Presidential Elections and Metals Prices

The 2016 presidential election is well underway; there have been a number of surprises early in the race and there is uncertainty about how the candidate field will shake out, and how the elections will all affect the precious metals markets.

 

If we hold to the commonly held belief that history repeats itself, then to predict what 2016 will hold for the price of gold and silver, we should take a look back to previous years and elections:

 
 
    • Markets fall: Historically, markets fall during the last year of a president’s second term. You may recall that during the last year of George W. Bush’s presidency markets fell by 41%. The fall is usually tied to the fact that markets don’t appreciate uncertainty, which presidential election years create. Pair that with this year’s concerns over the Chinese market and falling oil prices, and it wouldn’t be surprising if markets continued to fall.
 
 
 
    • Precious metal prices swing up and down: Gold historically tends to slump prior to an election and then hit a high right after, regardless of presidential race outcome. While gold began a downward slide soon after the 2012 election, it only did so after topping out in price right after the election occurred, suggesting a speculative claim on gold in a presidential election year is worth considering. Moreover, silver tends to follow gold in its election year journey.
 
 

What the prices of gold, silver and other precious metals will actually do remains to be seen. Even with the strong dollar and low inflation rates, the looming low oil prices and weaker currencies abroad may continue to weigh on markets, while lower industrial demand may pull on the prices of some precious metals.

 

And yet, when markets are in flux, investors often turn back to the standby of standbys in wealth storage, gold. Check out Provident’s wide selection of gold and silver bullion, or keep reading for more on factors affecting gold prices.

 

 

 

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