Stimulus Legislation

The fourth stimulus legislation since the beginning of the pandemic was signed today, amounting to $484 billion in additional relief.

Key features include $75 billion for hospitals, $25 billion in disaster grants, $60 billion in disaster loans and grants, and $310 billion in additional funding for the Payment Protection Program (PPP).

The original $349 billion in PPP funding through the CARES Act was used fast, although the process has left many still waiting for funds. Yet another problem has risen between many businesses and their employees, many of whom have figured out that the previous boost in unemployment benefits of $600 a week (on top of a $371 average weekly unemployment benefit) means they will earn less if they return to work.

This has been more the case in states with higher unemployment benefits. As a result some businesses have returned their loan, including exempted large businesses like Ruth’s Chris.

Stimulus Legislation States with higher minimum weekly unemployment insurance benefits.

Source: New York Times

Gold

You may have noticed some recent buys of precious metal bullion and precious metal miners. The unprecedented freeze of the economy and the unprecedented stimulus from government brings to mind an old paradox: What happens when an unstoppable force meets an immovable object? Will government help and money printing ultimately produce the kind of V-shaped recovery the stock market seems to be anticipating lately?  We don’t know just yet. What we do know is that large outlays and deficits funded by massive money printing are here to stay for some time. Gold and other precious metals seem like good diversifiers and even a form of insurance in a world united in doing everything it can to save the global economy, including asset prices. In the very least, gold may be increasingly accumulated as a currency, the supply of which can’t be increased by fiat. We will have more commentary on this later.   

Stimulus Legislation Spot price of gold.

Spot price of gold, via Bloomberg:

Lastly, a positive story

Here’s a story sent by a client, because reports of quiet heroism like this need to be forwarded. Workers making a key ingredient of personal protective equipment stayed at work for 28 days straight.

Have a great and safe weekend.