CNBC/Elliot Smith
‘Economic and social consequences will last a lot longer than the virus itself,’ says OECD’s Gurria

The global economy must fundamentally transform in order to avoid going back to the status quo that got us here, global finance leaders said Tuesday.

As policymakers around the world attempt to plot an economic recovery from the Covid-19 crisis amid a resurgence in infections in the U.S., Europe and various countries around the world, leading figures at the World Economic Forum (WEF) Jobs Reset Summit called for an overhaul of the global economy.

Angel Gurria, secretary-general of the OECD (Organization for Economic Co-operation and Development), told the same panel that the global economy was not in great shape going into the crisis, with trade tensions having a knock-on effect on confidence, investment and ultimately growth.

Gurria suggested that Covid had exposed the fundamental flaws in the global economic structure, from production to trade to inequality and “the way in which we are leaving many people behind.”

However, he argued that controlling the virus is the first priority in order to mitigate the long-term economic consequences, including rising deficits, debt and unemployment.

“We don’t want to go back to the status quo that you had before because it was the status quo that got us here, that made us be unprepared, that did not invest enough in vaccines, that did not invest enough in health,” Gurria told CNBC’s Steve Sedgwick.

“We are not out of the woods yet, we are actually just starting to walk into the woods, I’m afraid, because the economic and social consequences will last a lot longer than the virus itself.”

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Forbes/Tim Treadgold
Silver Shines, Says Citi, Tipping A 60% Price Rise — For Starters

Silver has been a graveyard for investors since the Hunt brothers tried to corner the market for “poor man’s gold” 40 years ago, so when a big-name investment bank earlier this week forecast a 60% rise in the silver price most investors yawned.

Citi, which has a well-connected resources research team, has put its neck on the silver block in an advisory note with a tip that the price of the metal will rise to $40 an ounce over the next 12-months.

Silver is currently trading around $24.80 an ounce on the London bullion market, having already risen by 38% from $18/oz since the start of the year.

Citi’s case for silver is based on growing demand from investors who see silver as a cheap entry point into the world of precious metals dominated by gold, with a bonus of strong industrial demand.

But the bank doesn’t stop at a 605% silver rally. It also argues that there is a technical case for silver doubling $50/oz, and potentially rising four-fold to $100/oz.

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Kitco/Anna Golubova
U.S. stimulus to trigger rally: Gold price to surge to $2,200 by year-end – ANZ

The U.S. fiscal stimulus package will trigger a price rally in gold, according to Australia and New Zealand Banking Group (ANZ), which sees the precious metal surging to $2,200 by the end of the year and advancing to $2,300 by early 2021.

“Approval of a U.S. relief package will be the trigger for price upside,” ANZ’s commodity strategists Daniel Hynes and Soni Kumari wrote in the latest commodity report.

ANZ’s forecast for the precious metal sees gold rising to $2,200 by the end of the year and then climbing further to $2,300 by early next year.

“The outlook for gold is positive amid mounting economic concerns due to C-19 surges. Accommodative central bank policies and liquidity injections are broadly supporting the market,” Hynes and Kumari said.

Physical demand is also projected to recover ahead of the festival season, the strategists added.

“We see the gold price reaching USD2,300/oz early next year,” they wrote.

In the short-term, uncertainty over the stimulus package and stronger U.S. dollar have been weighing on gold, the strategists said, while noting that this pressure is likely to be only temporary.

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Fox Business/Jonathan Garber
Wall Street backtracks on ‘gridlock is good’ stance with post-election stimulus at risk

Investors are having second thoughts about which election outcome may be best for the financial markets, according to JPMorgan.

Wall Street, which typically likes gridlock in Congress since it thwarts major regulatory changes, now fears a Democratic and Republican split will delay stimulus efforts the economy badly needs.

A Biden victory and Republicans retaining the Senate was previously thought of as a best-case scenario for financial markets, but that may no longer be the case as Congress has yet to agree on a new stimulus package.

“Market expectations are now set up for a Biden win and a front-loaded fiscal package into 2021, and there is room for disappointment if these assumptions do not come to fruition,” according to participants in JPMorgan’s virtual investor conference call held on Oct. 14. The call was conducted under Chatham House rules, meaning the identities of the speakers were not made public.

Traders on the betting platform PredictIt say there is a 58% chance that Democrats sweep control of the presidency, House and Senate.

Expectations of a so-called blue wave have Democrats feeling confident over the possibility they will be able to ram through a hefty stimulus package in early 2021.

So much so that House Speaker Nancy Pelosi on Sunday set a 48-hour deadline for the White House to reach an agreement with Democrats if they want a deal passed before Election Day.

That seems unlikely as the two sides appear to be far apart on a deal. Senate Majority Leader Mitch McConnell, a Republican from Kentucky, has floated a targeted stimulus package worth less than $500 billion while Pelosi and some White House officials have called for a bill worth $1.8 trillion to $2.4 trillion.

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