The Trump Effect on Gold

Donald Trump has wasted no time in attempting to implement a variety of campaign promises. His cabinet selections have generated immediate controversy and some would say chaos. Additionally, his economic and foreign policies are expected to increase inflation and the budget deficit. In a nutshell, there are four specific reasons that gold is expected to benefit from the new Trump Administration. The reasons are trade protectionism, aggressive tax cuts, increased infrastructure spending and global and domestic uncertainty created by the new “wild card” administration...

Trade Protectionism makes the list due to a rapid adjustment or dismantling of existing agreements. The planned renegotiation/potential U.S. withdrawal from the North American Free Trade Agreement (NAFTA) and the Trans Pacific Partnership (TPP) could start a trade war.  At the very least, it will diminish U.S. credibility for initiating international economic and trade agreements now and in the future, weaken global trade growth, and reduce U.S. dollar value, all of which will lead to negative economic growth, massive inflation, and increased gold prices.

Aggressive Tax Cuts have been announced that will reduce taxes paid by the highest tax bracket (39.6% to 33%) and lower corporate income tax rates (35% to 15%). As a result, the federal government will collect trillions of dollars less in taxes than expected over the next decade and these unfunded tax cuts will increase the national debt by $7 trillion, causing the U.S. dollar to fall and gold prices to increase.

Increased Infrastructure Spending plans call for $1 trillion to be spent improving transportation and rebuilding infrastructure over the next decade. Such plans will increase the national debt and  demand for metals, potentially including gold.

Trump is a Wild Card and with Uncertainty Comes a Move to Safe Haven and an Increase in the Value of Gold. Almost daily, Trump is stirring the pot on Twitter and antagonizing high-ranking politicians, as well as foreign leaders. There is unrest among the American population and it appears destined to continue throughout the entire term. Uncertainty appears to be the only constant with this administration and global uncertainty is fertile ground for sources of new and greater problems. With the stock market achieving all-time highs and gold resting more than a third below its high, there could hardly be a better time for every American investor to take advantage of this tremendous opportunity, by selling off a portion of their fully-mature over-valued stocks, paper ETF’s and fiat currencies, so as to convert them into a physical gold investment that can not only appreciate under normal conditions, but can absolutely soar, while protecting all other assets during sudden or even protracted cataclysmic economic events. Pick up the phone and make the call. Financial protection couldn’t be any easier. Don’t get caught without a chair when the music stops!