Obama Win Boosts Gold Price

Obama won the election giving us all even more reason to invest in gold; the gold price has hit a fortnightly high and is still climbing having seen its biggest jump in over seven weeks. Not only is it set for its 12th yearly gain, analysts have now returned to saying they believe gold will end the year on $1,800, but it is up 10% on the year. Silver has also advanced, reaching $32.35 earlier this morning.

As we wrote last week, the gold price was always destined to go up regardless of who came into the White House; however Obama was more likely to see a quicker and greater rise under his watch. Not only is he a Democrat in a second term (therefore he has a higher propensity to spend), he is also likely to keep Ben Bernanke and his loose monetary policies.

Bernanke’s future was looking a little shaky when it looked like Romney might pip Obama to the White House, however now that Obama is firmly staying put Bernanke can keep doing what he does best – devalue the dollar – in the face of improving the jobs numbers.

But, celebrations must be tempered for Obama as he has the Cliff of Doom (aka the Fiscal Cliff) to deal with. If it is allowed to happen the country will see the equivalent of $600bn removed from the economy, the equivalent to 5% of GDP. One thing that would have been certain, had Romney won the decision regarding the fiscal cliff would have been made far quicker. As Obama lost the support of the house back in 2010, the political wrangling which must be done between now and the end of December will be tricky.

America’s unique position of global currency issuer enables it to live beyond its means, far more than the rest of us do. For this reason we can expect to continue to see a country which believes it is the world’s greatest and strongest nation show off to the rest of us, but underneath a shaky set of foundations are struggling to hold it up.

Earlier this week we were excited by renewed gold buying in India, but the World Gold Council has said that they don’t expect figures for gold demand to be as high as previously seen. Last year 933 tonnes were purchased, this year it is expected to be just 800.

In China, the pace of gold investment has picked up somewhat as gold jewellers move to poorer cities thanks to increased demand for the yellow metal after rising incomes and growth.

Elsewhere, Greece will vote on the latest austerity measures today. Cue more tantrums, punch-ups and strikes. Retail sales data for the Eurozone will also be announced, they are expected to have declined from 0.1% increase to -0.1%.

Generally however, today is quiet when it comes to data announcements, and who would be paying attention anyway? There’s just been a US Presidential election.

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