The Trend

Gold: The One Clear Winner of the U.S. Election

Abysmal.  Terrible.  Confusing.  Cluster… you get the idea.

These are just some of the words traders and investors have been using to describe the market in recent weeks. 

With the U.S. election next week, a disintegrating OPEC deal, and the Federal Reserve prepared to raise rates in December, there’s been a considerable amount of fear.

Investors just pulled $17 billion from stock market mutual funds.

They pulled another $28 billion from hedge funds over the last quarter – the biggest quarterly disappointment we’ve seen in quite some time.

Others are turning to cash positions. 

In fact, The Wall Street Journal reports that investor cash levels now represent 5.8% of portfolios.  That’s the highest in 15 years.

Meanwhile, Black Rock notes that $50 trillion is sitting on the sidelines in cash right now because the current economic and political climate has scared off many investors.

And rightfully so…

Others are flocking back to the safe havens of precious metals, like gold.

Typically, the very threat of higher rates would be enough to send gold prices lower.

But investors are choosing to focus on politics, rather than economics this week are running to the safe havens of gold, which last traded at $1,308 on fears of the U.S. election…


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Although it believes a Donald Trump victory could be more supportive of gold prices, HSBC says gold could enjoy at least an 8% jump whoever wins.  Both candidates, notes the firm, have trade policies that could stimulate demand with gold offering “protection against protectionism.”

If Trump wins, they noted, gold could run well above $1,500 an ounce. 

If Clinton wins, the price of the metal could run to $1,400 by year-end, adding that a potential Democratic sweep could stoke demand.

Whatever the case may be, investors are terrified of what’s next.

If you plan to buy gold on the fear, consider jumping out shortly after the election results-jitters begin to fade.  A potential rate hike by December 2016 could rattle the rally.