Obama not good for markets, but metals poised for Santa rally

J. Keith Johnson Senior Writer, The Gold Informant
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Several times over the past few months we’ve pointed out that the incumbent never loses on an up market. With this in hand, we thought an Obama win was a given. However, as Election Day approached we saw a weakness in the markets that caused us to wonder.

Then the question became, “How much is too much?” We didn’t exactly get a crash. It was just weakness. And, as it turned out, the weakness didn’t reflect enough sentiment change to usher in a new president.

Never mind that our economy is on a continued downward spiral. Forget the fact that more Americans are unemployed today than at any other time in the country’s history. The fact that our debt grows astronomically day by day apparently is no factor. Dropping average wages in the face of ongoing inflation has no bearing. Apparently, with the markets down a bit from their highs, the economic outlook is good enough for more status quo.

Of course, “more status quo” isn’t more of the same. With the current trend in our country, the status quo means that we’ll make less, what we make will be worth less, we will increasingly become suspects (subjects?) of the state and we’ll pay more in taxes for the privilege.

It was no real surprise to see the markets tank on the day after the election. In spite of the people voting in Barack Obama, it appears that they didn’t really want him. Is that a big surprise, though? Isn’t that how our system works? The people say they want freedom, small government and free enterprise, but then vote in the one who they think will give them the most benefits. It’s an amazing twist of irony and hypocrisy.

But, there’s nothing that can be done about that now. So, what do we do from here? We can consider a couple of stats that should help us prepare.

First, trying to figure out the markets right now is very difficult. Analysts are all over the map. Even the darling AAPL has dropped hard from recent highs. But there are some angles we can contemplate as we prepare for the future.

First, Democrats are very kind to gold. Since Nixon cut the umbilical cord that attached the dollar to gold, the gold price has increased by 358.65% under Democrats, but only 121.27% under Republican presidents.

But it gets better. Gold always performs better during a president’s second term than his first. Our friends at Agora have provided a great map to show us. Furthermore, Democrats are much harder on the dollar than Republicans, which should come as no real surprise.

During the recent market turndown metals showed excellent resiliency. Today they are continuing that trend. November through January tend to be great months for precious metals; though we might get a correction here in the next week or so. Perhaps Black Friday would be an optimal time to get out and buy the missus a few ounces of physical for Christmas. As things stand, it looks like she’ll thank you by Valentine’s Day.

J. Keith Johnson’s Austrian and libertarian perspectives on current socioeconomic and geopolitical affairs are fueled by his insatiable desire to both discover and share the truth. A Goldco Direct affiliate, you’ll find his commentary on The Gold Informant website, as well as various Internet financial and news sites.