Gold’s Potential Surge: How the US Election Plays a Key Role

By Doug Young – 19 May 2024

Introduction

The upcoming 2024 US Presidential Election is not just a political event but also a potential catalyst for economic uncertainty.

With experts suggesting that gold could benefit from this uncertainty, analysts are closely monitoring the factors that may contribute to a surge in gold prices.

In this article, we will explore how the election could impact the gold market and the potential implications for investors.

The Upheaval of the Voting Event

As the election draws near, concerns arise about the possible upheaval that the voting event could bring.

Former Department of Homeland Security intelligence Chief, John Cohan, points out that both foreign and domestic threat actors are likely to exploit the election to achieve their ideological and geopolitical objectives.

Furthermore, the political discourse associated with the election is expected to become even more polarized and divisive.

Gold as a Portfolio Hedge

UBS, a renowned financial institution, now views gold as a portfolio hedge due to uncertainties surrounding the US elections. Their assessment is supported by research from Go Quant, a geopolitical analytics firm, which found a near perfect 0.94 correlation between gold and US political risk.

Despite its impressive display of resilience, gold may continue to thrive due to ongoing support from economic and geopolitical uncertainty.

Policy Implications and Gold

A potential benefit for gold lies in the policy implications that may result from the election, regardless of the outcome.

One highly regarded metal strategist, Bart Melek at TD Securities, suggests that gold could remain resilient regardless of who wins the general election. Melek highlights the persistent tension with China, which he believes will remain status quo whether it is a Biden or Trump administration. This tension could potentially provide additional momentum for gold.

Another favorable policy implication that could result from the election is the continued erosion of America’s fiscal profile. Gold has already thrived under the current administration’s oversight of the nation’s fiscal and economic structure.

Melek points out that persistent massive deficit spending under the Biden Administration and a slow response by the Federal Reserve to recent inflation spikes have already driven investors towards gold as a hedge against long-term US dollar depreciation.

Gold as a Safe Haven Investment

Throughout history, gold has often served as a safe haven investment during times of uncertainty.

The potential impacts of sky-high deficits and more adversarial US-China relations, regardless of who prevails in the election, make gold an attractive option for investors seeking stability and diversification. The precious metal has the potential to retain its value and act as a comforting shield amidst market volatility.

Diversifying Savings with Gold

Given the potential economic and geopolitical uncertainties surrounding the US election, diversifying savings with gold may be a prudent strategy. Gold has demonstrated its ability to protect against long-term US dollar depreciation and preserve purchasing power.

Investors who seek to safeguard their wealth and hedge against potential market turbulence may want to consider adding gold to their investment portfolios.

Conclusion

The 2024 US Presidential Election has the potential to stir up markets and create economic uncertainty.

Analysts believe that gold could emerge as a key beneficiary of these circumstances. Whether it is the upheaval of the voting event or the policy implications resulting from the election, gold stands as a potential safe haven investment and a means to diversify savings.

Investors should carefully monitor the developments surrounding the election and consider the role that gold could play in protecting their assets and navigating uncertain times.

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