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Clinton or Trump Will Be Good for Gold

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In mid-October, a steady stream of financial analysists and investors came out bullish for gold in 2017. Market veterans, like Raoul Pal, see buying gold as the best hedge against the coming recession, which is currently being covered over by low interest rates, bad data, and election year politicians.

gold bars with Clinton and Trump campaign logos


The 2016 presidential election has for months been seen as a major wild card for gold prices, with Trump likely creating more political and economic uncertainty and higher gold prices. Now other gold investors, like HSBC Holdings Plc, are seeing a win-win for gold bugs regardless of who wins the election, according to Bloomberg.

The bank’s Chief Precious Metals Analyst, James Steel, predicts gold prices could reach $1,500 per ounce with a Trump victory and $1,400 with a Clinton win. Steel foresees at least an 8% boost either way.

Part of the reason a gold price increase seems immune to either candidate is the anticipation of increased fiscal spending by the government. Steel said he thinks a strong showing by the Democrats in Congress would send gold higher because of the likelihood of increased fiscal spending. Trump has also promised more fiscal outlays with proposals like the border wall, which would likely require an enormous amount of expenditure.

Both candidates have also argued for renegotiation of free-trade agreements. Trump continues to rail against the evils of globalization, promising fairer trade deals, while Clinton promises trade renegotiation and walks back her previous position on the Trans-Pacific Partnership (TPP). Both candidates offer a more protectionist strategy with respect to trade, which Steel said he sees as a positive for gold.

ETF Securities’ head of research, James Butterfill, said he also sees a Trump presidency raising gold prices as much as 10%, driven by policy uncertainties and the candidate’s attacks on the Federal Reserve. “Gold is seen as a hedge against political uncertainty, and President Trump would bring more political unpredictability than any president for generations, particularly over the US Federal Reserve’s leadership and monetary policy strategy,” Butterfill wrote.

Both Steel and Butterfill make strong cases for gold’s resurgence by the end of the year and into 2017. Buying gold before the election results makes sense as a good way to preserve your wealth for many years to come.

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