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Silver "Unch" Despite Election Uncertainty

First of all, Happy Veterans Day!

Especially to all of the American Veteran Truckers out there (who may even be on a trucker strike this very day)!

I'm a Veteran myself (US Army, Iraq War), and I can tell you that no matter when you served or where you served, the US Military takes a little something from each and every one of us, and sadly, not in a good way. Many Veterans have marriage and relationship problems, many Veterans have health and mental health problems, and many Veterans have addiction problems such as gambling, drinking, or drugs, and some Veterans experience all of those things, even to the point where they can no longer bear the pain.

Thank you Veterans, and hang in there by focusing on the ongoing good fight, which is the fight for Honest, Constitutional money!

Some call it Sound Money, and some call it God's Money, but as required by the US Constitution, it's specifically called Gold & Silver!

If one looks to the mainstream media, Biden has won the 2020 Presidential Election. This is pretty much the full spectrum of the mainstream media too, from the mainstream financial press to the so-called national conservative and national liberal news outlets, such as Fox News and CNN. If one looks at the actions taken in the courts, if one listens to the myriad whistleblowers, and if one listens to various politicians and Trump Administration officials in Washington, however, Trump will come out on top. Needless to say, It has been over a week, and there is still no clear winner. President Trump is acting as if he won the election, and Biden is acting as if he's working on the transition from the Trump Administration to his own.

Interestingly, despite this election uncertainty, Gold & Silver have not benefited from the "fear trade".

That said, all things considered, gold & silver are holding up nicely!

Recall this silver chart I shared last week, showing the movement in silver during the 2016 election:

Suffice to say, in the week after the election, silver was down substantially, from tapping $19 on election night to under $16.50 and falling a week later for a loss over 13% and rising.

This election, however, a week later and with the election currently in dispute, silver is basically unchanged from election night:

To me, this is a great opportunity for Silver Bugs, Stackers, and other Smart Investors.

Why?

Because in my mind, this pause, this consolidation, this whatever-you-want-to-call-it, is about as good as it gets for prices.

That is to say, silver's price has been pretty stable, and premiums on silver have come down substantially, so this is pretty much about as good as it gets. Now it is true that when one takes into consideration the premiums, right now, one is pretty much paying over $26 for an ounce of generic silver "in-hand", but if silver's price begins to move quickly, either to the upside or to the downside, and especially if there is another round of Economic Impact Payments sooner than anticipated (this year?), then upward pressure on premiums could return, meaning that lower silver prices could be offset or worse by rising premiums, all the while a spike in buying on rising prices could likewise add to the pressure on premiums as available retail supply is still nowhere near as robust as it was at the start of the year.

Recall just how fast premiums shot-up in March of this year, and how long it has taken for some of the upward pressure to come down. All things considered, including the ongoing global and national supply chain disruptions, in my opinion, the sweet spot is right where we are now.

Furthermore, generally speaking, the longer an "underlying", in this case, silver, consolidates, the more explosive the move could be.

The same can be said for gold:

If hundred dollar swings in the price of gold are back, then we could be retesting all-time record highs in a matter of just a couple of days once the move starts!

For now, the paper Gold-to-Silver ratio is still in the upper 70s:

In my opinion, the ratio is still shouting "buy silver with gold", because, in theory, all the ratio has to do is fall to 38.50 at the end of the cycle for that one ounce of gold to become two ounces, and many people think the ratio is ultimately headed much lower than that, myself included.

 Amazingly, platinum is still on a discount of a hundred bucks, year-to-date:

Platinum is down about a hundred bucks, and that's despite the flight to safety pressure and the so-called Green New Deal or the so-called Trump Infrastructure Spending Plan?

If one is a deeper-pocketed investor or an investor where storage may be an issue, platinum, in my opinion, is something to consider. Besides, we often hear about "diversification", so why not diversify that portfolio with something that's still down, year-to-date?

Palladium opened the year at just over $1900:

Is palladium finally breaking out of its sideways choppy channel?

Copper is building strong support at three bucks:

 

No matter who ends up in the White House come late January of 2021, between the Green New Deal and the Infrastructure Spending Plan, there's going to be a whole lot of demand for copper!

Crude oil has spiked over the last few days:

 What will a rising price of crude oil mean for the recovery on Main Street?

 Check-out that massive gap-up and surge to new all-time record highs in the stock market:

The election outcome apparently does not matter as much as the possibility of a Covid-19 vaccine.

Said differently, market participants think that stocks will rise under either under a Trump or Biden Administration just the same, all the while back-stopped by the Fed. That is quite the faith in others, or, alternatively, quite the counter-party risk, isn't it?

The VIX continues to fall:

What happens if this election uncertainty drags on, for months even?

What happens if there is more civil unrest, looting, and riots in the streets as a result of the outcome?

In my opinion, it is amazing that there are so many unknowns on Main Street, and yet market participants are so sure of the direction of the market!

The yield on the 10-Year Note is spiking, and that could put pressure on the rising stock market:

For now, however, along with the so-called Fed Put in the stock market, many people, myself included, seem to think the Fed can step in and place a bid under the bond market to bring interest rates back down.

Of course, this would be detrimental to the US Dollar:

Which in my opinion is not bottom-bouncing, but rather, is getting ready for its next leg-down.

Thanks for reading,

Paul Eberhart

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Paul Eberhart
Paul Eberhart
Senior Market Analyst and Columnist

Paul Eberhart has been actively trading and writing about precious metals for more than a decade. A U.S. Army Iraq War Combat Veteran, he holds an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill.

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