The Daily Nugget: The Week Ahead, November 5-9, 2012

Before we get to the big fight for the White House, we must not let the US election distract us from other events later this week which may also have a short-term impact on the price of gold.

Last Friday wasn’t a nice way to end the week for anyone who was hoping to see gold break $1,780, it did the opposite and broke $1,680 hitting a 2-month low. No one should really be surprised by this given the proximity of nonfarm payroll data release to the election tomorrow. Unsurprisingly Jack Welch decided to keep quiet.

On Thursday the week-long 18th National Congress of the Chinese Communist Party will commence, followed by the monthly "data-dump" of Chinese statistics. Much of the data released is expected to show a small improvement in the economy.

By the end of the congress Xi Jinping will almost certainly have been "elected" the new leader. He will set the stage for the next 5 -10 years of Chinese policies. He becomes leader after two decades of tremendous growth which has seen the largest middle-class expansion in history, and will have a bigger impact on some areas of the world than the US election.

Speaking of China, Hong Kong’s gold shipments to the country jumped 23% on the year to September this year, exports from China were also down 13%.

Also on Thursday monetary policy decisions in both the UK and EU will be the focus of many markets. Both are expected to maintain rates at 0.5% and 0.75% respectively.

Also out this week service PMIs will be released, no dramatic changes are expected in the euro area.

Election countdown
We are now in the final 24 hours before the election of the year, as we wait to hear whether Obama or Romney is the chosen one.

Here on The Real Asset Company Research Desk we’re a little torn as to who we think will win. I (literally) have my money on Romney; others are more convinced Obama’s got it in the bag. I’m torn as to who I want to win; Obama has to go but then, as our research showed on Friday, he would be best for a greater increase in the gold price.

But who am I kidding, gold’s going to go up no matter who’s in power,how quickly just depends on the next President of the world’s biggest printing machine. Whilst Romney is seen as less likely to implement further monetary stimulus, he is still expected to hold off on the fiscal cliff which will give some more buying time for those who wish to invest in gold.

This week may be just as exciting for the gold price thanks to the election; last week saw some slow trading as people stocked up on the green stuff as a safe haven prior to tomorrow. In some research out later today, we show how there is little point in waiting for the election result when it comes to buying gold, since the 1970s there has been little difference between the week, months and even days before and after the election.

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