Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

How Socialism Presidential Election 2020 Could Affect the Gold Market

Commodities / Gold & Silver 2019 Jun 13, 2019 - 03:13 PM GMT

By: MoneyMetals

Commodities

The 2020 presidential election is already shaping up to be one of the most bitterly contested in history. The outcome could have enormous ramifications for all asset markets, including precious metals.

In the meantime, a lot can happen before November 2020 – especially with the Federal Reserve apparently set to turn dovish and cut interest rates this summer.

Some historical research into presidential election cycles suggests that the stock market tends to perform well heading into an election year. The incumbent administration tends to focus on padding economic statistics.


And during election years, Fed officials (who swear up and down they aren’t motivated by politics) tend to avoid making policy moves (such as rate hikes) that could make them vulnerable to political attacks.

Gold and Silver Fared Well Last Time a Republican Stood for Re-Election

Gold and silver, which are less tied to the economy than stocks, show little recent correlation with election years.

The last time a Republican incumbent was up for re-election was 2004. Incumbent President George W. Bush faced off against Democrat challenger John Kerry. Gold and silver markets performed well in the second half of 2003 and made modest gains in 2004. The metals were in the early stages of a major bull market.

In 2008 (when Barack Obama and John McCain were vying for the White House), the financial crisis hit. Silver got slammed along with virtually all other assets during that infamous autumn. Gold, however, weathered the storm quite well and ended up putting in a gain for the year.

The stunning election victory of Donald Trump in 2016 lit a fire under the stock market and put something of a damper on retail demand for physical precious metals in the United States.

Although gold prices are now up since Trump’s election win and inauguration, silver has trended lower – and coin and bar demand remains soft compared to the heady years under President Obama.

Unlike stocks, precious metals tend to benefit from the “fear” trade. If a pro-socialist Democrat actually wins the White House in 2020, you can bet a lot of investors will decide to hunker down and get defensive.

Gold and silver markets may begin to display an inverse correlation to trends in President Trump’s poll numbers.

However, larger macro forces now in motion – namely, steadily rising government debt and accommodative monetary policy – will stay in motion through next year’s election and beyond, regardless of who wins. It’s only a matter of whether the election results accelerate the debt-fueled monetary crisis that is coming.

If the GOP keeps the White House in 2020, it’s not necessarily bad news for metals investors.

Recall that when George W. Bush won re-election in November 2004, gold was trading at a mere $450/oz. The money metal went on to hit a record $1,000/oz in early 2008. Over that same period, silver advanced from under $8/oz to over $20/oz. Importantly, precious metals vastly outperformed the stock market through the four years of Bush II’s second term.

Radical Leftists Push Democrats to Go for Broke on Spending Promises

Some in the conservative media stamp Democrats as suffering from “Trump derangement syndrome.” Unhinged hatred of the President is only part of what’s driving Democrats to take increasingly radical positions (packing the Supreme Court, abolishing the electoral college, abolishing ICE, censoring the internet, “Medicare for All,” “Green New Deal,” etc.).

Even before Trump, the base of the Democrat Party had been lurching ideologically to the left. Today Democrat candidates are being pushed to reject “mixed economy” welfare statism and fully embrace socialist doctrines. Nearly the entire field of Democrat presidential candidates has essentially adopted Bernie Sanders’ platform.

One exception: Former Colorado Governor John Hickenlooper, who is running as a pragmatic problem solver with a business background. He recently gave a speech to California Democrats in which he said socialism was the wrong way to go. He was roundly booed.

Meanwhile, 76-year old “Uncle Joe” Biden is disavowing himself to appease far left activists but that is proving to be difficult for him. Under pressure, he suddenly reversed his decades’ long support of the Hyde amendment, which bars federal funding of most abortions.
Biden is also trying to play catch-up to the trillions in new spending programs proposed by Bernie Sanders and Elizabeth Warren, clumsily rolling out a partially plagiarized “Clean Energy Revolution” that would cost the economy at least $5 trillion.

2020 Prediction: Winner Will Embrace More Money Printing

As for Senator “Pocahontas,” Warren has gone off the reservation when it comes to taxing, spending, and printing currency out of thin air. She would pay for her multi-trillion-dollar Progressive wish list by instituting a new wealth tax and pushing the U.S. dollar lower (i.e., inflation). As Warren put it, her monetary policy (vague as it is) would entail “more actively managing our currency value.”

It sounds like Modern Monetary Theory (MMT), which is likely coming in one form or another in the years ahead as the government struggles just to pay interest on an exponentially growing debt load. Under MMT, the government would directly print the dollars it needs to close its deficits rather than issue new bonds. Similar monetary experiments didn’t work out so well in Zimbabwe and Venezuela.

Given President Trump’s repeated clashes with the Federal Reserve over what he sees as “too tight” monetary policy, he might be all too willing to support a bipartisan push for a more “actively managed,” more inflationary monetary system.

Investors who are thinking about selling precious metals, or refraining from buying until Trump leaves office, should check their premises.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules