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Gold Hits New Highs On Obama Victory
Investors warn that slide toward economic depression will continue
Nov 7, 2012
Gold prices have hit their highest level in two and a half weeks on the news that Obama has won a second term in the White House, and are heading for the longest positive streak in more than two months.
The precious metal soared to around $1,729 an ounce, its highest level since Oct 23. U.S. gold for December rose $3.70 to $1,718.70 an ounce.
Late Tuesday night, gold prices jumped up by $30 a troy ounce, and then increased even more as it became apparent that Mitt Romney had failed to defeat the incumbent president.
In total, gold prices are up $54, or 3.2 per cent, since the beginning of the week. They reached a high of $1,731.40 an ounce on Wednesday morning, before dropping back slightly.
Earlier this month gold reached an 11-month high above $1,795 an ounce, following the Federal Reserve’s announcement that it would commence a third round of so-called “quantitative easing.”
With control of the Senate remaining with the Democrats and control of the House staying with Republicans, the phony left/right political status quo has been maintained, meaning that gold is likely to make significant gains.
“Nothing will change with regard to the ultra-loose monetary policy of the Fed,” Commerzbank analyst Daniel Briesemann said.
The Fed announced two weeks ago that it planned to maintain $40 billion in monthly purchases of mortgage debt and to hold interest rates near zero until mid-2015.
The political dog and pony standoff between the Republicrats and the Democans means that averting some $600 billion in tax increases and spending cuts now also seems unlikely, leading many to warn of a “fiscal cliff” looming for the US economy.
Gold prices more than doubled during Obama’s first term in office. Experts believe the precious metal could make significant gains over the coming weeks and months.
“The political gridlock in Washington has not gone away following the election, and this uncertainty has the potential of supporting the [precious] metals.” said Ole Hansen, head of commodity strategy at Saxo Bank.
Bayram Dincer of LGT Capital Management said that no change in loose Federal Reserve policy could see gold reach $1,800 an ounce by the end of 2012 and $1,900 by the end of the first half of 2013.
“We will see a continuation of the loose monetary policies pursued by the Fed and Chairman Bernanke, for the foreseeable future. Low interest rates and more quantitative easing all add up to favourable metal prices,” added David Govett, head of precious metals at Marex Spectron.
“The outcome of the U.S. election increases the probability that the ultra-expansionary monetary and fiscal policy will continue, which puts pressure on the U.S. dollar and gives buoyancy to commodity prices,” Eugen Weinberg, head of commodities research at Commerzbank also said today in a report.
Copper and silver also made gains on the Obama win, as did stocks and US Treasurys.
Steve Watson is the London based writer and editor for Alex Jones’ Infowars.com, and Prisonplanet.com. He has a Masters Degree in International Relations from the School of Politics at The University of Nottingham in England.
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