Feb 2017


Feb 2017

Why Buy Gold in the Trump Era

By StoneX Bullion

In the age of Trump, we have seen the bullion market enter a new phase.

During the Obama Presidency, we saw the trail of the 2008 Financial crash and the introduction of the zero interest rate policy from the federal reserve. Reason to buy gold and silver were abundant. At the end of Obama's term people who were deeply concerned are now more optimistic, this is largely due to the US stock market moving steadily upwards, the low-interest rates that have sent house prices higher and higher and we even see the dollar is looking strong against other currencies.

Now investing and owning physical gold and silver isn’t making the front pages but that doesn’t mean investing in gold and silver is over. More investors are sitting and waiting to see what direction things will move next.

There are good reasons to expect the metals market to make headline again. Here are the potential catalysts as we see them today…

A massive devaluation of the dollar seems the only politically viable means of addressing the national debt.

President Trump and his advisors have been saying explicitly that they would very much like to see a weaker dollar. The administration has put some proposals on the table which would promote a decidedly weaker dollar. However, for now, we see that the Fed is still signalling tighter monetary policy, which could make the dollar seem stronger compared to other major currencies.

Trump’s determined bid to launch a huge infrastructure spending program of construction projects is anticipated to be close to the sum of a trillion dollars. This alone is already fueling inflation expectations.

Trump’s proposal for significant tax reductions is getting a lot of interest but is yet to have driven the price of inflation. If continued it will. When tax cuts are made people have more spendable cash left in their pockets.

Lastly, should Trump get his way with congress to levy import or border taxes with its largest trading partners such as Mexico or China, it will mean higher prices inside the U.S. That is the inevitable cost for such a policy.

We know we are down for uncertainty and the potential for real turmoil in the next 4 years under Trumps presidency. It is impossible to know what the political landscape will look like just a few months from now, let alone a few years down the road. For anyone who isn’t confident in trumps vision of reform to shepherd the tax cuts and get a big infrastructure program through congress, investing in physical gold or silver is the better bet…