This week, Zacks Equity Strategist Mayur Thaker, CFA, discusses:

His lates update in gold. Mayur dives into the performance data of gold and the S&P, showing that gold has soared over the past year. Contrary to popular opinion, Mayur suggests gold behaves differently from the consumer price index and reflects forward-looking excess liquidity. By looking at trends in the federal government budget alongside past gold prices, Mayur believes gold can forecast the direction of a future government deficit or surplus.

Mayur’s data shows that as of August 2024, the fiscal deficit is the fourth largest in the last 100 years, and the most severe in any non-emergency year. He believes this alongside rallying gold prices over the past year may indicate rising excess liquidity. Mayur suggests that while gold may signal an upcoming recession or increasing deficit spending, it has been notably weaker following the Presidential election result, indicating decreasing expectations of excess liquidity due to stronger private sector growth expectations.

He wraps up his discussion indicating the Trump agenda can either be very bullish or very bearish depending on the order the agenda is carried out and provides a key signal to watch for to determine which outcome is most likely for the coming year. Mayur strongly advocates caution to investors and urges a repositioning of assets into quality businesses that comprise the recession-resistant Zacks Earnings Certain Portfolio. Some of these companies include Costco, Novo Nordisk, and more. Don’t miss this valuable analysis.

The views of Mayur Thaker, CFA are not necessarily the views of Zacks Investment Research.

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