Gold's Seasonal Rally and the future of Money

Festive predictions have begun 

Thanksgiving marks the start of the festive season and there is just over a month to go before we can wave off 2023. As with every year end we are starting to see large institutions put forward their expectations for the year ahead. 

Goldman Sachs entered the fray feeling especially pleased with themselves as many of their predictions for 2023 were so accurate one might wonder if there are forces other than market forces in play. So what does the near psychic bank expect for next year? 

Well they are extremely optimistic, with big gains across the major stock indexes expected. They are still betting on a soft landing, and see inflation coming down thanks to interest rates, with no major fallout. They believe both interest rates and inflation have peaked, and no further rate hikes are to be expected by the major central banks. 

Whilst this might sound like bad news for gold, it is in truth very positive. This last year has shown gold’s true resilience in the face of rising interest rates and falling inflation. Investors (like central banks) are beginning to see the yellow metal as an asset for liquidity and stability. They are just starting to buy gold as a safe haven and not for its returns. This is great news for gold in the long term. 

Elections Could Change The Monetary System 

First up, Argentina welcomed in libertarian economist and TV presenter Javier Milei. The ‘radical’ politician took 56% of the vote. It has been reported that the majority of his support came from the youth vote. With inflation at 142% it’s unsurprising that the future of the country has been decided by those who are likely to be the most affected. 

Milei (also known as El Peluca (“the wig”) and El Loco (“the madman”) has expressed his desire to abolish the Argentinian peso and adopt the US dollar. This is an interesting approach from a libertarian – handing over your country’s monetary independence to the US. But he has also expressed his admiration for currencies that enable citizens to go about their business privately and without fear of anyone devaluing the currency through monetary policy. Contradictory, to say the least! Regardless of where his approach finally lands, this is set to cause some ripples, for sure. 

Patrick Karim, Charts and Gold’s Next Breakout

The second election that could shake the boat is the one that only announced its results last night and that is the victory of Geert Wilders in the Netherlands. His Freedom Party doubled its number of seats in Parliament. Wilders must now work out how to form a coalition, a process which could take months. However he succeeds, this could be another pin in the Eurozone. Whilst Wilders did downplay his previous calls for ‘Nexit’ he is not a fan of the EU and it will be interesting to see how this comes into play in the coming years.