Fox Business/Jonathan Garber
Biden blue wave tax hikes could batter stock market, strategists say

Trump and Biden“With the 2020 election approaching, Wall Street strategists are starting to factor in the consequences of a possible Democratic sweep, which could create major headwinds for stock-market investors who have been enjoying a record run under President Trump – even after the outbreak of the COVID-19 pandemic.

Democratic control of the presidency and both chambers of Congress, also referred to as a “blue wave,” may mean tax hikes and other legislation that hinders economic growth and weighs on the stock market.

“The implications for the stock market from this shift to higher taxes are generally negative,” wrote David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research

Potential legislation would include raising the capital gains tax for the highest earners and increasing the corporate tax rate in an effort to pay for at least some of the $6 trillion of proposed spending over the next 10 years.”

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Kitco/Anna Golubova
‘We still like gold at these levels’: Prices can move another $500 by end of next year – Wells Fargo

Gold Bars“Gold has been on a sprint since last year, breaking all kinds of residence levels, including $1,300, $1,400, $1,500, $1,600, $1,700 and now $1,800 an ounce. And for those wondering whether it is too late to get in, Wells Fargo has a reassuring answer: “We still like gold at these levels.”

Gold is currently trading at fresh nine-year highs at above $1,820 an ounce. August Comex gold was last seen at $1,827.40, up 0.97% on the day.

“In May 2019, gold finally and definitively broke above the $1,300 per ounce resistance level—after six years of trying. In the year since that time, gold has made comparably quick work of the next major resistance levels,” wrote Wells Faro investment strategy analyst Austin Pickle. “With our 2020 year- end target of $1,800-$1,900, we have been asked whether we still like gold at these levels. The short answer is a resounding, ‘yes’.”

The reason for that is that Wells Fargo sees gold rising all the way up to $2,200 – $2,300 by the end of next year, which means there is still a lot of upside potential — up to $500 worth to be precise.”

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Reuters/Howard Schneider
Fed officials suggest U.S. recovery may be stalling

Recovery“Federal Reserve officials raised fresh doubts on Wednesday about the durability of the U.S. recovery, while new business surveys highlighted developing risks from the relentless coronavirus pandemic.

In separate appearances, Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren and Richmond Fed President Thomas Barkin noted what Barkin characterized as “air pockets” facing the U.S. economy – businesses exhausting existing order books without refilling them, and households facing the end of unemployment benefits and other support.

“Businesses like construction had pretty good pipelines and kept going,” through the first phase of the pandemic Barkin said in webcast remarks to a group of local chambers of commerce in Virginia’s Shenandoah Valley.

But, “new orders are not coming on line in the same way. We have fiscal payments … that are coming to an end and it is not clear what is going to replace them.” Enhanced unemployment benefits that have proved key to replacing spendable income amid record setting unemployment are due to expire this month.

Facing that “fiscal cliff,” the economy is also grappling with a surge of COVID-19 cases to record levels.”

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Marketwatch/Myra P. Saefong
Why gold has become a ‘weapon of choice’ for investors

Weapon of Choice“Gold prices have climbed to their highest levels in nearly nine years, with the precious metal seen as a ‘weapon of choice’ for gold investors dealing with pandemic-related uncertainty in the stock market, clearing the path to a fresh record in the second half of the year.

Gold breezed through the $1,800 level and “seems to have recovered its mojo,” said Ross Norman, chief executive officer of precious metals news and information provider Metals Daily. Bulls will also be “much encouraged that silver is performing at last.”

September silver SIU20, 0.67% was up 44.1 cents, or 2.4%, at $19.14 an ounce in Wednesday dealings. It’s poised for the highest most-active contract settlement since September 2019.

Gold prices may still see some downward pressure from profit takers, warned Moy, but fundamentals indicate that higher gold prices ahead. “We have a long uncertain road ahead to recovery and that will be gold for gold prices.”

As for how high prices may go, Norman said his forecast issued to the London Bullion Market Association in December 2019 still stands, calling for a 2020 high of $2,080 an ounce for gold.”

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