New Trade for December 14th, 2020

The sentiment on Wall Street is optimistic this morning as the first shipments of the vaccine developed by Pfizer and BioNTech are scheduled to arrive in some states.  Fresh effort in Washington to reach an economic stimulus deal is also adding steam to this morning’s positive movement.  

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, it would make sense to incorporate an inflation and dollar devaluation hedge.  

Gold, considered a hedge against inflation and currency debasement, has gained over 21% this year, helped by massive amounts of stimulus to support pandemic-hit economies. Gold has been under some pressure after the stalling of the relief plan in Congress, but with renewed hope for a package, analysts are expecting gold to move higher.  

“We will get a stimulus deal by the end of the month and the U.S. Federal Reserve will maintain its very loose monetary stance, and that should help underpin gold  into 2021,” said Michael Hewson, chief market analyst at CMC Market UK.

Gold’s rally may extend into 2021 and beyond on dollar wobbles amid rising geopolitical risk in a lower for longer interest-rate environment.  Considering the potential increased government spending in 2021, gold seems like a good bet.  

With higher highs possible, some of the top gold stocks to consider include:

  • Barrick Gold (GOLD)
  • Gold Fields (GFI)
  • B2Gold (BTG)
  • Kirkland Lake Gold (KL)
  • VanEck Vectors Gold Miners ETF (GDX)


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