2020 has been a difficult and unpredictable year. As the pandemic hit the US in the spring, the US economy contracted 30% and there was a rush to gold, silver and cryptocurrencies such as Bitcoin. Over the summer and into the fall, these three peaked and have declined to pre pandemic levels. A lot of this is driven by the belief that the economy is recovering. Post election, there has been a further decline in gold and silver and especially in crypto. Investments such as stocks like stability and there is a strong belief of a peaceful transition in leadership.
This perception of stability does nothing for the perception that the US deficit spending will continue post election and potentially cause a significant decrease in the value of the US Dollar. The US Dollar has weakened versus some currencies in the last size months. There are a number of technical analysts who look only at averages and trends and buy or sell on that data. The downward trend and braking of a 200 day moving average led to a significant further decline.
What’s next? Have gold and silver hit the bottom?
Timing of any market is risky. What is predictable is that a Biden administration will be pushing for higher taxes and higher deficit spending, post election. Many bearish economists believe we will see a dramatic pressure on the dollar by late 2021. This should lead to higher precious metal prices as we go through 2021.
When to buy? How much to buy? That is a personal decision.
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