Gold And Silver Ready To Pop After The Election?

[Reub]

I was reading the Decision Moose commentary today and he made an interesting point about how much of the bailout for Europe has been put on hold until after the US elections. Additionally, the fall/winter season is usually very strong for precious metals with the exception of Octobers. Are we heading into a buying opportunity for Gold and Silver?

[melveyr]

It depends who wins. Obama is out of political capital for increased stimulus so I don't think we would see a pop in gold.

However if Romney wins, is able to get his tax cut passed without closing any significant loopholes (which is likely considering he hasn't specified any), and he is able to get his 2 trillion in defense spending, I think we could see a moderate uptick in GDP growth with some inflation stemming from that increased federal deficit which would be great for gold. Historically this makes sense because Republicans in the federal government generally go for the tax cuts first, and then decide on how to cut spending later (later never usually happens or is smaller than the size of the tax cut).

[Reub]

I was thinking that, if he won, Obama wouldn't need much political capital after the election as it is his last one. He will be freer (as he told the Russians) to maneuver unemcumbered by the electorate. If he loses he will still have 2 months of a lame duck regime where he can fulfill whatever promises he had made. I would not be surprised if he had agreements worked out with an impatient EU that he can fulfill right after the election.

[melveyr]

I was thinking that, if he won, Obama wouldn't need much political capital after the election as it is his last one. He will be freer (as he told the Russians) to maneuver unemcumbered by the electorate. If he loses he will still have 2 months of a lame duck regime where he can fulfill whatever promises he had made. I would not be surprised if he had agreements worked out with an impatient EU that he can fulfill right after the election.

Hypothetically if Obama wins: Do you think he would be able to get tax cuts and/or spending increases through though? I still think that Republicans in congress would block these attempts. A weak economy during a democratic presidency can help their political position in the long run.

[Ad Orientem]

I see nothing but continued gridlock in DC no matter who wins. Both parties and candidates are largely locked up by the more extreme wings. Democrats can't even have conversation about reforming entitlements or civil service pensions without starting a riot. Republicans can't hear the word tax without having a seizure. Even in a best case scenario for the GOP they are not going to get a filibuster proof majority in the Senate. So the Dems will just do what the GOP has done in the House and adopt a "just say no" approach to everything that Romney and the Republicans try to get through.

Compromise is now impossible and divided government means nothing will happen.

[RuralEngineer]

If we weren't in such a hole in this country, 4 more years of gridlock would sound blissful to my ears.  However, the dems and repubs always seem willing to come together in order to pass some particularly nasty legislation (indefinite detention per NDAA, for example).  Even gridlock is only a partial shield against further harm.

Back to the OP though, BO seems great for gold thanks to his tax (a little) and spend (a lot) policies.  Romney seems good for gold in the short term because, as a previous post mentioned, repubs always go for the cut first and then never pay for it.  Plus he's dead set on buying the military more toys than their toy chest will hold.  However, if he can get sufficient support in Congress we should get the one thing we've been lacking for the last 4 years...certainty (to a point).  My company put out a release stating that Obamacare will cost them 100 million per year (which is crazy, because my company has great health care).  They were called to testify before Congress so the dems could beat our CEO for his "partisanship," but they called it off once they were informed that my company was legally obligated to release the information to the shareholders.  Just getting rid of Obamacare will do a lot to get the economy moving again.  A permanent tax deal of some kind, regardless of the details, will help with hiring.  That is going to hurt gold eventually.