Presidential elections often bring investor concerns about the economy to the forefront. It’s a period for reflecting on financial health and security. This is particularly relevant in the current election, which is shaping up to be one of the most heated and controversial in modern history.

In this week’s The Gold Spot, Scottsdale Bullion & Coin Sr. Precious Metals Advisor Steve Rand and Precious Metals Advisor Joe Elkjer explore the impact of a Republican victory on gold prices, why it’s about the dollar instead of politics, and how investors should protect themselves moving forward.

Anticipated Volatility Before the 2024 Election

Investors can expect some economic volatility in the run-up to the election. This transition period is characterized by choppy markets every four years as people remain uncertain of the incoming leadership and policies. Given the contentiousness of this election, this routine instability could be more acute than most elections.

The Potential Republican Impact on Gold

gold prices during trump term

Gold prices jumped +54% during President Trump’s term.

Polls suggest this presidential race will be neck-and-neck. In fact, The Economist’s summary of the latest polling averages has President Biden and former President Trump in a dead heat. With a virtual toss-up, many investors are starting to wonder about the economic implications of a change in office.

Trump has earned a better reputation as a stimulant to the economy, while Biden is widely viewed as a strain. Surveys indicate Americans felt they were doing financially better under the 45th President. Even with a strong economy through most of his tenure, Trump still oversaw an impressive 54% gain in gold prices.

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It’s Not Political; It’s About the US Dollar

Investors are looking at the economy through a political lens, but the US dollar is the real factor in question. Gold’s impressive growth streak throughout the first half of 2024 is largely attributed to the dollar’s faltering. Here’s what’s weighing on the greenback:

  • Debt, currently at over $34 trillion, is expected to reach $56 trillion in the next 10 years.
  • Household debt has ballooned to $16.5 trillion.
  • Personal credit card debt stands at a whopping $2 trillion.
  • Entrenched inflation is squeezing buying power.
  • The cost of living is spiraling out of control.

Unfortunately, the dollar’s problems are only expected to get worse from this point forward. These issues will likely continue no matter who takes office, given that borrowing, spending, and printing seem to be the only bipartisan issues. The foundational rot is the Fed’s addiction to Modern Monetary Theory (MMT), which assumes that debt accumulation has no consequences.

“This is a problem that will NOT be fixed by an election. The problems are going to remain for the dollar after the election happens.”

Central Banks Are Preparing

The US dollar’s status as the world reserve currency means its performance impacts the economies of virtually all countries. Thus, central banks around the world have a vested interest in keeping an eye on USD performance and adjusting their investments accordingly. Over the past few years, the dollar’s decline has led to central banks buying gold at record rates

For example, China is offloading US treasuries and scooping up physical gold bullion. This transition indicates a global shift toward de-dollarization whereby countries move away from dependence on the US dollar. In all cases, physical gold is the replacement of choice to provide the stability, security, and value economies need.

The Dollar’s Fall is Gold’s Rise

The US dollar and gold have maintained an inverse relationship since the abandonment of the gold standard. However, this correlation is growing stronger as the de-dollarization timeline plays out. As USD-related problems spiral out of control, central banks lean further and further into gold bullion.

According to the World Gold Council, nearly one-third of central banks are expected to boost their gold reserves over the next year. The graph below clearly illustrates this massive and sustained spike in physical gold demand.

central bank gold purchases vs gold prices chart

“Central banks are building up their gold reserves now because they know that bad times are coming for the US dollar and they want to be prepared.”

The dollar’s declining influence and gold’s rising demand have experts raising their gold price predictions for 2024 and beyond. Major banking institutions such as USB and Bank of America keep raising their projections as economic conditions worsen.

Learn About the Root Issue

Knowledge is power when it comes to investing. Unfortunately, the government has been making a concerted effort to keep people in the dark about what’s really going on behind the scenes. For decades, the Federal Reserve has been running a massive experiment with the implementation of Modern Monetary Theory (MMT).

To give investors a look behind the curtain, we’ve put together an in-depth MMT report that covers everything you need to know about these disastrous fiscal policies. Claim your FREE copy of the MMT report today!

Unlock Free Modern Monetary Theory Report

Modern Monetary Theory, the Catalyst to the Next Financial Crisis?

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Question or Comments?

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