The US election results are in. The people have chosen. Subscribers are well aware of the changing rules of the game will conform to the latest economic developments. There may well be a period of negativity relating to the general markets due to the US election, fiscal cliff and year-end tax loss selling. We may see both parties come to some sort of conciliatory agreement to save the holiday season. This is known after the election as the honeymoon phase, when previously antagonistic parties feel the need to think “Can’t we all just get along?”
What should investors in the precious metals market do next on this wave of Obama’s win? The way we see it is to wait for any initial reaction of pessimism to subside. Precious metal devotees are a special breed that still must operate within basic rules of the game. What is the market signaling to us?
Immediately after Obama’s victory, there has been a selloff in the general market. Note carefully that gold and silver has held up well despite a significant decline in the Dow Jones Industrial Average and S&P 500. The market will do whatever it can to confuse, misdirect and obfuscate. The recent decline in the S&P 500 not only was unmatched by the action in gold, but we note silver is outperforming as well.
What could the recent market response tell us as to what our next move in the gold market might be? Possibly, reverting to one of our favorite mantras: “Patience and fortitude.”