If you read our briefing on Wednesday, you’ll know that upon leaving hospital earlier this week following treatment for COVID-19, President Trump cancelled planned economic stimulus talks and declared he’d only introduce a new relief package after he won the November election.
Fast forward one day and Trump had already distanced himself from the statement, suggesting he’d only threatened to cut discussions in order to get the upper hand.
As a result, there are signs that some sort of aid package will be approved before the election with many experts expecting US businesses will again be able to access the Paycheck Protection Program. This would enable them to open up and bring back laid off employees. It is thought those who have been laid off will receive government checks to help them pay rent and buy food. This renewed optimism is good for gold, which began gaining ground when the news emerged.
In the long term, this additional stimulus also makes a strong case to begin buying gold now. The latest estimates from the Congressional Budget Office show that US debt is soaring. It says, “Relative to the size of the economy, the deficit—at an estimated 15.2 percent of gross domestic product (GDP)—was the largest since 1945, and 2020 was the fifth consecutive year in which the deficit increased as a percentage of GDP.” A deficit of this size – which will only grow with additional stimulus measures – would seriously increase gold’s appeal as a safe haven asset.