Will Commodities Ride the "Blue Wave" Higher in 2021?

What a way to kick off the new year.

If you happened to watch the storming of the Capitol unfold live on TV on Wednesday, you might have mistaken it for a movie adaptation of a Tom Clancy novel. Not since the Burning of Washington in 1814 have antagonistic forces succeeded in breaching the Capitol walls and causing damage.

I believe that may be one of the most alarming things about what happened. I’m hardly the first to question how the rioters were able to get inside the building so easily. It’s being reported that lawmakers are planning a “minute-by-minute” investigation into law enforcement failures during the attempted coup that resulted in five deaths, including an officer with the Capitol Police.

Despite the turmoil, stocks have incredibly continued to trade up. Today the S&P 500 opened at a new record high as disappointing jobs numbers sparked hopes of additional fiscal stimulus.

Such spending seems even more likely now that the Democrats have managed to gain control of both chambers of Congress, following Georgia’s special Senate election.

To be fair, the Senate is split right down the middle 50-50, but the Democrats can also count on Vice President-elect Kamala Harris’ vote in the event of a tie. (Today, though, Joe Manchin, the conservative Democratic senator from West Virginia, said he will “absolutely not” support $2,000 relief checks, which puts the legislation at risk if no Republican lawmaker can be persuaded to get on board.)

I’m not sure if this constitutes the “blue wave” we kept hearing about in the months leading up to the November election, but it provides the Democrats with just enough political capital to realize at least some of the policies on their wish list, including green renewable energy. President-elect Joe Biden has an ambitious deadline of 2035 for decarbonizing the U.S. power grid.

If nothing else, this should be positive for gold, given the potential for greater government spending and, therefore, inflation.

Remember: Government policy is a precursor to change. We liked renewable energy stocks well before the election, and I believe investors would be missing an opportunity if they overlooked them now that the sector may get support from the new Congress and administration.