The UAE News report by Abdul Basit: Investors are feeling excited as well as nervous. On Nov 9, Dow futures jumped over 1,400 points higher following the early morning announcement, setting itself up for one of the largest daily net point increases in history. Meanwhile, S&P futures added more than 3.5%, shares of PFE were 16% higher in premarket — which is nuts considering Pfizer is already a $200 billion company.

These valuable and insightful thoughts were shared by Shan Saeed, Chief Economist, Juwai IQI, Malaysia, during an exclusive interview with The UAE News.

The biggest loser this morning was precious metals. Gold, traditionally seen as a hedge against economic turmoil, sold off in a knee-jerk reaction to the news, falling nearly $65 to under $1,890 an ounce. Meanwhile, silver shed more than 5%, trading at $24.30 an ounce at last look.

Presumably, gold and silver dropped because investors might be thinking there won’t be a second stimulus. Or that the second stimulus won’t need to be as large as planned. But they can keep dreaming. Sophisticated and smart invetors who fathom history and economics have always taken position in two asset classes. 1/ Real estate 2. Gold / Silver 

Gold Prices Post US Election

With the election over, it’s still early to foretell the future, but one thing is for sure — the recent results of the presidential election will play a big role in shaping the global economy for the next four years. In the coming months, there is no doubt that we will see increased volatility in stock markets and investors seeking traditional safe havens such as gold.  

Sources: Refinitiv Datastream / Economist Magazine/ financial times/ Wallstreet journal. 

Changing Asset Class

Just imagine, how bonds became stocks and stocks became bonds.  Bonds have become the new equities.  Everyone has become a short term trader, not buying bonds to hold them. I don’t think people fathom the volatility of equities.  Markets are whistling past the graveyard.  First signal in the market. In the last 4 years, bonds have become equities 

Year              Negative Bonds      Percentage

2016.             $10 trillion                35%

2019.             $16 trillion                50%

2020.             $17.05 trillion           53%

Strategic Thoughts: Gold for Gold 

In fact, Central banks are buying bonds, ETF and now QE is moving like a bullet train. And along with a rapid increase in the velocity of money, should be seen as a positive for gold. 

Remember, most gold demand comes from the jewellery market. People don’t buy jewellery during economic declines. Bottom line is I don’t see any reason gold should have sold off this morning. And I think that makes it a great day to be a gold buyer. Gold prices to meander around $2200 to $2500/oz by December 2020 and should be higher trading between $3000 and $5000/oz by Dec 31-2021. Stay agile and invest only intangible assets as the global economy moves toward stagflation. – abdulbasit@theuaenews.com