Gold Climbs; Still A ‘Must Have’ For Trump Presidency

for Barrons

Gold gained on Monday after two days of losses, although the metal is still struggling to shake off multi-month lows.

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Gold for November delivery gained $12.40 per troy ounce, or 1.05% to $1190.60. Silver for November delivery gained 11.40 cents per troy ounce, or 0.69% to $16.5780.

As for ETFs, the SPDR Gold Trust (GLD), the iShares Silver Trust (SLV), the VanEck Vectors Gold Miners ETF (GDX), and the Direxion Daily Gold Miners Index Bull 3X Shares (NUGT) were all higher at recent check; the Direxion Daily Gold Miners Index Bear 3X (DUST) was falling.

While gold initially rallied when the election results were tallied, investors’ fears were soon allied, with the metal tumbling in the days after Donald Trump was declared the winner.

However Tocqueville’s John Hathaway argues that it’s too soon to abandon gold, despite its recent gyrations, which he believes will soon smooth out into a steadier rise. He argues that since 2000, gold has been the best asset class to be in, winning out over both equities and bonds by a wide margin, and it’s gained when both Democrats and Republicans controlled the White House.

He believes that gold can continue to climb during an “uber-populist/pragmatist” administration, if that’s what lies ahead, as the real catalyst for gold since the start of the millennium has been radical monetary policy: Unlike elections, this appears to be immune to politics and instead draws support from “an unshakeable bipartisan consensus to avoid the economic and political pain that would be required to undo nearly five decades of bad public policy.”

More detail from his note, in which he argues the metal is a ‘must-have’ hedge:

For us, there seem to be too many unknowns to discard the protection afforded by gold. While the markets appear to be saying “good riddance” to the past eight years, that does not translate into certitude that there are magical solutions. If interest rates continue to climb (and bond-market losses continue to mount), and if inflation begins to rise, especially as public spending expands, we may be only one or two Tweets from completely unsettling the markets. Trump is a pragmatist who may or may not turn out to be everything the markets are fantasizing.

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