The Global Populism Movement: Brexit, Trump & Le Pen

populism_-cover1What do these movements mean to the economy and to the price of gold?
With the surprise Brexit vote and the election of Donald J. Trump, the rural, working class right feels positively left behind after decades of globalization, untempered immigration and socialist values. Nationalism, protectionism and anti-immigration policy have become popular opinions from the shores of Britain to the rust belt states of the Midwest. Is France the next country to voice its discontent and elect a right-wing leader to follow suit in this populist climate? And if so, what effect will that type of move have on the price of gold?

Brexit: Voters in favor of Britain leaving the European Union are likely to be naturally suspicious of big government and the ruling elite. They shun the power held by the “ruling class,” and don’t feel that globalism is the most compelling way to spur economic growth. In fact, the upward trajectory of gold prices after the Brexit vote was announced showed how other commodities – like oil, plummeted when Britain’s decision was announced.

Commodities are quite vulnerable to this kind of market shock, while gold is the safe hedge for investors worldwide. In the case of Brexit, gold soared by 4.7% in value in just one day (to about $1,315/ounce), but has since settled down into a more normalized valuation. The bottom line is that political unrest often leads to gold price spikes.

Trump: Gold tends to perform in periods of uncertainty, and a Trump administration certainly promises some of that – but gold has plummeted in price since the election was announced, though it did jump right after the votes were tallied. The 10% drop may amount to a reaction to impending rate increases by the Fed, but continued uncertainty is promising some type of value appreciation over the next year or so. Right now may simply be the ideal time to add more gold holding to your portfolio.

Le Pen: Marine Le Pen is a French politician who currently serves as leader of the National Front, which is a staunchly conservative and nationalistic political party that promises changes to France’s current economic, immigration, and legal codes – all in the name of preserving conservative values and a traditional French way of life. What most of us don’t realize is that Le Pen petitioned in 2014 for a total repatriation of French gold back to native soils. Simply put, she wants all of France’s gold back, and doesn’t think the nation’s reserves are as secure as they could be. With Russia, China, and India currently hoarding gold at an alarming rate, this French politician may be on to something… a possible near-future hike in gold prices?

Similar to Trump, Le Pen is calling for sweeping overhauls to domestic immigration policies – most of which will cause friction among nations and lead to heightened risk of global uncertainty. This will drive the price of gold higher, though the extent to which it will is still to be seen.

It isn’t simply coincidence, or some type of déjà vu moment that many of us are feeling – the world’s leading nations are beginning to lean more toward the right than ever before, and that could signal feelings of discontent on a global level.

Global uncertainty is a catalyst for increasing gold prices, and today’s relatively low spot price of gold could equate to the perfect time to add gold to your investment portfolio.

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.