New Trade for November 19th, 2020

Futures are pointing to a red open for the three benchmarks this morning for a possible third day in a row of Dow losses following Monday’s rally.  

Both Republican senators in Georgia have been forced into runoff races against Democrats, contests that will most likely determine control of the Senate after a six-year Republican majority.

A mixed government would keep spending in check to some extent and keep the budget deficit lower than it potentially could be with a Democratic Senate.  However, it is still possible that the Democrats pick up two more seats in Georgia, which with incoming Vice President Kamala Harris’ tie-breaking vote, would give them control of the Senate.  

Considering the potentially hefty cost of Joe Biden’s policy platform, with the economy still in rough shape, the combination of increased government spending with sagging receipts could mean massive budget deficits for the foreseeable future.  

Under that scenario, gold would make sense as a possible inflation and dollar devaluation hedge, and one of the cheapest and most cost-effective ways to buy it is via SPDR Gold MiniShares (GLDM)GLDM sports a low expense ratio of just 0.18%, making it one of the cheapest gold ETFs on the market.  

Gold will likely continue to rise no matter who wins the senate.  Investors are genuinely worried about the health of the dollar these days, and with legitimate reason.  But under an unrestrained blue Senate, you might see gold’s ascent speed up.