Trump-Inspired Investing: Stocks, Commodities, and Crypto Explained

The US presidential election brought excessive volatility to the markets in early November.

Until the final count was released, investors were uncertain where to place their bets.

The high reading of the CBOE Volatility Index (VIX) before and during the election clearly showed this.

However, this volatility didn’t last long. Even the early results showed that most Americans voted for the Republican candidate, Donald J. Trump.

That will be his second term in the White House, so investors knew what to expect from him.

Let’s review what Trump's presidency will likely bring to the markets in the next four years.

What worked last time, and what didn’t?

More importantly, we will focus on what markets are betting on, what they are missing, and how savvy investors can profit from these “blind spots.”

Trump Euphoria

This election had a similar effect on the major asset classes as the 2016 one.

The US stock indices went up right after the election, and so did the US Dollar Index and Treasury yields. On the other hand, US dollar-denominated commodities fell off the cliff.

That’s explained by the stronger US dollar, in which most commodities are priced.

Bitcoin gained after Trump was elected both times. However, in 2016, it wasn’t as popular and traded below $1,000.

That was the initial euphoria, which didn’t last for too long after the elections.

Track Record

During the previous Trump term, US stocks gained 16.4% annually, eclipsing the long-term average of 12.8% per year.

That’s not a surprise since Trump is pro-business and uses stock market performance as a yardstick.

At the same time, non-US equities slowed to 9.9% per year, compared to the long-term average of 10.7%.

That’s where Trump’s tariffs got into action, limiting the performance of non-US companies.

The US dollar was also appreciating, but its growth was quite in line with its long-term averages.

Broad commodities indexes fell by 0.5% a year during Trump’s first term, a disaster compared to their 2.3% growth in the past.

On the other hand, gold kept growing regardless, posting a solid 5.6% gain a year. Still, that was lower than the long-term average of 6.9% per year.

During Trump's first term, Bitcoin produced its first “hockey stick” chart in 2017, breaching $19,000. But it wasn’t as big of a move as in late 2020 and early 2021 when Bitcoin surged over $60,000.

Current Outlook

This time, Trump's agenda will be easy to implement, given that Republicans control the Congress (both the Senate and the House of Representatives).

He fully supports domestic business, and we will likely see US stocks do well overall.

Shortly after the election, Goldman Sachs updated its S&P 500 guidance to target 6,500 by the end of 2025.

At the same time, non-US equities may lag, given that more import tariffs are likely.

The greenback will likely remain solid if the US economy outpaces the rest of the world. Still, a strong US dollar may become an issue, making US exports prohibitively expensive for their foreign buyers.

For commodities, the “drill, baby drill” campaign may help lower the country's energy costs. However, it also means more oil on the domestic market, which will lower the spot price of crude. As a result, oil producers may face lower margins.

Further, a lower tax regime should be supportive for most businesses.

Trump has a radical view on immigration. If his plan works and most illegal immigrants are deported, that will raise the labor cost. That’s a massive inflationary factor that investors should keep in mind. (However, it doesn’t seem quite realistic that the Trump administration would be able to do that.)

However, on the opposite side, the president-elect intends to “clean up” the government with the new Department of Government Efficiency (DOGE) with Elon Musk and Vivek Ramaswamy at the helm. The new agency aims to cut the state bills by $500 billion a year.

Hopefully, that will work.

Trump pledged to establish a friendly regulatory framework for crypto. He also plans to create crypto reserves and make the US a global hub for the crypto sector.

The news immediately pushed Bitcoin and other crypto assets to new records.

What To Do?

Overall, Trump has ambitious plans for this presidential term. Not everything may work as planned, but the direction is clear.

However, most economists outlined policy as inflationary. These proposed measures will likely push prices higher. That’s why we’ve seen gold, as an ultimate inflation hedge, quickly recover after its post-election drop. The metal’s price remains strong and is unlikely to decline while Trump holds the presidential seat.

We still see gold as a must-have protective asset in the portfolio.

For growth, the US stocks and crypto assets look promising for the next four years.

Industrial commodities, oil and gas, in particular, may lag behind them. Be careful when betting on these during Trump's presidency.

As an extra source of growth, consider gold equities. A few of them are listed on the Canadian stock exchanges, and they offer a variety of risk-reward exposures to the investors seeking to profit from gold’s ongoing bull market.