Gold Got Trumped

As expected, Donald Trump's victory in the recent U.S. presidential election has triggered a rally in equities, Bitcoin, and the U.S. dollar, creating significant headwinds for gold and silver prices.  

Gold has dropped over 4% since Trump’s election, while silver has fallen USD $3 per ounce, or 9%. This reaction from the metals market should come as no surprise, as we saw a similar response in 2016 when Trump won his first presidency. The prevailing bet is that his domestic fiscal policies will favor the stock market and the U.S. dollar—not to mention Bitcoin—all of which are competing asset classes for precious metals.  

This economic environment is further compounded by technical factors. Gold and silver had recently reached their near-term expected highs of USD $2,750 per ounce and $34 per ounce, respectively. Senior analyst Chris Vermeulen highlighted this trend to SWP clients and in an exclusive webinar we recently recorded. Vermeulen predicts that gold and silver prices will trade sideways or decline over the next 6 to 12 months before beginning the next leg of this bull run. He also noted in his presentation that the U.S. stock market appears to be nearing its peak, and investors should prepare for a significant pullback during the same period.  

For precious metal investors, the opportunity lies in steadily adding to their holdings during this downtrend, acquiring gold and silver at relatively discounted prices. For those with a mid- to long-term investment horizon, this strategy positions them to benefit from price appreciation during the next upward cycle.  

As metal investors, our mindset must shift from celebrating daily all-time highs to recognizing the upcoming market as a buying opportunity—one that will pay off in the long term.  

Follow Mark on Twitter @YaxleyYax