Gold has bounced back from its support level of the low $1,800s, and is on track to touch $1,920 by Christmas time, said Peter Hug, global trading director of Kitco News.
Fiscal stimulus and certainty continues to dominate the headlines and move the markets. Peter hug, global trading director of Keiko metals joins us today to talk about his metals forecast for the remainder of the year. Peter, it seems like every time we speak, there has been some progress made with the fiscal stimulus front, and then it's been taken away, back and forth, back and forth.
What's the latest from this week. Well, when the week started, uh, it looked like they were going to get a deal together. And, uh, you know, it was impressive. Gold got up through 1850, uh, got as high, almost as 1880 at the beginning of the week. And, uh, you know, then I don't know what else to call them, but these, uh, idiots and now Washington, I just can't seem to get it together.
Uh, even though it's absolutely crucial, we get a bridge here. Uh, Until the vaccine takes hold. And as of this morning, uh, there's still a part on two major issues. And, um, my understanding is the Democrats have taken the weekend and they're not back till Tuesday. So, uh, you know, the fact that the stimulus is now in question, uh, again, I find it absurd, but, uh, the fact that it's in question, uh, as a, you know, created, uh, some, uh, weakness in the metals, um, Through the balance of this week.
Um, and, uh, you know, gold broke down below 1850, uh, and is just now just sort of nudging up against it again. So until we get this fiscal stimulus package done, um, uh, the market is sort of sideways, uh, but, uh, my tone is still, uh, constructive for next week. I think they will get something done. They don't have a choice.
Uh, and given the other news this morning that, uh, Boris Johnson, uh, came out with that, uh, The UK is likely to, uh, go through with Brexit without a trade deal with the EU, uh, could also create some issues in the new year. So again, the macro picture, my opinion continues to be bullish for the metals, but, uh, in the short term, there, there is some volatility.
I was asking you offline, whether or not they're going to wait until the Georgia runoffs to have some sort of conclusive deal. Maybe they're just waiting. Well, they might, but again, even if, uh, let's assume Democrats win both those seats, uh, there's nothing Biden can do until he becomes a sworn in on the 21st.
Um, so I'm not sure that that accelerates any process. If anything, it might anger the Republicans even more and make them even more, uh, Uh, recalcitrant in, uh, putting a deal together with the Democrats. Yeah. So I don't think that's the, the catalyst that gets this deal done. And I, I think it's pressure from, uh, from the public, uh, on their, uh, elected officials.
Uh, there is some serious issues coming up within a week, uh, on people that, um, uh, had a wreck moratorium and, uh, on the unemployment side, they need to get a bridge here until this vaccine, uh, Uh, it is going to take effect. And I think that is at least a three to six month process before the vet, the vaccine, it's going to be distributed in quantities, uh, sufficient to, uh, STEM this pandemic.
And I, I'm just amazed, uh, that the, uh, That the government is not able to come together and do something I should bring up also the U S job as clams Rose to three month highs. So what is the fiscal stimulus package that you're looking for, where you would like to see that could help Americans at this time?
Well, I think, uh, you know, other than the States and, and, and, uh, the municipal governments that are basically, uh, mired in debt now because of, uh, the loss tax revenue, uh, that's something I think that can wait, uh, they can run their, uh, their local budget deficits, uh, you know, as needed until, uh, you know, until the economy rejects itself.
But for small businesses, uh, And for people that are on unemployment that is expiring within the next week, uh, funds are absolutely crucial. I mean, people are not being able to pay rent, uh, uh, because of the new surgeon COVID, uh, related cases, uh, businesses in a variety of States, large States like California, they're shutting down.
Um, there are these businesses, uh, if they don't get relief are going to go out of business. So, you know, and you know, for them to come back then, and then to rehire, uh, is going to be a much, much more difficult process. So giving them some relief so they can pay at least their workers. And keep them on board.
So when this economy does reopen, um, they'll have the snap and they'll, they'll still have a business to open, uh, for, you know, to move forward is absolutely crucial. Yeah. So without the stimulus, I mean, uh, These businesses, folding and then people maybe being more permanently unemployed, uh, is, is going to be a serious issue for the economy.
Again, I mean, just mind blowing to me that, uh, both the Democrats and the Republicans can come together. The equities markets have reacted. Uh, well, I guess negatively, if you want to call it negatively, but it's been trending down this week. Hasn't been huge moves, but it's been trending down this week. I personally, I would have expected to go down more considering the stimulus grit lock and the, uh, and the, um, economy economic troubles that we just discussed.
Fair point. But, uh, if you look at the equity market, You could buy the index and you'd be, you'd be doing okay, but you know, not all stocks are moving in the same direction. I mean, there are certain sectors that are doing extremely well. Um, you know, I mean, I don't know if you saw the Airbnb, uh, IPO yesterday.
I, uh, you know, went up to $160. I think the issue price was 40 if I remember. Right. Uh, so you know, the people, the disconnect between wall street and main street is enormous. Uh, so the people that have the money that are in the equity market and are in the right sectors are doing extremely well. Uh, main street is getting hammered.
Uh, so the disconnect between the rich and the poor is just accelerated and, and that gap is widening. Um, So that, you know, the poor guy on the street, he's not, uh, experiencing the, uh, the growth in wealth, uh, that the, uh, uh, the upper-middle-class and rich are experiencing in the equity market. So yeah, the broad, the broad market looks higher.
Individual stocks are where you need to play the equity market. It's not just a broad base recovery. And again, if we don't get a stimulus package in this economy slows down again. Um, and, uh, we can't get this pandemic under control, you know, stocks that have. On the anticipation of the economy open I E airline stocks, uh, cruise lines, uh, Disney places like that.
Uh, Disney parts specifically, uh, are, are going to have, uh, uh, an issue in 2021 from an earnings perspective. Let's go back to gold now, suppose let's take the scenario that you just discussed suppose that we don't get a fiscal stimulus package in time. And some of these stocks fall and we see more volatility of the equities markets.
Would that be positive or negative for gold? Because keep in mind, this scenario depends on fiscal steam. That's not happening and we need fiscal schemas for gold to rise further. Well, I think the macro picture, uh, stimulus is obviously very important for the general population, but from a macro perspective, I think the central banks, uh, both in North America and in Europe, at Japan to it as well will, um, continue to be extremely accommodative and do whatever they need to do to try to keep the economy.
Uh, a float. So in that context, that's positive for gold, where I have a possible issue with the metals is if we get a significant downturn, uh, in risk assets, uh, I E sort of a March of this year, the short term, uh, prospects for the metals could be negative as people raise cash. So th th that is, that is a possibility, um, from a technical perspective, the other issue that might come up being between now and the end of the year, uh, it's an outlier, but it's possible.
Uh, if people are concerned, uh, when Biden gets in that he will be. Early on his initiative to raise capital gains taxes and income taxes. I personally don't believe that will happen until 2022, if, if, then, but if he does come early and that's the perception. Yeah. There is still a lot of value, a lot of profit in the gold and silver trade for people that got in at the beginning of this year.
And for larger clients that have the ability of, of doing a, uh, of this type of tax tag, a transaction, um, I could see some tax loss selling and gold and silver to lock in your capital gains under this, uh, capital gain structured tax year. Um, in anticipation of capital gains, uh, rates going higher next year.
So you may see some, uh, tax loss selling from a capital gains perspective, uh, to lock it in capital gains, uh, uh, in the 20, 20 tax year. That's an outlier it's possible, but that could create some weakness coming into year end. Yeah. Uh, you were right actually last week, or, you know, we you've been saying this for quite a few times in the last couple of weeks, that goal would be hitting a bottom.
Uh, it bounced off its support level. Now is having a hard time re uh, breaching the 1850 resistance level. Uh, what's it going to take to breach that level? Yeah, we got through 1850, a late last week, early Monday morning. Uh, and, uh, went up through, uh, almost got up to about 1875. Uh, then with the stimulus, uh, talk, starting to stall it, it dropped, uh, lower, uh, it's it's bouncing up against 1850 this morning.
It's a Friday. So I don't expect the, um, traders to go into this weekend. Short. Um, so I would anticipate 1850 gets taken out next week and it's still possible in my opinion, to see, uh, before Christmas to see the 1925 levels tested. It's interesting. I'm going to share with you our, uh, kick a weekly survey here.
Wall street is more bearish this week than bullish. So 33% of the wall street pros surveyed. Bullish 40% bearish, 27% neutral main streets, uh, bullish 54% bearish, 28% neutral, 17%. So the main street investors are a little more, uh, bullish than the, uh, wall street pros. Uh, which, which camp are you in? Well, you see 1920, so I'm guessing you're with the retailers.
Uh, this I'm constructed this market, uh, you know, uh, I'm not discounting the fact that we won't see an 1825 tomorrow or next week, but, uh, my, uh, overall, uh, uh, perspective for next week is I, I think this market moves higher coming into Christmas and, uh, you know, I'm, I'm still looking for 1925 to get tested before this year out.
Perfect. Peter hug. Thanks very much for your updates.
Stay tuned for more on Kitco news and don't forget to subscribe and be a part of the action by participating in our weekly survey every week. At the end of the week. I'm David Lynn. .