The Post-Election Trade Points To Gold And Silver

Includes: AGQ, DGP, GLD, SLV
by: David Urban

This lack of a selloff in Gold (GLD, DGP) and Silver (SLV, AGQ) is a sign that this is the final chance to get in before the bad news hits. The recession in Europe continues to grind on with far right parties taking a larger role over the security efforts of Greek citizens and the Obama administration asking the Troika not to release its latest report on Greece before the election.

Earnings reports across the board have been weak which is surprising since earnings estimates have already been ratcheted down. Across the board companies are reporting a diminished outlook for the fourth quarter disappointing bulls who expected earnings to push stock prices higher.

The reality in the US is that as the election has now passed everyone can focus on the dual problems of the fiscal cliff and the debt ceiling. Neither one is likely to be solved with a Grand Agreement and the discussion regarding each will only serve to kick the can down the road.

The post-election forecast is for no change in the US government and a continuation of the pre-election malaise as neither party appears ready to reach across the aisle and work to get the country back on a growth path.

In South America, Argentina is being affected with a serious case of stagflation as inflation jumps above 20% while economic growth stagnates.

In Europe the problems continue with the EU and IMF now at a major difference of opinion over Greece while Angela Merkel attempts to sweep the problem under the rug as she faces re-election in September of 2013.

This indicates that a solution to the problems befalling Greece, Spain, and Italy will be kicked down the road until at the very least after the German elections. Failure to do so risks the election becoming a referendum on the Euro, a discussion nobody in Germany want to have.

Around the world leaders seem unable or unwilling to deal with the problems affecting the world. At a recent IMF conference, in Tokyo ironically enough, global leaders prodded each other to act but to date the only action is monetizing debt.

The good news is that the continued malaise will benefit both gold and silver investors in 2013 as the realization that the market has become increasingly overvalued.

The only value proposition in the market remains the precious metals. Use this dip as a buying opportunity to add to your gold and silver holdings as the forecast for 2013 is for much higher prices.

Disclosure: I am long GLD, DGP, SLV, AGQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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