If Congress and President Obama hurl America over the fiscal cliff, some fearful investors may clutch tightly to gold on the long way down.
Stocks have been hit hard since Election Day as fiscal cliff concerns dominate the daily market chatter. But it's been a different story for gold, which has rallied more than 3% in the past week.
It makes sense to a certain degree. Gold is often viewed as the classic fear trade and it's also a hedge against inflation. And gold is not the only metal that's heading higher as a bet that politics as usual will lead to economic stagnation in 2013. Silver and platinum have also moved higher in the past week.
Even if some deal is reached in the next few weeks, experts are not holding their breath for a so-called Grand Bargain that would solve the nation's debt problems for good.
The fact that President Obama won re-election and the make-up of Congress remains mostly unchanged can be viewed as a signal from voters that they are not interested in the kind of tax hikes and spending cuts that would be required to truly get the deficit under control.
"I think many people feel that the can will continue to get kicked down the road. The outcome of the election seems to show there is not an appetite for major tax increases or meaningful cuts in spending," said Christopher Blasi, president of Neptune Global Holdings LCC in Wilmington, Del. "So even if there are compromises to avoid the cliff in the short-term, the fundamentals are still there for gold to keep rallying."
Blasi thinks it is a real possibility that gold will hit $2500 an ounce -- which is nearly 45% higher than current levels -- sometime in the next two years. ...
In other words, the forces that have helped lift gold from about $800 to $1730 in the past four years aren't going to change anytime soon.
Stocks have been hit hard since Election Day as fiscal cliff concerns dominate the daily market chatter. But it's been a different story for gold, which has rallied more than 3% in the past week.
It makes sense to a certain degree. Gold is often viewed as the classic fear trade and it's also a hedge against inflation. And gold is not the only metal that's heading higher as a bet that politics as usual will lead to economic stagnation in 2013. Silver and platinum have also moved higher in the past week.
Even if some deal is reached in the next few weeks, experts are not holding their breath for a so-called Grand Bargain that would solve the nation's debt problems for good.
The fact that President Obama won re-election and the make-up of Congress remains mostly unchanged can be viewed as a signal from voters that they are not interested in the kind of tax hikes and spending cuts that would be required to truly get the deficit under control.
"I think many people feel that the can will continue to get kicked down the road. The outcome of the election seems to show there is not an appetite for major tax increases or meaningful cuts in spending," said Christopher Blasi, president of Neptune Global Holdings LCC in Wilmington, Del. "So even if there are compromises to avoid the cliff in the short-term, the fundamentals are still there for gold to keep rallying."
Blasi thinks it is a real possibility that gold will hit $2500 an ounce -- which is nearly 45% higher than current levels -- sometime in the next two years. ...
In other words, the forces that have helped lift gold from about $800 to $1730 in the past four years aren't going to change anytime soon.
More information can be found online at http://www.goldbullionadvisors.com
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