A Renewed Surge in COVID-19 Cases Rattles Investors

Just as the economy was beginning to find its feet and begin some form of recovery in earnest, the reality of 2020 has begun to sink in once again, with cases of COVID-19 rising rapidly across both North America and Europe.

Some of this increase has to do with better testing, some if it has to do with the significantly increased knowledge we have about the virus, however, a significant proportion of it has to do with complacency and people’s desire to live their lives in as normal of a fashion as they possibly can in this upside down world.

Regardless of the why, the markets are reacting and they are suffering negatively because of it.

Markets Drop Across the Board

Renewed fears of an economic shutdown is what is scaring market participants the most, as it is appearing more and more likely that Joe Biden is going to become the next President of the United States, despite President Trump’s continued fight in that arena.

Joe Biden and his closest allies have stated repeatedly that they are not taking a mass shutdown off the table and are indicating that it is a very likely possibility in their attempt to battle the spread of COVID-19 once he takes office.

Many people laugh at this notion, as they believe that it is simply too late to stop the spread of the virus and only a mass national vaccination program will help alleviate the problem, or simple herd immunity over time.

Yet, fears about people’s willingness to take the first wave of vaccines is a real concern for the markets.

Chart sources, google stocks

These various concerns are what is causing the recent volatility in the markets, as speculation of what is coming next begins to run rampant in the minds of many investors.

Recent polling from across Canada has indicated that support for taking a COVID-19 vaccine is rising from recent levels, however, many are still anxious about taking what they believe to be a “hastily” approved vaccine.

Global News reports;

A new poll suggests the proportion of Canadians planning to get vaccinated for COVID-19 is on the rise after encouraging initial results from Pfizer’s vaccine trial.

Sixty-nine per cent of respondents said they plan to get inoculated against the novel coronavirus once Health Canada approves a vaccine that is broadly available and free, according to a survey by Leger and the Association for Canadian Studies.

The number is a jump from the 63 per cent who said they would take up such an offer one month ago, and a return to levels of vaccine enthusiasm reported in a similar poll in July.

Similar polling, carried out for Global News between October 23–26 by Ipsos, found that just 54 per cent of the Canadian public is willing to take a vaccine as soon as they can. Of that figure, only 22 per cent feel strongly about taking a vaccine right away.

What this means is that there is going to be heavy resistance by a large percentage of the population in taking the first round of COVID-19 vaccines, and despite what your personal beliefs may be surrounding this controversial topic, this has the markets and governments around the world rattled.

China Steams Ahead with Vaccinations

One country that is not waiting for global approval in regards to a standardized COVID-19 vaccine is China, who has to date vaccinated over 1 million citizens under the “emergency use” designation.

This vaccination campaign by the Chinese government is much higher than what Western officials previously believed and of which has been largely targeted towards troops and those in peace keeping positions according to government officials.

Joining the ranks of China, and unsurprisingly to many is Russia, who has also made recent news due to the fact that they have also begun to issue “still in clinical trial” doses of their COVID-19 vaccine.

Zero Hedge reports;

Russia and China are the only two countries actively working to develop a vaccine that have used emergency measures to vaccinate large swaths of their populations. Russian President Vladimir Putin even claimed earlier this year that one of his adult daughters had been inoculated in one of the early-stage trials for the vaccine developed by the Gamaleya Institute.

The rush to profit off of an effective COVID-19 is truly underway at this point, with countries such as Brazil already signing a contract to purchase the Chinese COVID-19 vaccine, while others such as Turkey are also entertaining the idea.

Meanwhile, in North America, both Pfizer, Moderna and other western corporations are signing deals with countries all around the world, as they claim to be close to having an effective COVID-19 vaccine.

In Conclusion

The markets remain rattled at the moment, fearing renewed, potential lockdowns, while also fearing the effectiveness and willingness of the public to take a newly released COVID-19 vaccine.

However, they need to fear not, as big daddy government is soon to be coming to the rescue once again, revving up the printing presses and issuing out stimulus checks galore, of that you can rest assured.

As previously stated, it mattered little who won the election if money printing was first and foremost on your mind, as both Donald Trump and Joe Biden plan to do just that.

In this scenario, both gold and silver bullion remain strong buys in my personal opinion, with dollar cost averaging being the continued preferred method of acquisition, riding out by the highs and the lows in stride.

2020 will remain a volatile year right until it closes its chapter, however, sanity will eventually be returned and a new normality will be resumed, yet with much uncertainty remaining as we head into 2021.

Until that time, stay safe and as always, keep stacking.

- Source, Nathan McDonald via the Sprott Money Blog



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Nathan McDonald

Financial journalist with over 10 years of experience. Writing about geopolitics, economics and all things related to precious metals.