And in many ways, we're right back where we started with the same President, and a house divided.
For investors, all the uncertainty this situation brings to the fiscal cliff and its impending tax increases and spending cuts are likely to fuel plenty of volatility for the next several months.
Yesterday's almost 300 point drop on the Dow and a 7% pop in the VIX are good examples of this.
We can also expect Ben Bernanke to be in place until at least early 2014. The only change I expect from the Fed now is more frequent and still larger easing campaigns, as well as potentially extending low rates, again, beyond mid-2015. Even if Bernanke is replaced, I expect only more of the same seriously misguided policies.
In fact, just yesterday San Francisco Fed President John Williams hinted that the most recent QE3 bond buying program could well exceed $600 billion.
So what does all of this mean to investors in hard assets--particularly those with holdings in gold and silver?
Leading into Election Day, traders are the most bullish they have been in 10 weeks. Eighteen of 27 gold analysts contacted by Bloomberg News were expecting higher gold prices in the short-term, while only five of the analysts were bearish.
Holdings in gold exchange-traded funds (ETFs) reached a record 2,588.4 metric tons on Nov. 1, which was valued at $140 billion. According to Bloomberg data, holdings in gold ETFs in the past three months have enjoyed their best run since August 2011.
Of course, the rise in bullishness regarding gold is not only due to the presidential election, but also to continued loose monetary policy from the U.S. Federal Reserve. Gold did rise 70% as the Fed bought $2.3 trillion of debt during the first two rounds of quantitative easing.
So should gold investors expect anything to change if President Obama wins re-election?
Under a true gold standard, paper notes are "convertible" into pre-determined, fixed quantities of the "yellow metal."
What actually happened back in 1971 was that President Nixon - facing huge budget and trade deficits, and a plunging dollar - enacted a series of economic moves, including the unilateral cancellation of the direct convertibility of the U.S. dollar into gold.
By slamming the "gold window" shut, Nixon also brought down the curtain on the existing Bretton Woods system of global financial exchange.
The fallout was immediate, creating a situation that financial historians still refer to as the "Nixon Shock."
Proponents of the gold standard say the real damage is still being wrought: That decision four decades ago led directly to the uncertainty, volatility and irresponsibility that we see in the U.S. economy and global financial markets today.
Whether you agree or not is a topic for another time.
But what I'm here to tell you today is that the world's central banks have quietly - almost secretly - returned the world to a new version of the gold standard.
Back in 2010, the world's central banks became net buyers of gold for the first time since 1988. Buying ramped last year and net purchases exceeded 455 metric tons (tonnes). That was the largest net purchase since 1964.
But the world's central bankers will handily eclipse the 2011 totals here in 2012: They will purchase a projected 493 metric tons this year as they expand reserves to diversify away from the U.S. dollar and protect their countries' economies against inflation, Thomson Reuters GFMS said.
And GFMS said you can expect central banks "to remain a significant gold buyer for some time to come."
Real Asset Returns Editor Peter Krauth told me he completely agrees with that assessment.
As Peter explained: "You can see their thinking, Bill ... you can see them saying: "We have enough of all these fiat currencies in our bank reserves - now we want something that's going to counter those holdings, that's a valuable asset and that has all the right fundamentals in place.' And that asset is gold."
We're seeing the results of this "new gold standard" in the marketplace...
Gold is expected to continue its rise in 2013, reaching up to the $2,000 mark - or higher.
On Oct. 23, Deutsche Bank analysts called for gold to exceed $2,200 an ounce next year. This came in light of the stimulus measures by central banks.
They wrote in a research note via Commodity Online, "While we have targeted gold prices moving above $2,000/oz. since the beginning of 2011, we believe the Fed's open-ended program of QE announced last month increases our confidence that a surge in the gold price above this level is only a matter of time."
Yesterday (Wednesday), December gold futures closed at $1,719.10.
But if we fast-forward to January, even March 2013, if Romney wins Election 2012, would gold prices be able to continue their upward run?
Here's what a Romney win would do for the yellow metal.
On Wednesday, markets returned to action and December gold prices rose to a week high on the Comex of $1,720.40.
But even without activity in the States, gold prices have a major catalyst from another part of the world: India.
This year, India's demand for gold has been off as authorities blame the metal for the country's economic problems, higher gold import fees and a lower Indian rupee.
But Indians don't stay away from gold for long - especially ahead of festival season.
Festival season in India, which includes Diwali and Dhanteras, starts in November. Weddings will also take place during this period with gold jewelry included in dowries.
With a "pent-up' demand for gold in India, it has the potential next year to hit new highs -- past $2,000 an ounce, reported Emirates 24/7.
On Tuesday, trading in the December gold contract on the Multi Commodity Exchange (MCX) closed 0.01% higher to 31,097 rupees per 10 grams, after seeing a 30,968 rupee low--a level not seen since August, reported Reuters.
In fact, the metal's string of annual gains is its longest winning streak in at least nine decades.
So it is hardly surprising that some investors are questioning whether the strong performance will continue for gold prices in 2013. Recent market activity shows a short-term pullback is on its way.
As Money Morning's Chief Investment Strategist Keith Fitz-Gerald explained today, "Many hedge funds and institutions are using gold to collateralize their marginable assets right now so one of the first things they're going to sell to raise cash when faced with a margin call is gold. They're also sitting on large profits that they'll immediately begin to take off the table in a sell-off. This will end up catching a lot of investors by surprise because they expect gold to take off when the stuff hits the fan."
But that doesn't mean the long-term 2013 gold price outlook is doomed.
Fitz-Gerald said gold will take off - "but only after it takes an initial hit."
In fact, Money Morning Global Resources Specialist Peter Krauth said gold could hit $2,200 by April or May.
Looking beyond the sell-off, here are three key drivers of gold prices in 2013.
Of the 20 S&P 500 companies that have provided Q4 guidance so far, 18 of them have guided lower, "slashing" their forecasts, according to Goldman Sachs and CNBC (as of Monday afternoon).
What's more, roughly one quarter of the reported earnings have come in flat to middling. According to Capital IQ, overall revenues are up only slightly at 0.34%.
Yet, for some reason the S&P 500 is only 3.89% off of its highs and is up 12.01% year-to-date through Wednesday afternoon.
Under the circumstances this suggests two things to me:
- There's a lot of volatility waiting in the wings; and,
- The near-term risk is to the downside.
The Q4 Earnings Story
So far this earnings season, roughly one quarter of the S&P 500 has already reported. That leaves the market with nearly 375 companies that have yet to spit out their numbers, roughly 150 alone this week.
Assuming the balance follows the pattern set so far, companies like Caterpillar Inc. (NYSE: CAT), Philip Morris International (NYSE: PM), and 3M Co. (NYSE: MMM) are going to show "respectable" (under the circumstances) numbers while talking about the "challenges" they see ahead.
Meanwhile, a few others, like DuPont (NYSE: DD) and United Technologies (NYSE: UTX), are going to reflect weakening earnings and revenue pressures leading to further cost-cutting as a means of protecting profits. These will include job cuts.
I also expect the bulk of the remaining companies will take the opportunity to lower their expectations -- especially when you consider that 61% of the companies as of Monday afternoon missed revenue expectations.
The irony here is that 61% of the companies that have reported over the same period have also exceeded analysts' expectations.
Naturally the markets will punish those who missed even when what they should recognize is that the analysts were wrong yet again. But that's another story for another time.
What's important to understand is that top-tier company management is using this earnings season to accomplish three things.
Meanwhile, over the last eight years, silver soared 790% before profit taking took some of the sheen out of the white metal. It is difficult or nearly impossible to find other investments that can boast those kinds of gains.
Despite the recent pullbacks and sideways trading in the metals' markets since mid-September, gold and silver are heading higher.
CIBC World Markets agrees and just turned more bullish on both commodities. The firm says both gold and silver are due for a seasonal bounce and investors should plunge into the sector now.
"We are about to head into the strongest month for gold performance, and indeed in looking at the next four months, investors could capture 56% of the annual gold gains and a whopping 66% of the annual silver gains by holding the metals over the period November to February," CIBC analysts Barry Cooper and Alec Kodatsky wrote in a note to clients.
Following a 5% increase and a rise in exchange-traded funds holdings in the third quarter, gold prices fell back to earth Monday, falling 1%.
It was gold's greatest one-day fall since July.
Most of the news that hurt gold prices was fleeting.
Positive U.S. retail sales data raised concerns the Fed would abbreviate its purchases of mortgage-backed securities. Investors were also worried early in the week about the possibility of weak Chinese economic data, although that didn't materialize - China posted growth of 7.4% on Thursday, as expected.
Finally, as Mitt Romney rises in the polls there's concern that as president he would implement bigger cuts to U.S. government spending, which would be bad for gold prices.
Precious metals investors no doubt have seen the recent headlines coming out of South Africa. Violent strikes (resulting in dozens of deaths) and work stoppages have plagued the platinum industry there in the past few months.
The causes of the labor unrest include poor wages and unsafe working conditions. There has also been a tussle for power between two warring labor unions - the Nation Union of Mineworkers and the far more militant Association of Mineworkers and Construction Union.
The result of all this turmoil is quite obvious for the global platinum market. The majority of the world's platinum, roughly 80%, comes from South Africa. Not to mention that 90% of that production comes from a limited area, the Western Bushveld region of the country.
But here's where it gets interesting, especially for those investing in gold.
This flurry of gold buying prompts many curious investors and doubting media to ask me two questions: 1) How can demand for gold and gold stocks continue; and 2) How high can gold prices go?
To answer these questions, we need to look at the intentions behind the economic and political decision-making across several developed countries, analyze the causes, the effects, and the possible ramifications.
For example, one of the most debated topics today is America's ongoing unemployment situation.
Job loss has affected the lives and pocketbooks of millions of Americans and our friends and families, culminating to a center-stage position in the election this year. All eyes turn to President Barack Obama and Mitt Romney to explain how each intends to create jobs.
During the two years following the Great Recession, Americans lost jobs at a similar rate to the employment losses during the Great Depression and in Finland after 1991. But two years after the crisis, U.S. employment losses stopped and reversed direction.
Compare this to the situations in Norway, Spain, Finland and Sweden, each of which had prolonged unemployment.
After Norway's financial crisis in 1987, it took 8.5 years to return to the country's employment peak. It took 13 years for Spain's employment to return to its 1997 peak. For Finland and Sweden, it took more than 17 years following their 1991 peaks.
Although the job losses in the U.S. don't seem as dismal, "Helicopter" Ben Bernanke wants to avoid Europe's and Japan's catastrophic situations.
The Asian city's government repealed a 7% tax on gold and silver effective Oct.1. Now investors can store their gold in Singapore without costly value-added taxes.
Singapore hopes the move will help the region morph into a precious metals trading market like London and Zurich.
"It seems a little unfair to put a sales tax on what is essentially money. The removal of the GST on gold will allow Singapore to better compete with Hong Kong and other bullion trading centers in the region," Nick Trevethan, a senior commodity strategist at ANZ in Singapore told Reuters.
Singapore currently controls roughly 2% of global gold demand and aims to grow that share to some 10% to 15% over the next five to 10 years.
The market expansion is expected to increase global demand for gold and silver bars and coins in the fourth quarter of 2012. An influx of precious metal traders to Singapore is also expected, with more commodity offices and bullion storage facilities to follow.
Anticipating the opportunity, JPMorgan Chase & Co. (NYSE: JPM) opened a precious metals vault in the city in 2010.
"I think this is really going to change the landscape in Singapore," a gold dealer told Asia One Business. "A lot of companies will find the incentive to start operations in Singapore. This news is going to draw attention to Singapore as a safer place to park funds."
That's because Gross, the Pacific Investment Management Co. (PIMCO) founder and co-chief investment officer, released his October 2012 investment outlook Tuesday that came with a warning for the U.S. and investors.
Gross said that U.S. fiscal problems have put the country in a "Ring of Fire" that'll burn investors if they aren't protected by gold and real assets.
Gross warned that recent studies have concluded that "[T]he U.S. balance sheet, its deficit and its "fiscal gap' is in flames and that its fire department is apparently asleep at the station house."
Central banks bought 254.2 tons in the first half of 2012 and may add close to 500 tons for all of 2012, the World Gold Council said last month.
According to the International Monetary Fund (IMF), Russia added 18.6 metric tons of gold in July. South Korea bought 16 tons -- a 30% increase. Kazakhstan increased their bullion reserves for a 12th consecutive month.
Turkey, Ukraine and the Kyrgyz Republic also joined the party.
And the buying continued in August, albeit at a more moderate pace, the IMF confirmed.
"Gold prices continue to be underpinned by growing demand from central banks...we believe this trend is likely to ramp up once liquidity increases in global markets," Justin Harper, markets strategist at IG Markets, told MarketWatch.
That means the cheap money policies by many of these same central banks, such as the Federal Reserve's recently announced QE3 program, will also help fuel the rise in gold prices.
Combine that with skyrocketing demand from the private sector, and government hoarding could easily push the price of bullion as high as $2,500 in 2013.
In fact, the rally could be similar to gold's big breakout move in 2007, when gold prices surged 60%, according to Citi FX Pro analyst Tom Fitzpatrick.