Did you know? One of the top U.S. presidents for gold was George W. Bush, who saw a 250% increase in gold prices during his term of 2001 to 2009.
Now, consider the parallels between the conditions that existed during his administration and those that the new Trump administration is facing:
Shift in party power with new U.S. president
Fragile global economy
Geopolitical uncertainty
Focus on tax cuts
Rising unemployment
Unfriendly press corps
Growing income disparity
Slashing of regulation of industry and environment
“Saber rattling” with other major world powers
Increased national debt
Markets at record highs
Housing bubble
Gold seen as safe haven asset
Sound familiar?
With gold at its current bargain level, it isn’t hard to imagine that precious metals could see significant price appreciation in 2017. We are in a similarly unpredictable political and economic situation.
Not to mention that gold’s diversification value alone, in the face of a sky-high stock market, will be hard for savvy investors to ignore much longer.
UNPRECEDENTED CHALLENGES, UNPRECEDENTED APPROACH
In many ways, the new President faces challenges like none other before him. His unpredictable and combative style may be exactly what is needed at this moment in our country’s history, but only time will tell.
On the international front, President Trump’s provocative behavior and remarks have escalated tensions with China while angering global allies and institutions crucial to America’s leadership role in the world. Trump has already questioned China’s longstanding One China policy, criticized Angela Merkel about her “catastrophic mistake” in allowing refugees to pour into Europe, cast doubt on the viability of NATO and openly supported Brexit.
On the domestic front, David Stockman, former director of the Office of Management and Budget under Ronald Reagan, thinks a financial meltdown is coming. Stockman sees the U.S. as holding a “ticking time bomb” worth of debt that Trump will be unable to diffuse during his time in office – and may even blow. His view is that the U.S markets’ record highs since Trump’s election represent serious over-exuberance about possible pro-business policies and projects by Trump. These are hopes that would be impossible for any new President to fulfill.
Wall Street firms see troubling times ahead. Capital Economics warns that a Trump economy could see a spurt of faster growth but also bring higher inflation. Goldman Sachs‘ analysts believe potential GOP tax cuts could quickly send our deficit even higher.
WHERE ARE GOLD AND SILVER HEADED NOW?
Several bank analysts, including Societe Generale, Credit Suisse Group and UBS Group all expect gold prices to top $1,300/oz in 2017.
Chief Executive of Merk Investments Axel Merk thinks the gold market has priced in continued hawkish Fed policy in 2017 and he is not convinced that the central bank will be as aggressive as expected.
Chad Morganlander of Washington Crossing Advisors recommends maintaining an allocation to gold, primarily for hedging purposes.
According to the World Gold Council, global demand for gold has been sustained, especially from investors and huge markets like China and India where the middle class is booming with a rich tradition and strong cultural affinity for precious metals.
BUILD A MORE SECURE FUTURE WITH GOLD
No one knows what President Trump will do next, but Trump seems to want to go it alone in a world where challenges are increasingly scary.
Gold thrives on just this sort of uncertainty. America has a bitterly divided electorate, negative interest rates have distorted the global economy, and Brexit has thrown the existence of EU in doubt. In addition, the U.S. equity markets are overvalued and there are signs inflation is picking up.
In a world of rising uncertainty, the only real security is owning your wealth in your own hands. A wealth that no unpredictable politician or international adversary can influence or hack.
