Archive for October 31st, 2016

October 31, 2016

Gold Will Win Regardless of Who Gets Elected President


With the 2016 Presidential race drawing to a close, many Americans are worried about the fate of the nation and government. What will happen to the economy under the new administration; to oil prices, property values, the stock market, and so on? Before we know who our next Commander-in-Chief will be, there’s a lot that remains uncertain. However, for investors there’s at least one thing you can count on: according to experts, regardless of who wins, the price of gold will go up.

Gold in a Trump Presidency

Donald Trump’s platform is one of significant change, both on the political and economic fronts, which is part of what’s made him such a popular candidate. But with his well-known views on trading partners, as CNN notes, change on the scale a Trump presidency portends will certainly lead to market volatility.

As we learned from Brexit earlier this year, drastic political upheavals have a huge impact on the economy. One former member of the Bank of England’s Monetary Policy Committee, David Blanchflower, points out Britain is “already being hit by higher prices, slowing wage growth and – despite official data showing a stable unemployment rate of 4.9% – signs of rising joblessness…” Similarly, there are some experts who believe the market uncertainty that would accompany a Trump presidency could lead to a jump in gold prices as more Americans would be looking for a safe haven to secure their investments.

Gold in a Clinton Presidency

But what if Hillary Clinton wins? Her proposed economic policies could be just as likely to cause panic. Experts believe Clinton’s plans to increase spending on infrastructure, will likely lead to inflation. Since one of the surest ways to protect against rising prices is to invest in gold, a Clinton tenure is also predicted to drive up demand.

Moreover, unlike stocks and even cash, gold’s value tends to remain steady, allowing it to maintain buying power and protect against inflation. This is why experts predict the increased spending that’s all but certain with a Clinton presidency will lead investors to safe havens like gold, driving up the price in the process. Though experts believe such a rise would be less acute than in the Trump scenario, it’s still good news for investors.

Beyond Politics

Gold, as a physical commodity, has intrinsic value that’s not subject to the same volatility as other assets. This is what makes it a good inflation hedge. Paper money gradually decreases in value over time. Think of what you were able to buy with $20 a decade or two ago, versus its buying power today. Now imagine the impact of that same erosion of buying power—over decades. This is why the cliché of hiding cash in the mattress is such a poor strategy when it comes to preparing for the future.

No matter who wins the Presidency, many investors will be looking for safe havens in the coming weeks. However, there’s another reason gold stands poised to increase, one that has nothing to do with politics: It’s drastically undervalued at the moment.

Gold’s spot price, its trading price at any moment during the trading day, is currently hovering around $1,275. However, based on figures from the world’s four biggest central banks, many experts believe it should be trading at closer to $1,700.

This isn’t to suggest gold will reach $1,700 overnight; such an increase would likely occur over the next few months and years. However, that does mean now is a perfect time to invest—while the metal is undervalued—and before it corrects upward.

Markets are increasingly uncertain, with what CNBC terms “a long but listless bull market now in its eighth year,” coupled with the Federal Reserve jarringly riding the brakes on interest rates. Meanwhile, oil prices are again in flux as doubts continue that OPEC will stick with agreed-upon production cuts. Housing, as Forbes notes, is also revisiting a widespread bubble-and-bust cycle. In the midst of this volatility, gold is the one of the only stable investments; one that’s virtually guaranteed to go up over the next few years.