhelmed with the huge number of mail-in ballots used in 2020 due to the COVID health crisis and are working slowly through the ballots.
Supreme Court in Focus
Assuming that Amy Coney Barrett will be seated on the Supreme Court before the November 3rd presidential election – she will become the key and deciding vote in a case on mail-in ballots and who, ultimately, will become the United States President for the next four years.
A 4-4 Split Means Lower Court’s Ruling is Upheld
Without a ninth justice on the Supreme Court (which Barret will be) – any 4-4 Supreme Court ties — revert to the decision of the lower court. Let’s unpack what that means.
For example, in mid-October, the Supreme Court already ruled on a case regarding Pennsylvania state mail-in ballots.
A Pennsylvania state court ruled that mail-in ballots could be counted even if they arrive up to 3 days after election day – if they are postmarked by election day. The Supreme Court ruled in a 4-4 tie on the matter.
That means the decision of the lower Pennsylvania court stands – and those mail-in ballots can be counted.
If Amy Coney Barret had been on the court at that time, her judicial philosophy suggests she would have joined with the 4 conservative votes to not allow those votes to be counted. And, the lower court’s ruling would have been struck down.
2020 Trump v. Biden
So, you can see when it comes to election cases – having a fifth reliable conservative vote on the court could make the difference between a Joe Biden presidency and a Donald Trump second term.
Barrett dodged recusal questions
It’s no secret why President Trump wanted to advance his judge so quickly.
Amy Coney Barrett has been thrust onto the court amid President Trump’s frank calls for her swift confirmation so that she can be seated in time to decide the election cases.
Yet, in her Congressional testimony, Barrett artfully declined to answer whether or not she would recuse herself if a contested election case comes before her that could determine the outcome of this monumental presidential election.
Indeed, legal scholars point to a case from over a decade ago – Caperton v. A.T. Massey Coal Co., and say it applies directly to Barrett’s recusal decision and would require her to decline to vote on election cases.
The case states: A judge cannot hear a case that centers on the financial interests of someone who supported him substantially in his campaign for election.
Here’s the rationale: “Under the Due Process Clause and Tumey v. Ohio (1927), a judge must recuse himself if he has a direct, personal, substantial, pecuniary interest in the outcome of a case.”
Even more, Justice Antonin Scalia, while he did dissent in the case he wrote in that case: “In the best of all possible worlds, [judges should] sometimes recuse [themselves] even where the clear commands” of the Constitution don’t require it.
Yes, there is a strong case for Amy Coney Barrett to recuse herself from 2020 election cases.
Will she recuse herself?
Unlikely.
Get Ready for a Replay of 2020: Bush v. Gore
The nation has been primed for and is hurtling toward a reply of 2020’s Bush v. Gore, in which the Supreme Court decided the fate of the election and the country for the next four years.
President Trump stated shortly after the death of Supreme Court Justice Ruth Bader Ginsberg: “I think this [election decision] will end up in the Supreme Court,” “And I think it’s very important that we have nine justices,” instead of the eight seats currently filled.
President Trump publicly stated several times that he wants Barrett to be appointed swiftly so she will be on the court in time to “decide” the presidential election results.
How Will Financial Markets Respond?
In the event that our country moves through November and December with no presidential outcome – as court cases work their way toward the Supreme Court – the stock market will sink.
In 2000, the last time we saw a contested presidential election, the S&P 500 and technology stocks sank. Expect that to happen again – extended stock market weakness and volatility. In this scenario, investors will rush to safe haven assets like gold and silver and the U.S. dollar will tumble by 15-20%. Gold climb moderately amid the uncertainty hitting a new all-time high at $2,100 an ounce.
Bottom line
If the 2020 Presidential election battle is turned over to the courts as it was in 2000 – having Amy Coney Barrett seated on the court all but ensures a victory for incumbent President Trump.
Worth noting – power to pick presidents and strike down laws
No matter your political party affiliation, it is worth noting the extreme power the Supreme Court now has on our society.
In an increasingly polarized environment where Congress has become ineffectual due to gridlock, the Supreme Court has moved to the forefront to be the most important governing body in our land.
Of course, our founding fathers intended for all three branches of government (Executive, Judicial and Congress) to be equal with checks and balances on each other.
Today’s reality is different.
The Supreme Court has shown its ability to decide presidential elections (Bush in 2000) and can strike down any law that Congress passes that it sees unconstitutional.
With a strong conservative majority on the Supreme Court with Amy Coney Barrett – and their lifetime appointments – the Supreme Court has become the most powerful influence and governing body for America for the next 30 years.
Longer-Term Market View
In this scenario, once the Supreme Court decides the election – and hands the White House back to President Trump for a second term, U.S. dollar devaluation will continue as the Administration brow beats the Federal Reserve into printing ever more money to attempt to prop up the economy.
The stock market will rally briefly on expectations for another tax cut – but as the second term continues the economic realities of isolationist and combative trade policies tank the U.S. equity market.
Investors will turn to hard assets like gold and silver as the dollar continues to weaken and as capital begins to leave the United States.
Wealthy investors will begin to move their money offshore as it becomes clear the decline of the United States of America is on a track that can’t be turned around. Gold will easily eclipse the $3,000 an ounce mark. For precious metals investors, there is small comfort in their gold and silver holdings, as inflation is becoming rampant and the country’s economic future becomes grimmer.
This concludes our “What Happens If…” election series. With less than one week until election day, we hope that we’ve provided you with valuable information to help you prepare your portfolio for most any eventuality.
Regardless of the election outcome, the economy is still reeling from the pandemic and a quick recovery is unlikely. Inflation is coming. Call us today at 866-629-2281 for a personalized review of your long-term financial goals. We want to help you protect what you’ve worked hard to build.
If you’d like to read the entire six-week series, please follow the links below and let us know your thoughts.
Read Part 1 here: “What happens if….” Trump Wins in a Landslide
Read Part 2 here: “What Happens If….Biden Wins in a Landslide
Read Part 5 here: What Happens If…” States Aren’t Ready to Declare a Winner
Monday Morning Wrap Up – October 26, 2020
Posted onTrick or treat?
Halloween is fast approaching. What spooky surprise might be just around the corner? The nation is on edge. Early voting numbers are through the roof. A record number of 52 million Americans have already cast their ballot in this year’s U.S. Presidential Election – and we still have another week to go before Election Day.
As Americans stream to the polls, there is another looming threat overhanging credit markets.
Two of the three major U.S. credit agencies – Fitch Ratings and Moody’s Investor’s Service – which currently give the U.S. a top rating have warned that if a peaceful transfer of power does not occur that high rating could be in jeopardy.
When you are wondering who the next President of the United States will be, a credit rating may not seem to be of great importance. Think again.
Could the U.S. lose our AAA credit rating?
The U.S.’s nearly top-notch credit rating is what allows our country to finance our $27 trillion plus in federal debt at rock bottom interest rates.
Ratings agencies will be monitoring the post-election environment closely for “any departure” from America’s history of orderly transfers of power.
Indeed, our country boasts a perfect AAA credit rating from Fitch in part because of our history for strong governance, including “well-understood rules and processes for the transfer of power,” a report from Fitch last week said.
Beware. A downgrade for U.S. debt would trigger a huge loss of confidence in U.S. financial markets – and could potentially trigger stock and bond market volatility.
Tech world abuzz with Google anti-trust lawsuit
The Trump administration hit tech giant Google with an anti-trust lawsuit last week. This awakens memories of the Microsoft anti-trust lawsuit that ran from the late 1990’s-early 2000’s.
In the end, after years of court wrangling, Microsoft suffered little more than a slap on the wrist. Key takeaway for the Google case? Expect this to last for years.
Presidential debate – a draw?
The nation witnessed the last presidential debate on Thursday evening. President Trump exhibited a more restrained approach – and most analysts called the debate a draw – as neither candidate likely moved the voting needle in a significant fashion.
Cloudy economic outlook ahead
With COVID-19 infections on the rise especially in the Midwest and Rocky Mountain region, we’ve seen little movement from Congress on a second round of emergency stimulus and future economic projections are beginning to look dire.
The massive stimulus package Congress passed earlier this year was, in essence, life support for the economy. It injected billions of dollars of money that flowed through the economy through extra unemployment insurance and support to businesses.
That stimulus is gone now. And, the economy must limp along on its own. Expect economic headwinds to take hold in November and December – especially if a contested election occurs. Neither individuals nor businesses like uncertainty. Indeed, uncertainty – whether that is political, economic or market related tends to hold people back from making decisions or spending money.
High earners spending less too
Even spending from high-income households remains below pre-pandemic levels, simply because those individuals face a discretionary sector challenged by health crisis restrictions. For the week ending September 27th, high income household spending was 7.3% below January levels.
Industries most impacted by the health crisis are showing double digital declines in activity. U.S. restaurants are operating at 35% below than year-ago levels as of October 18th, hotel occupancy was 29% lower year ago levels as of October 10th and air traffic has been slashed by 60%, according to S&P Global research.
Silver demand soars at nearly triple the year-over-year levels
In the midst of the uncertainty, investor demand for silver soared in the first three quarters of 2020.
“Investors sought security in silver-backed Exchange-Traded Products (ETPs) in the first nine months of 2020, nearly tripling the amount amassed compared to the comparable period in 2019. Investors have also had a strong appetite for investment in silver bullion coins and bars during the first three quarters of this year. Overall, this reflects both silver’s role as a safe haven asset and as a leveraged play on gold, as some investors expect silver to outperform the yellow metal,” the Silver Institute said last week.
Gold traded sideways last week – as investors remain in a wait and see mode ahead of what could be a tumultuous election market reaction.
Are you prepared?
Right now, perhaps more than ever before in history, it’s critical to think about what could lie ahead and to prepare your financial situation for whatever may come next.
Investments in tangible assets like gold and silver offer you the safety and security that no paper asset can offer in these unprecedented times. Take advantage of this time now – just ahead of the election – to increase your financial security with an additional allocation to physical gold.
Take care of yourself and your loved ones. Until next week…
Regards,
David
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“What Happens If…” States are not ready to declare a winner
Posted onIt’s December: The Nation Is Still Waiting for a Winner
Dozens of lawsuits are underway to decide whether or not uncounted mail-in ballots in key battleground states should be counted. It was a rigged election, the Republicans say!
So…here we are in early December – and the nation still doesn’t know who won the Presidential election in November.
Joe Biden won the popular vote easily on Election Day – as the polls predicted he would. Yet, the popular vote doesn’t decide the winner of the White House in the United States – that honor goes to the Electoral College of course.
That big Biden win in the popular vote occurred despite polling day violence which erupted in several voting sites.
Violence at the Polls on Election Day
Prior to Election Day, President Trump and his campaign encouraged his followers to “enlist in an army” of poll watchers to “fight” for his victory. That army of supporters remains active into early December.
Earlier in October, the FBI charged six men with a plot to kidnap Michigan Governor Gretchen Whitmer from her vacation home with a plan to take her to Wisconsin and put her on trial for treason. Seven more men face state charges as part of the same plot, which included plans to attack law enforcement, overthrow the government and start a civil war. That state remains a hotbed of unrest and militia activity.
Militia group members show up at several polling places on Election Day in Michigan to “watch the polls.” Tense situations escalate and, sadly, three innocent bystanders are injured as gun violence erupted outside one of the polling stations.
Civil Unrest: 7 pm Curfew Set in Portland and Chicago
Throughout November and into December, civil unrest has taken over big cities across the nation. Peaceful protests calling for a “full and complete vote count” in large, urban Democratic cities turn violent. Militia group members swarm to major cities – and violent clashes erupt nearly every day.
Chicago and Portland now have 7 pm curfews. Citizens are not allowed to leave their homes after dark. The National Guard has been called into several major cities and they patrol at night.
The United States is gripped in a crisis of severe proportions and on several fronts. The rate of COVID-19 infections is escalating quickly, some hospitals in Midwestern states are becoming overwhelmed. Unemployment remains high.
The nation’s transportation and delivery system has been disrupted. Shortages are common in many cities. The grocery stores are short on items and consumers are unable to buy many basic goods they need for everyday life.
Today on December 8th, the outcome of the election rides on key battleground states like Michigan, Pennsylvania and Wisconsin. The Republicans are suing for recounts in states where the popular vote was close and have lawsuits about alleged voter irregularities in key battleground states.
Post Office Seized Mail-in Ballots
Millions of mail-in ballots that were in transit on November 4th were seized by the U.S. Post Office, under orders from the Trump Administration. As of December 8th, those ballots remain locked up in the custody of the U.S. Postal Service.
The Postal Service is an agency under the Executive Branch, which allows the President broad authority over mail in ballots in transit. Trump has the full support of Attorney General William Barr – who embraces the President’s electoral fraud claims.
Will those votes ever be counted? That decision lies in the hand of federal judges and the case will likely go to the Supreme Court.
Stock Market Crashes – Dollar’s Position as Reserve Currency in Jeopardy
To the international community, it has become clear that America is a nation gripped in crisis and chaos. Foreigners are cashing out of U.S. denominated assets – fast.
The stock market crashed throughout November – sinking into a bear market amid the uncertainty of the contested election litigation and amid the wave of violence that is erupting across the country.
The U.S. dollar declined sharply and foreigners are selling U.S. Treasury bonds.
The idea that the U.S. dollar will continue to act as a stable reserve currency of the world is being widely doubted in financial centers around the globe.
In the midst of the 2020 US Election Crisis, gold has climbed to new all-time highs – now trading at $2,500 an ounce as panicked investors turn to the safety of precious metals.
December 8th: Safe Harbor Deadline
It’s December 8th. Most citizens had never heard of the December 8 safe harbor deadline until the 2020 presidential election. This is the deadline for states to choose which electors will be sent to the Electoral College. Now, the details of these arcane rules and procedures, which normally have unfolded in the background, quietly, without a hitch, have become common public knowledge.
In America, it’s actually the 538 members of the Electoral College that vote for President.
When voters go to the polls they are actually voting for a slate of presidential electors who will vote for president. Further complicating matters, only 33 states require electors to vote for the winner of the popular vote in a state.
The safe harbor deadline requires states to choose electors to be accepted by Congress.
But, who should Michigan, Pennsylvania and Wisconsin choose? They don’t know the official final ballot tally – mail in ballots have not been fully counted yet.
The Republicans have been lobbying hard to all the key battleground/undecided states to submit the slate of Trump electors, despite the popular vote. Trump has a major advantage as the incumbent. He is able to use the power of the presidency to his advantage while he is still in office, even if the courts may rule his actions as eventually unlawful. These powers include the ability of the president to freeze assets of individuals and groups the president determines to be a threat, and his ability to restrict internet communications in the name of national security, according to the Transition Integrity Project (TIP).
The electors are supposed to vote on December 14th and the count is tabulated on January 6th before Congress.
In the midst of the chaos, the country hurtles through December with no clear alignment on a winner and the calendar flips to January.
Can Nancy Pelosi Become President?
It’s January 6, 2021. There is a joint session of Congress to ratify the Electoral College votes and declare official election results.
Yet, there is no clear winner from the Electoral College vote on January 6th.
There may be a tie, or many Electoral College votes are disputed due to states not following the popular vote or because mail in ballots weren’t fully counted.
Here’s what happens next.
According to the Constitution, the House chooses the president with each state, not each member, casting a single vote. The Senate chooses the vice president.
Indeed, this has happened before. One president in American history did take office that way under the current Electoral College system. It was John Quincy Adams in 1825.
Again, we turn to the Constitution to understand if Nancy Pelosi could actually become president.
The presidential term ends on January 20th – no matter what.
If Congress and the Electoral College have been unable to choose the winners by then, the Presidential Succession Act kicks in.
Then, the first in line to serve as acting president is the House speaker, now Nancy Pelosi. She is followed by the president pro tempore of the Senate, currently Charles Grassley of Iowa, followed by members of the Cabinet.
However, Pelosi would be required to resign from Congress to serve in the temporary Acting President position and she could only serve until Congress finally decided who the new president will be.
The Bottom Line
So, technically, Pelosi could temporarily become acting president on Jan. 20th. But, it is a highly unlikely outcome and would only be short-lived.
Never before has an election been so complicated, with so many hypothetical scenarios and what-ifs. Never before have citizens had to dig into election rules and laws to understand if their vote will count and what the contingencies are in place if a contested election goes off the rails. But, this is indeed what we could be facing this year.
Now it’s Your Turn
How do you see this or another hypothetical election scenario unfolding?
Between now and Election Day, we present to you an in-depth Blanchard exclusive Presidential Election series. Please join us each week as we cover six hypothetical scenarios and detail potential outcomes for the economy, geopolitics, the stock market and precious metals if these scenarios unfold. We invite your comments, questions and insights below.
Read Part 1 here: “What happens if….” Trump Wins in a Landslide
Read Part 2 here: “What Happens If….Biden Wins in a Landslide
Read Part 3 here: “What Happens If…Trump Wins on Election Night but Biden Prevails After Mail-in Ballot Count
Read Part 4 here: “What Happens If…” Biden Wins on Election Night…But Trump Prevails After Mail-in Ballot Count
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Monday Morning Wrap Up – October 19, 2020
Posted onGoldman Sachs says sell U.S. dollar, buy silver.
Heading into the U.S. election, Goldman Sachs issued new reports over the past week advising its clients to sell the U.S. dollar and to buy silver.
“The risks are skewed toward dollar weakness, and we see relatively low odds of the most dollar-positive outcome — a win by Mr. Trump combined with a meaningful vaccine delay,” Goldman analysts said.
A weaker U.S. dollar is a positive signal for precious metals, and would boost both gold and silver higher. Goldman also warned that the U.S. dollar was vulnerable to a plunge to its 2018 lows.
How high could silver run? Looking ahead, if the U.S. and China move forward with new solar installations plans, Goldman estimates a 9.3% advance to its $30 an ounce silver target. Silver is a major component in solar panels manufacturing.
Billionaire Jeffrey Gundlach warns of stock market crash.
The economy is weaker than you think.
“I don’t think people fully understand how many business closures there’s going to be in the next few months,” he told MarketWatch. Gundlach added that he’s shocked at how many empty storefronts are popping up. “There’s going to be a lot more of that. I think it’s going to really accelerate. I think there’s going to be real problems in the wintertime here.”
How should investors prepare? Gundlach says: Owning 25% of your portfolio in gold isn’t crazy right now.
The final stretch.
We are just two weeks away from Election Day. Over 27 million Americans have already cast their vote in the most contentious presidential election cycle in modern era. You can watch President Trump and Democratic candidate Biden on Thursday night at 9 pm ET in the final debate in Nashville, Tennessee.
Market action.
The stock market gained modestly last week as Wall Street investors continue to watch for news on a potential emergency stimulus package to support the economy ahead of the election.
Gold traded sideways in quiet trade, closing above the $1,900 an ounce level. While the gold market may seem quiet recently, don’t forget – gold at $1,900 an ounce is up about 25% year to date. Gold made a major move earlier this year. Indeed, experts say the historic Bull Run in gold is just getting started.
New record highs for gold ahead! Yes, another big bank calls for new gold highs.
Last week, Canadian Bank TD securities said gold will continue higher no matter who wins the White House next month.
“The resulting record debt and deficits, monetization and the Fed’s ultra-low interest rate policy across the yield curve all imply that gold should see a sustained rally, once the new government starts operating in the early months of 2021,” the TD Securities report said. “It is likely that large fiscal spending programs, topping five trillion dollars over the next two years, will very likely be passed by whoever is in power … Lower real interest rates and weaker USD will be important factors assisting gold in its move to new records.”
TD Securities targets gold’s next move to a new record at $2,100 an ounce.
COVID cases on the rise again.
A massive second wave of COVID infections hit Europe last week. Hospitals are nearing capacity in some countries, with many around the same levels seen during the spring crisis. France issued a new state of emergency and introduced a dramatic curfew in an attempt to stem the growth of the pandemic.
In the U.S. COVID cases are also on the rise again and climbed to their highest levels since mid-August last week. The Midwest has become a new hot spot, with Wisconsin, Indiana and Iowa showing some of the worst infection rates in the nation.
In Kansas City last week, many hospitals hit capacity. Several hospitals were forced to turn ambulances away due to a lack of beds, ABC News and others reported.
Major unknowns ahead.
The next several weeks are tenuous for the country, the financial markets and maybe even our democracy. With the potential for a contested election and civil unrest, the stock market could be set for a major crash. No matter what lies ahead, owning gold in these uncertain times gives you confidence that your wealth is secure.
Stay safe…
Regards,
David
Related Reading
A U.S. dollar crash could have serious consequences for many American investors who haven’t properly hedged their portfolios. Learn more here.
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Americans Are Socking Away More Than Ever…But Are Their Savings Safe?
Posted on — 2 CommentsAmericans historically have been terrible at saving.
The COVID-19 crisis changed that.
Indeed, the COVID-19 crisis has changed our lives in so many ways, including how much we save.
Back in 2013, the American personal savings rate stood at a paltry 3%. That compares to Germany (10%), Australia (11%) and France (15%), according to Organization for Economic Cooperation and Development (OECD) data.
Americans who are still employed in 2020 are saving more during the COVID-19 crisis – than ever before in history.
Most experts would argue – a higher savings rate is a good thing. In fact, we agree. Yet, your future financial security depends on where you put that savings (more on that later).
In April at the height of the COVID shelter-in-place lockdowns, American’s savings rate surged to over 30%, according to the St. Louis Federal Reserve. It’s come down since then – but still stood at a respectable 14% as of August.
In fact, total household net worth rose 6.8%, to $119 trillion in the second quarter of 2020, the Federal Reserve said. That gain was the largest in quarterly records back to 1952.
What to Do With Your Savings?
Investors looking for a safe place to store their savings today see meager choices in vehicles that our parents and grandparents used – like certificate of deposits, bank savings accounts or even Treasury securities.
- Current CD rates stand at 0.27% for a year.
- The average bank savings account interest rate stands at 0.05%.
- And, 3-month Treasury bill yields only 0.09%.
When you factor in inflation – you lose money every month you store your money in one of those assets.
| Current Rate | Inflation | Real Rate of Return | |
| CD | 0.27% | 4% | -3.73% |
| Bank Savings | 0.05% | 4% | -3.95% |
| 3 Month Treasury Bill | 0.09% | 4% | -3.91% |
What Happens If the Dollar Crashes?
To make matters even worse for investors today, the COVID-related explosion in the U.S. government debt leaves Americans so vulnerable to a dollar-crisis.
If the dollar crashes, you lose. It’s really that simple.
This is not something many people think about.
The value of the U.S. dollar – measured as the U.S. dollar index on the global financial markets matters a lot – to your future purchasing power.
Sadly, the Federal Reserve and our government continue to obliterate the future value of our dollars, with every new dollar they print and every new dollar they rack up in government debt.
- In 2016, the total U.S. government debt stood at $5 trillion, according to Treasury Direct.
What is the national debt today?
- We just surpassed $27 trillion in October 2020, four years later.
If the dollar index falls you lose. Then what?
Of course, we all know the U.S. government no longer backs its dollars with gold. Yet, the government has printed more dollars by the trillions – just this year alone!
What does that do to the value of the piece of paper in your pocket? As we learned in Econ 101, more of anything dilutes the value.
Can you trust the value of the U.S. dollar to stay the same?
Absolutely not!
Today the U.S. dollar is increasingly vulnerable to a major crash due to central bank money printing and massive government debt.
Stephen Roach, Yale University Senior Fellow and former Morgan Stanley Asia chairman, told CNBC this summer that a dollar crash is looming.
“The dollar is going to fall very, very sharply. These problems are going from bad to worse as we blow out the fiscal deficit in the years ahead,” said Roach.
His forecast calls for a 35% drop against other major currencies within the next few years!
What will that do to the real rate of return on CDs, savings and treasury bills? You can bet it will be worse than the -3% to -4% you’re getting now.
Want a safe, liquid asset that keeps your purchasing power intact?
Gold Preserves Your Purchasing Power
It’s no wonder that investors in the U.S. are turning to gold in 2020. Major investment firms have even called gold a “bond alternative” this year.
When you are investing for the long term you want to increase your wealth and preserve your purchasing power. Gold does that for you.
Legendary investor Warren Buffett highlighted this critical point in his 2014 letter to Berkshire Hathaway shareholders. Buffett explained how over the past 50 years, the purchasing power of the U.S. dollar fell 87%. That means it now takes $1 to buy something that could be purchased for 13 cents in 1965, as measured by the Consumer Price Index. That’s simply from inflation!
A dollar simply doesn’t buy what it did 20 years ago and will buy even less 20 years in the future – especially as the government enacts policies that weaken our currency.
You need your investments to hedge against currency volatility and to keep up with the pace (or exceed) the rate of inflation in order to preserve your purchasing power.
Gold and the dollar have what is known as an ‘inverse correlation.’
Gold is a traditional hedge against inflation and tends to increase often significantly during inflationary periods. And also – this is important – when the dollar goes down, gold goes up.
Turn to the safety of gold
In today’s uncertain world, where you put your savings is more important than ever.
Don’t let your hard earned savings crash in value – as government policies leave the U.S. dollar at risk.
When you invest your savings into tangible assets like gold and silver you can be assured your future purchasing power will be preserved. Just as it has been for thousands of years, gold is a store of wealth, an asset without credit risk related to any government. Gold is an alternative currency and some may say the only real currency. You can take that to the vault.
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