How Could Gold Prices Move Under Trump?

One of the questions many gold owners have about their gold holdings is, which way will gold prices move? Everybody obviously hopes that gold goes up, but we all realize that gold prices can move both up and down with market demand.

With President Trump now in office, there is a great potential for economic and political change. There are numerous questions that people have about Trump and his economic policies.

What kind of tariffs might Trump place on imported goods, and how could that impact the economy? Will Trump be able to renew the tax cuts he signed into law under his first administration?

Will Trump be able to undo all the executive orders President Biden enacted? And how might all of this impact gold prices?

Key Takeaways

• Gold sales tend to do better under Democratic administrations than Republican ones
• Gold prices have risen more since 2001 under Republican Presidents than Democratic Presidents
• The long-term trend in gold prices since 2001 has been ever upward

How Gold Performs Under Democrats and Republicans

Conventional wisdom is that gold performs better under Democratic administrations than under Republican administrations. In fact, the World Gold Council in its pre-election analysis last year noted that gold sales tend to be stronger under Democratic administrations than under Republican administrations.

Looking at US Mint coin sales, demand for gold coins and bars doubles under Democratic administrations, and overall gold coin sales are far lower under Republican administrations than under Democratic ones.

But correlations don’t always equal causation. Could President Trump’s second term be one that flips the script, and in which gold coins sales finally take off under a Republican administration?

Let’s take a look back at gold prices under Republican and Democratic administrations. Under George Bush, gold prices rose by over 200%, or over 15% per year on an annualized basis.

Under Obama, gold prices rose only 41%, or 4.4% per year. During the first Trump administration, gold prices rose 52%, or 11% per year. And under Biden’s term, gold prices rose 45%, or 9.6% per year.

But there are numerous factors that play into gold demand and gold prices more than just who happens to occupy the Oval Office.

Other Factors That Impact Gold Prices

The 2008 financial crisis occurred during the tail end of the Bush administration and impacted the first years of Obama’s first term, so that impacted both gold prices and gold demand. During periods of economic uncertainty, many people choose to buy gold because of its role as a safe haven asset.

Higher gold prices can dampen demand for gold, while lower gold prices can spur it. And since gold prices rose more under Republican administrations than under Democratic administrations, that could also help explain dampened demand for gold under Republican Presidents.

Then again, the World Gold Council’s analysis seemed to indicate that people tend to buy gold when Democrats win elections, perhaps fearful of higher taxes, more regulations, or a worsening economy. Conversely, they seem to be more comfortable under Republican administrations, and less likely to buy gold.

Will that pattern hold under President Trump?

How Gold Prices Are Doing So Far

Well, so far gold is up about 3% since President Trump took office, a pretty good start to his term. But it will take a while to see how gold sales fare.

If gold prices remain high, demand for coins and bars could remain muted, so we’ll have to look at US Mint sales figures and gold demand figures from the World Gold Council to see what impact higher gold prices might have.

If gold prices start to decrease, it could spur demand from people who may feel priced out of the gold market right now. Of course, the biggest wild card is the prospect of a potential recession.

During the 2008 financial crisis and its aftermath, gold prices more than doubled from December 2007 until their 2011 all-time highs. If the US economy were to fall into recession during President Trump’s term, could gold perform similarly over the next few years?

With the yield curve no longer inverted , the clock could be ticking towards recession. And while President Trump will undoubtedly do all he can to stave off a recession, the reality of four years of inflation and trillions of dollars of debt-fueled government spending under President Biden is coming home to roost.

Still, while no one wants to see a recession, there are always those who benefit during periods of recession. Among those could be gold owners.

Gold as a Safe Haven Asset

Because gold has such a long history as a safe haven asset and a store of value, people often look to buy gold when the economy begins to show turbulence.

That often gets reflected in higher gold prices, as increased safe haven demand leads to gold prices rising.

During the 2008 crisis, gold rose 24% from the beginning of the recession in December 2007 to the end of the recession in June 2009. And gold also rose during the 2001 dotcom recession and the 2020 COVID recession.

But no matter what transpires with the economy, the long-term trend in gold prices since 2001 has been ever upward. And there may be reason to believe that gold prices could continue to rise under President Trump.

If you want to try to take advantage of rising gold prices, there are numerous ways to do that. One of them, of course, is just to buy physical gold.

Many people around the world buy and sell physical gold on a daily basis, and gold markets are highly liquid and highly traded. But maybe your assets are tied up in retirement accounts and you don’t want to take a tax hit by distributing those assets to buy gold.

In that case, you can start a gold IRA. A gold IRA functions just like any other IRA, is subject to the same rules and regulations as any other IRA, but holds physical gold rather than conventional financial assets.

Gold IRAs can be funded with a tax-free rollover from existing 401(k), 403(b), TSP, IRA, or similar retirement accounts, allowing you to benefit from owning gold while still maintaining the same tax advantages as your current retirement accounts.

If that sounds appealing to you, talk to a Goldco representative to learn more. With over $3 billion in precious metals placements and over 6,000 5-star reviews from our customers, we strive to provide you with high quality gold coins and outstanding customer service.

So if you think President Trump could be good for gold, call Goldco today to learn more about the many ways you can take advantage of adding gold to diversify your portfolio.