Coming election bad for the metal market?

Firstly... lets keep the politics out of this one. This is definitely a serious thought. I know usually political topics are relegated to the political section. So lets try to keep this as benign as possibile.

Does the upcoming election and it's result spell correction for the metals and then a rebound later?

 

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How could you keep politics out of a discussion about an election or its resulting effects?

 

very carefully! haha!

 

Then let me try.
It seems to me the current run up in PM prices is due to the FEDs declared intention of another round of quantitative easing, that will already be over with when the newly elected members of congress take their seats in Jan. So I dont think the election will have much of a lasting effect on PM prices, The damage will already have been done. Maybe some short term swings one way or the other.

 

If the Democrats win people will think that we will keep going down the same path and PM's will skyrocket and if the Republicans win people will have hope that the other party can change things and PM's will drop until people realize that they cant change anything until 2012 driving PM's to skyrocket.

 

Oh now you have done it, you have mentioned politics.
BTW I totally agree.

 

Slight drop in Nov. (and I emphasize SLIGHT) Most people have no confidence in either of the empty suits and will come to the reality that the economy is no quick fix. The time to play hardball with China was a decade ago....nobody has an answer to them now. The PMs rebound within a month......and just like Luke1988 has already said....they will skyrocket.

 

Something needs to happen to burst the PM bubble...perhaps it will be the results of the midterm elections. How's that for keeping politics out of it? TC

 

Short answer, with no politicspeak, yes. Never discount the power of wishful thinking, good or bad, in significant numbers.

How was that for ambiguity?

 

If you look at this through the lens of Andrew Jackson and the Bank, or the Compromise of 1850, or some other historical drama, then you can analyze the parties and their politics without putting yourself in your estimates.

I agree that the traditional view from the outside is that both parties are to blame and both are somewhat interchangeable -- as were, say, the Whigs and Democrats of the 1840s, at the sectional and local levels where coalitions were built.

That said, as I review Time magazine on the Tea Party and as I listen to NPR "Morning Edition" in a blind panic for any spin that downplays the Tea Party, I see a paradigm shift. Beltway Republicans are just as marginalized as the Democrats. The Tea Party could make the balot in 2012 on its own: already we have in-fighting over the use of the name for elections here in Michigan.

Look at precious metals in the Reagan-Bush-Clinton years. Cut government spending and the price will fall. Is that bad for precious metals? Not really. The shallow thought is that rising prices are "good" because you can sell for more "money" -- but what can you buy with it? Falling PM prices mean paper losses for speculators, but mean that the economy is stablizing. And that is good.

People who are longterm hardmoney will just continue to average their buying prices as they always have. Buy at $350; buy at $1350; it's all the same.

 

I don't think the election will matter much. What will change from today? There are no important policy differences between the two parties, and the Tea Party is not [yet] a viable third party. Gold and silver are rising because of the recognition that they are again a viable asset class for individual and institutional investors. This probably won't change for a number of years, and when it ends, it won't be because of the party in control of government.

 

There are far to many variables that influence the precious metals market. These midterm Elections , however they turn out, might have a slight impact , I don't see them affecting a surge in either direction. Many are astounded that Silver is where it is today, I for one am not. Nor do I think that it has reached it's peak. We may have some fluctuations through the end of the year, but nothing drastic in the P/M market .

 

Nonsensical! How's that for a made up word? Now back to the question! I think after the elections you will see a slight correction and a definite rebound after all we are talking about a global recession and after the dust settles there is still gonna be record numbers unemployed. I think the biggest surprise is gonna be the California results. The "Tea Party" has had little affect on California and you can tell by the guy who hosted their last event! I'm just sayin'!!

http://www.nbclosangeles.com/news/l...sts-Tea-Party-in-Beverly-Hills-103795109.html

 

Lord oh lordy, I thought Pat Boone was worm food. Who was the midget holding him in place ?

 

I dont pretend to be able to predict anything ... but from what i've seen bubbles are nearing a top when EVERYBODY is in and talking about it.

In 1999/2000, everybody was talking about the killing they were making in dot.com stocks (cab drivers, store clerks). Many of my coworkers were talking about it and participating in it.

In 2006/2007, everybody was talking about the killing they were making in real estate (meetings of neighborhood real estate investment groups). Many people owned 2nd investment homes / rental properties. Tv shows called "flip this house", etc

Fast forward today, I dont know anybody among my circle of friends, family, co-workers, other than myself that is into or owns Gold, Silver, Platinum, Palladium coins. Nobody is talking about this around the water cooler saying how much money they have made in their gold coins. I think most people dont realize the past 10 year increase in precious metal prices or really cares (except maybe the occasional jewelry buyer). Add in the fact that many GOVERNMENTS (India, China, etc) are buying gold and precious metals to diversify away from paper assets -- and the prospect of massive quatitative easing (money printing) by the US Govt. I think the precious metals have a long way to run. In any case, I would not be surprised of a 5 to 10% pullback anytime ... however that would be a buying opportunity as I think we are heading quite a bit higher over the next few years.

Just my opinion!

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My guess will be not much change, for two reasons. One is that the fundamentals are driven by Federal Reserve policy, which is partly insulated from politics. Another is that the forces pushing the economy around are bigger than any policy change that could plausibly happen as a result of the midterm elections.

 

Current profit taking hasn't resulted in any big declines. Then we see a rise immediately following. I believes this indicates a greater than normal investment in an otherwise underfunded market. Which causes the wide fluctuations. I don't think there will be a radical sustained movement because of the election. Day trading might be lucrative if timed right, but I don't see downward pressure until the economy is moving steadily upward. I feel large holders are concerned over the movement of currency right now and are hedging with large PM holdings. Nothing about the election will change that. IMHO

gary

 

Why do you think there is a PM "bubble?" Is it just because it is in a bull market? Bubbles involve widespread participation by individual and institutional investors, usually using leverage. These conditions just don't exist.

 

If I may say so, TC thinks that there is a bubble (as do many others) because prices are 4x what they were 5 years ago. Gold has historically been relatively stable, rising and falling but staying somewhat consistent. This ype of run-up in prices is unprecedented and probably unsustainable. The market now seems to be over-inflated and I think that people suspect it as well. When people start to think that the market has topped out, they'll sell. En masse! Then the prices will plummet popping the bubble. What prices will do and where they will stabilize at that point is largely unknown, but people do expect a LARGE correction, thus your bubble.

 

In that case, I think we can safely say there is no bubble. Bull markets normally shake out most investors along the way by making them believe prices must plummet. Bubbles only happen when people can't see any way they can lose. People experiencing a real bubble can't see the bubble until after it bursts.