Is Gold the Only US Election Winner? / Commodities / Gold & Silver 2020

The elections are behind us. However,the official results are still not definite. What does it mean for gold prices?

Ladies and Gentlemen, the new Presidentof the United States is… still unknown! The election results are not available,as some states are still counting the votes. The race is very balanced, withfew states remaining too close to call. At the moment of writing this report,Joe Biden leads the White House race with 253 electoral votes, while DonaldTrump has 213 electoral votes. So, Bidenis more likely to become the new POTUS . However, with those few statesofficially still undecided, Trump could still win. Hopefully, we will get someof the results later today, but it might even take several days to count theballots in some locations.

One thing is sure: Trump over-performedpolls and expectations in the presidential election, again. What a shame,pollsters! We warned our Readers several times against trusting polls:

“althoughmainstream pollsters have corrected some of the mistakes they made in 2016,it’s safe to assume that Trump has better chances of reelection than it iswidely believed and reflected in the mainstream polls”.

Moreover, Republicans also performed much better than expected in elections toCongress . We don’t know all the results yet, but as for the moment, bothDemocrats and Republicans have 48 seats in the Senate. So, yes, Republicans couldstill lose the Senate, but that is less likely now than before the elections.They are also on track to pick up a few seats in the House of Representatives.So, while all the focus is on presidential election results, investorsshouldn’t underestimate the surprising strength of the Republicans in Congress.

Implications for Gold

What does it all imply for the goldmarket? Well, it’s not easy to determine since we still don’t know the results.However, the most likely scenario is Biden to enter the White House, Democratsruling in the House, and Republicans maintaining a majority in the Senate,which is actually relatively bad newsfor gold.

I mean, the Blue Wave was considered tobe the best scenario for the yellow metal. If controlling both the White Houseand Congress, Democrats could do whatever they want. So, they could boostgovernment spending and public debt and raise taxes, supporting the goldprices. However, if Republicans keep control over the Senate, they will blockthe worst ideas of Democrats. Thus, the divided power would be better for theeconomy but worse for the shiny metal.

However, the probable lack of a blue waveshouldn’t plunge the price of gold. Yes, there will still be gridlock andhigher uncertainty, and gold prices may be under brief pressure in theshort-term, but the fiscal stimulus will eventually arrive. Therefore, no matter who ultimately wins, gold’slong-term fundamental outlook remains bullish . The coronavirus pandemic will continue to affect the USeconomy negatively, so both the White House and the Fed will provide more stimulus. The monetary policywill stay ultra-dovish, and the realinterest rates will remain in the negative territory.

Moreover, when the dust settles after theelections, and the uncertainty will become lower, gold may continue its rally . As the chart below shows, the gold price has already increased (afteran initial drop). So, maybe the actual winner of the elections is gold?

Of course, it’s too early to assess withcertainty the medium-term impact of elections on the gold market. Thevolatility could stay with us for quite some time, and the dashed prospects ofsignificant fiscal stimulus could negatively affect the gold market in theshort-term.

However, one thing remains interesting.In contrast to the 2016 presidential election, the gold market swings were much smaller this time . It seems to bebullish news, but, hey, don’t count your chickens before they hatch. So, staytuned. Hopefully, we will know the more complete election results soon and thenew FOMC statement, which will enable us to describe the gold’s outlook withmore certainty!

Thank you for reading today’s free analysis. We hope youenjoyed it. If so, we would like to invite you to sign up for our free goldnewsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all ourpremium gold services, including our Gold & Silver Trading Alerts. Signup today!

Arkadiusz Sieron

Sunshine Profits‘ MarketOverview Editor

Disclaimer

All essays, research and information found aboverepresent analyses and opinions of Przemyslaw Radomski, CFA and SunshineProfits' associates only. As such, it may prove wrong and be a subject tochange without notice. Opinions and analyses were based on data available toauthors of respective essays at the time of writing. Although the informationprovided above is based on careful research and sources that are believed to beaccurate, Przemyslaw Radomski, CFA and his associates do not guarantee theaccuracy or thoroughness of the data or information reported. The opinionspublished above are neither an offer nor a recommendation to purchase or sell anysecurities. Mr. Radomski is not a Registered Securities Advisor. By readingPrzemyslaw Radomski's, CFA reports you fully agree that he will not be heldresponsible or liable for any decisions you make regarding any informationprovided in these reports. Investing, trading and speculation in any financialmarkets may involve high risk of loss. Przemyslaw Radomski, CFA, SunshineProfits' employees and affiliates as well as members of their families may havea short or long position in any securities, including those mentioned in any ofthe reports or essays, and may make additional purchases and/or sales of thosesecurities without notice.

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.