Trump Or Biden? Positive Outlook for Gold as US Debt Heads towards $30 Trillion
The comments below are an edited and abridged synopsis of an article by Mark O’Byrne
With election day approaching in the US, O’Byrne advises focusing on the dollar and on gold’s fundamentals.
The Trump/Biden battle has been one of the most viciously fought elections in American history. Markets continue to weigh the effect of each man’s potential presidency on assets, including stocks, bonds, the US dollar and gold.
There are many ramifications to the outcome. Some include: an undisputed Biden win; an undisputed Trump win; Biden wins, but the outcome is disputed; Trump wins, but the outcome is disputed.
Given the partisan, acrimonious and near civil-war-style politics and the claims regarding voting fraud, partisan media etc, it looks increasingly as if it will be a disputed election that sees neither candidate secure a clear mandate.
In many ways, this may be the worst outcome for the US and for many financial assets, like stocks and bonds, which value certainty and stability. Conversely, this uncertainty has benefited gold, and would likely continue to do so.
Keep in mind that while the divided and volatile US political landscape is a factor when evaluating the outlook for gold, it is just one factor—some would say small—with short-term implications.
More important to the medium- and long-term outlooks for gold are the global supply and demand fundamentals in the mining and aboveground physical gold market, and the heightened macroeconomic, monetary, systemic and geopolitical risks in the world today.
These risks have been exacerbated by Covid-19 and the subsequent lockdowns that have made gold more attractive to risk-averse investors and bullion buyers and propelled gold higher in 2020. The top-performing asset in the world in 2020 with gains of 25% in dollar terms is gold, while silver is up 35%.
Up for discussion: the financial and economic outlook and risks; monetary outlook and risks to the dollar; societally and politically—deepening civil war politics and the risk to democracy; Wall Street vs Main Street—different sections of corporate America to benefit; and conclusion.