Top Stories This Week: Gold Up as Biden Talks Stimulus, Keep Watching Big Buyers

The first two weeks of the new year brought a steep decline for the gold price, but this week the yellow metal changed direction and was able to achieve a rise.

Gold started Monday (January 18) at around US$1,815 per ounce, and rose as high as about the US$1,870 level. At the time of this writing it was just over US$1,855.

As usual, market watchers have pointed to various factors to explain gold’s price activity. Chief among them this week was potential US stimulus measures — Joe Biden, whose inauguration took place on Wednesday (January 20), has proposed a US$1.9 trillion coronavirus relief package.

It’s been endorsed by Treasury Secretary (and former Federal Reserve Chair) Janet Yellen, but has faced resistance from some key Republicans.

“Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big” — Treasury Secretary Janet Yellen

Gold is viewed as a hedge against inflation, and typically gains traction in times of increasing money supply. With that in mind, we asked our Twitter followers this week where they think gold will be at the end of April, when Biden has reached the 100 day mark of his presidency.

By the time the poll closed, an overwhelming majority of respondents said they think the precious metal will be higher. Only about 15 percent each said they expect it to be lower or neutral.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

As a final note on gold, I recently had the chance to talk with Andy Schectman of Miles Franklin.

He spoke about last year’s surge in investor demand for gold, and said he doesn’t see an end to this increased buying — in his opinion, smaller investors should be following the lead of central banks and other large entities, which have been increasing their gold purchases over the last several years.

“Look at what the big men and women are doing since 2017 — buying copious amounts of gold and silver, taking physical possession of it, pulling it off of the exchanges, taking it away from the (US Federal Reserve) and the Bank of England. Levitating it to a tier one status” — Andy Schectman, Miles Franklin

Like we’ve done for the last several weeks, I’m going to close by highlighting INN’s outlook content. As a reminder, at the end of every year, our reporters reach out to experts in the many markets we cover, and then compile their ideas to give our audience a look at the year ahead.

This will be our last week publishing outlook content, and I’d first like to point you in the direction of our rare earths outlook. China is the dominant force in the industry, and rare earths tend to move in and out of the spotlight depending on the country’s relationship with the rest of the world.

Looking forward to 2021, analysts expect China to remain a rare earths powerhouse, but they also see other countries building out supply chains.

I’d also like to direct you to our potash and phosphate outlooks. These are not topics we cover on a regular basis, but given the ongoing issue of food security they are definitely worth keeping in mind — in fact, well-known mining financier Rick Rule of Sprott (TSX:SII,NYSE:SII) has previously described agriculture as a sector that’s flying under the radar.

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there’s someone you’d like to see us interview, please send an email to cmcleod@investingnews.com.

And don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.