Was that a close one or what?
Though it was a tighter race than most Democrats would’ve liked, a win’s a win and Obama is Commander-in-Chief for four more years.
But now that we know who’s in charge for a second term, what impact will his victory have on gold bugs?
From my vantage point, the future looks very bright for gold and gold stocks. Let me tell you why.
Firstly, I believe that Obama will retain Ben Bernanke as Chair of the US Federal Reserve – possibly even re-hire him after his term expires in 2014.
If such is the case, we can expect quantitative easing programs to continue until the US economy shows further improvement and stability.
Already, Bernanke’s been given free rein to buy back $40 billion dollars in mortgage-backed securities every month for as long as necessary. And you can bet that operation twist will either be extended or increased come the end of this year.
With this all-you-can-eat buffet, the Fed’s enormous balance sheet is sure to expand even more. Interest rates will remain at artificial lows. And the dollar’s value will continue to erode.
Then there’s always the threat of hyperinflation on goods, as the endless money printing punishes saver
So in this market environment, what would you rather own – cash or precious metals?
It’s a no-brainer. Gold will be superior to all other asset-classes moving forward.
But, there’s an even bigger trigger that could push gold higher very soon…
The Looming Fiscal Cliff
The fiscal cliff is a combination of dramatic spending cuts and tax increases mandated to take effect on January 1, 2013 if Democrats and Republicans can’t agree on how to deal with the nation’s budget deficit and debt.
The Budget Control Act of 2011 will force the government to slash spending by $1.2 trillion over 10 years starting January 1.
Also on that date, a number of tax reductions and an extension of unemployment benefits will expire, which would raise taxes significantly on most Americans
It’s called a fiscal cliff because the combination of spending cuts and tax increases will shock the system – causing our economy to grind to a screeching halt and possibly drive us back into a recession.
Gold prices would launch skyward as investors pile into safe haven assets like precious metals.
This would be a nightmare scenario for everyone. And hopefully, the idiots in Washington will come to their senses before it’s too late – especially if it can be avoided.
But remember when the S&P downgraded U.S. federal government from AAA to AA+ in August 2011? I’m not going to wait around for a repeat of that debacle and neither should you.
No matter what happens come New Year’s Eve, I believe gold will see a lot of buying activity over the next seven weeks due to the uncertainty – pushing prices up.
Although I feel a deal will be reached at the 11th hour, there’s no reason not to protect yourself just in case.
for Top Stock Millionaire