How Socialism Presidential Election 2020 Could Affect the Gold Market / Commodities / Gold & Silver 2019

The2020 presidential election is already shaping up to be one of the most bitterlycontested in history. The outcome could have enormous ramifications for allasset markets, including precious metals.

Inthe meantime, a lot can happen before November 2020 – especially with theFederal Reserve apparently set to turn dovish and cut interest rates thissummer.

Somehistorical research into presidential election cycles suggests that the stockmarket tends to perform well heading into an election year. The incumbentadministration tends to focus on padding economic statistics.

Andduring election years, Fed officials (who swear up and down they aren’tmotivated by politics) tend to avoid making policy moves (such as rate hikes)that could make them vulnerable to political attacks.

Goldand Silver Fared Well Last Time a Republican Stood for Re-Election

Goldand silver, which are less tied to the economy than stocks, show little recentcorrelation with election years.

Thelast time a Republican incumbent was up for re-election was 2004. IncumbentPresident George W. Bush faced off against Democrat challenger John Kerry. Goldand silver markets performed well in the second half of 2003 and made modestgains in 2004. The metals were in the early stages of a major bull market.

In2008 (when Barack Obama and John McCain were vying for the White House), the financialcrisis hit. Silver got slammed along with virtually all other assets duringthat infamous autumn. Gold, however, weathered the storm quite well and endedup putting in a gain for the year.

Thestunning election victory of Donald Trump in 2016 lit a fire under the stockmarket and put something of a damper on retail demand for physical preciousmetals in the United States.

Although gold prices are now up since Trump’selection win and inauguration, silver has trended lower – and coin and bardemand remains soft compared to the heady years under President Obama.

Unlikestocks, precious metals tend to benefit from the “fear” trade. If apro-socialist Democrat actually wins the White House in 2020, you can bet a lotof investors will decide to hunker down and get defensive.

Goldand silver markets may begin to display an inverse correlation to trends inPresident Trump’s poll numbers.

However,larger macro forces now in motion – namely, steadily rising government debt andaccommodative monetary policy – will stay in motion through next year’selection and beyond, regardless of who wins. It’s only a matter of whether theelection results accelerate the debt-fueled monetary crisis that is coming.

Ifthe GOP keeps the White House in 2020, it’s not necessarily bad news for metalsinvestors.

Recallthat when George W. Bush won re-election in November 2004, gold was trading ata mere $450/oz. The money metal went on to hit a record $1,000/oz in early2008. Over that same period, silver advanced from under $8/oz to over $20/oz.Importantly, precious metals vastly outperformed the stock market through thefour years of Bush II’s second term.

RadicalLeftists Push Democrats to Go for Broke on Spending Promises

Somein the conservative media stamp Democrats as suffering from “Trump derangementsyndrome.” Unhinged hatred of the President is only part of what’s drivingDemocrats to take increasingly radical positions (packing the Supreme Court,abolishing the electoral college, abolishing ICE, censoring the internet,“Medicare for All,” “Green New Deal,” etc.).

Evenbefore Trump, the base of the Democrat Party had been lurching ideologically tothe left. Today Democrat candidates are being pushed to reject “mixed economy”welfare statism and fully embrace socialist doctrines. Nearly the entire fieldof Democrat presidential candidates has essentially adopted Bernie Sanders’platform.

Oneexception: Former Colorado Governor John Hickenlooper, who is running as apragmatic problem solver with a business background. He recently gave a speechto California Democrats in which he said socialism was the wrong way to go. Hewas roundly booed.

Meanwhile,76-year old “Uncle Joe” Biden is disavowing himself to appease far leftactivists but that is proving to be difficult for him. Under pressure, hesuddenly reversed his decades’ long support of the Hyde amendment, which barsfederal funding of most abortions.
Bidenis also trying to play catch-up to the trillions in new spending programsproposed by Bernie Sanders and Elizabeth Warren, clumsily rolling out apartially plagiarized “Clean Energy Revolution” that would cost the economy atleast $5 trillion.

2020Prediction: Winner Will Embrace More Money Printing

Asfor Senator “Pocahontas,” Warren has gone off the reservation when it comes totaxing, spending, and printing currency out of thin air. She would pay for hermulti-trillion-dollar Progressive wish list by instituting a new wealth tax andpushing the U.S. dollar lower (i.e., inflation). As Warren put it, her monetarypolicy (vague as it is) would entail “more actively managing our currencyvalue.”

Itsounds like Modern Monetary Theory (MMT), which is likely coming in one form oranother in the years ahead as the government struggles just to pay interest onan exponentially growing debt load. Under MMT, the government would directlyprint the dollars it needs to close its deficits rather than issue new bonds.Similar monetary experiments didn’t work out so well in Zimbabwe and Venezuela.

GivenPresident Trump’s repeated clashes with the Federal Reserve over what he seesas “too tight” monetary policy, he might be all too willing to support abipartisan push for a more “actively managed,” more inflationary monetarysystem.

Investorswho are thinking about selling precious metals, or refraining from buying untilTrump leaves office, should check their premises.

Stefan Gleason isPresident of Money Metals Exchange, the national precious metals company named 2015"Dealer of the Year" in the United States by an independent globalratings group. A graduate of the University of Florida, Gleason is a seasonedbusiness leader, investor, political strategist, and grassroots activist.Gleason has frequently appeared on national television networks such as CNN, FoxNews,and CNBC, and his writings have appeared in hundreds of publications such asthe Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved
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