Still Waiting For Run To Safety To Materialize

As investors await the incoming Biden administration and the uncertainties that a transition of power may bring, precious metals markets regained some ground through Thursday’s close but have pulled back again on Friday, especially silver and platinum.

Precious metals prices and financial markets have seemingly been unaffected by recent political turmoil. Investors have been nonchalant in the face of Capitol unrest and a second impeachment of President Donald Trump – not to mention fresh new records in daily COVID deaths.

Against this unfavorable backdrop, the stock market continues to hit new highs on an almost daily basis. Fundamental analysts are left scratching their heads as to what’s fueling such elevated valuations.

The most likely explanation is that there hasn’t yet been a downside catalyst powerful enough to take investors’ eyes off the prospect of more fiscal and monetary stimulus to come.

Joe Biden is calling for $1,400 stimulus checks to be delivered to Americans on top of the $600 payments that recently went out. The total cost of the President-elect’s COVID relief plan, which includes a $15 minimum wage, enhanced unemployment benefits, and a variety of other handouts, comes to over $1.9 trillion.

Joe Biden:   Direct cash payments, extended unemployment insurance, rent relief, food assistance, keeping essential frontline workers on the job, aid to small businesses. We'll focus on minority-owned small businesses, women-owned small businesses, and finally having equal access to the resources they need to reopen and to rebuild. Our rescue plan also includes immediate relief to Americans hardest hit and most in need. We will finish the job of getting a total of $2,000 in cash relief to people who need it the most. The $600 already appropriated is simply not enough.

All this new spending will be done with money the government doesn’t have. But borrowing another $1.9 trillion into existence would be just a formality at this point. Biden is already set to inherit a record budget deficit.  

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Disclaimer: Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advise about or advocate the purchase or sale of any regulated security, listed on any ...

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