03
Mar
2016

Donald Trump – Bad For Dollar, Good For Gold?

Donald Trump’s emergence as the Republican frontrunner and possible future U.S. President is causing some gold and investment analysts to suggest diversifying into gold according to the Wall Street Journal.

Donald_Trump
Donald Trump – Gage Skidmore via Commons.wikimedia.org

 

From the WSJ:

The other winner from Super Tuesday could be gold.

With Donald Trump solidifying his status as the front runner in the Republican field, some investors and analysts watching from overseas say that the ascendancy of the brash New York businessman could rattle global markets as the November presidential election inches closer. Nervous investors, they say, could pile in to gold and other safe-haven assets as an insurance policy.

The journal quotes David Govett of London-based commodities broker Marex Spectron:

“The mere thought would suggest a good opportunity to buy gold,” said Mr. Govett, who heads the firm’s precious-metals trading desk.

“Who knows what could happen should he be handed the keys to the White House,” said Mr. Govett.”

James Sutton, a London-based portfolio manager on the global natural resources equities team at J.P. Morgan Asset Management concurs:

“If there’s any uncertainty regarding the U.S. election and the potential for a slightly off-center candidate, whether that be Sanders or Trump winning the election, then I can see a scenario where that’s bad for the dollar.”

It is important to note that gold’s fundamentals are very sound and the possible “Trump gold factor,” if there is one, is only one of a myriad of fundamentals that are driving the gold market.

As Mining.com comprehensively notes

Following three down years, many factors have been driving gold’s resurgence in 2016:

– Geopolitical turmoil – spreading from the Middle-East into Europe and beyond – burnishing gold’s safe haven status

– Doubts about the health of the global economy and financial system and the longer-term impact of the slump in oil prices forcing investors to look for insurance policies

– Uncertainty surrounding the future of the European Union and the possible fallout from a Brexit

– Slumping stock markets around the world pushing investors into alternative assets particularly gold

– Physical gold investors jumping back into ETFs – more than wiping out all of last year’s outflows less than two months into the new year

– Skepticism about further rate hikes in the US and negative interest rate policies in a growing number of developed economies around the world lowering the opportunity costs of holding gold

– Continued central bank buying and a belief that the strengthening trend in the US dollar is over for now

– First indications that inflation may be creeping back into the financial system making gold attractive as a hedge

– A realization that gold around $1,000 an ounce represents an historical bargain buying opportunity

Uncertainty regarding the U.S. presidential election will likely aid gold. But gold’s outlook is bright whether Donald Trump, Hillary Clinton or the Messiah himself or herself becomes President.

Gold’s fundamentals are positive given the very high degree of macroeconomic, monetary, geopolitical and systemic risk in the U.S. and indeed the world today.

LBMA Gold Prices
03 Mar: USD 1,241.95, EUR 1,141.48 and GBP 882.24 per ounce
02 Mar: USD 1,229.35, EUR 1,131.53 and GBP 881.54 per ounce
01 Mar: USD 1,240.00, EUR 1,141.70 and GBP 886.09 per ounce
29 Feb: USD 1,234.15, EUR 1,131.46 and GBP 890.95 per ounce
26 Feb: USD 1,231.00, EUR 1117.58 and GBP 878.87 per ounce

Gold and Silver News and Commentary
Gold futures mark best settlement in almost 3 weeks – Marketwatch
Gold slips as risk appetite back in vogue, ETF inflows support – Reuters
India’s Love Affair With Gold Tested as Tax Fight Spurs Shutdown – Bloomberg
There’s gold in them there rivers – New high-tech search – Independent
Silver American Eagle sales still restricted by weekly allocations – Coin World

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‘7 Real Risks To Your Gold Ownership’ – New Must Read Gold Guide Here

Global Central Banks Continue Longest Gold-Buying-Spree Since Vietnam War – Zero Hedge
Russia aims to overthrow dollar and West with gold – Pravda
COMEX vs Private Gold & Silver Eagle Stocks – SRSrocco Report ‏
Interest on Gold Is the New Tempest in a Teapot – Gold Seek
Silver Bullion Coin Sales Flying – Daily Coin

Read more here

Mark O'Byrne
Executive Director

  • Guy Christopher

    Trump seems inevitable. I appreciate your article on Trump and Gold and believe Trump will ultimately be good for gold.

    Trump has accepted gold from Apmex as rent payment for office space in his building. Trump seems to like shiny things.

    Trump has made noises, as has Cruz and as did Rand, about reining in The Fed. Trump’s Wall, immigration, tax, debt, military, health care, education and deal making/breaking promises make Trump a time bomb with a lit fuse to TEB, The Entrenched Beltway (my term, as opposed to MSM’s ‘establishment’).

    Then there’s his contentious, seemingly anti-free press rhetoric. As a retired, old-school, shoe leather reporter, I can’t wait to see at least 75% of today’s “journalists” sued for libel.

    There will be frantic pushback from TEB, fed by lapdog TEB media, and that will create gobs of uncertainty throughout TEB and across the globe (providing gleeful entertainment, in my book.) That uncertainty and unpredictability will likely be very good for gold and silver, but I do see a wild ride…a lung-screaming roller coaster and not the muzak-lulled department store escalator. Same outcome if Trump is elected and proves a greater economic disaster than Obama, which will be tough to do. The one thing I don’t see Trump doing is pulling a 1933 FDR gold grab, a spectre that has shadowed His Imamship Barry O for 7.3 years now, so maybe folks will stop worrying about that for a few years.

    As a meek, mild, unknown nobody on the world stage, I don’t know how I personally managed to make so many powerful enemies across the globe, intent on Grubering me into their version of a cashless, bailed-in, borderless Schengen Agreement.

    Trump seems now to be a powerful enemy of my own personal powerful TEB enemies.