How Gold Could Perform After a Trump Victory

Now that President Trump has won his second term in office, many people are wondering what his second term will mean for them. Whether it’s abortion, the economy, or foreign policy, there are still a lot of questions about what President Trump will try to accomplish.

Many Trump voters, however, are optimistic about what President Trump will do for the economy. And there’s an increasing amount of data showing that the performance of the economy was a deciding factor in Trump getting the number of votes he did.

But even though many people may be hopeful, there’s still the underlying economic reality to contend with. The labor market is weakening, manufacturing is slowing, and inflation still hasn’t gotten back to the Federal Reserve’s 2% target.

And the Fed has embarked on its rate cutting cycle now, reminiscent of its last major series of rate cuts back in 2007. As anyone who experienced the Fed’s rate cuts in 2000 and 2007 remembers, both of those rate cutting cycles began shortly before a recession occurred.

Many Americans have already taken steps to try to safeguard their financial well-being ahead of any potential recession, whether it’s by moving bank deposits into money market funds, or by moving retirement funds into a gold IRA.

But if President Trump really is going to be better for the economy as many people anticipate, what could that mean for people who have already bought gold?

Gold Performance After Elections

The winter months can sometimes be weak ones for the gold price, and particularly after Presidential elections. After the 2020, 2016, and 2012 elections, for instance, the gold price fell 2.3%, 5.1%, and 1.5% respectively between Election Day and Inauguration Day.

But the last Presidential election that occurred during a Fed rate cutting cycle was the 2008 election, and during that period gold rose 12.5% between Election Day and Inauguration Day. From that perspective, therefore, there’s some room for optimism for the gold price.

The conventional wisdom has long held that gold performs better under Democratic Presidents than Republican Presidents. And indeed, according to the World Gold Council, gold sales are certainly lower under Republican administrations than Democratic administrations.

But what about the gold price?

Under President Trump, the gold price rose 54.7%, or an annualized rate of 11.5%. Under President Biden, it thus far has been 39.3%, or an annualized rate of 9.1%, although much of that growth has just been over the past year.

Under President Obama, the gold price rose 41.8%, or an annualized rate of 4.5%, and under President Bush it rose 222%, for an annualized rate of 15.7%.

As you can see, during the 21st century gold has performed well over the long run no matter who is in office, although gold price growth rates have been better under Republican Presidents. So far from being a bad thing for gold, a Trump victory could still be a good thing for gold.

Gold and the Economy

One major factor behind gold price movements in the future could be safe haven purchases. If the economy deteriorates over the next year, safe haven buying could rise, which could put upward pressure on the gold price.

While hopes are high that Trump will fix the economy, ultimately the economic forces that lead to recession may be out of his control.

Looking back historically to the cause of the 2008 financial crisis, we know that it was caused by the Fed keeping interest rates too low for too long. Its belated rate hikes from 2005 to 2006 were too little, too late.

When all is said and done, the next crisis might end up being caused by the same thing, the Fed keeping interest rates too low for too long. And the rate hikes that began in 2022 may be seen in hindsight as also having been too little, too late.

If the economy really is on the verge of recession, it’s doubtful whether anything President Trump can do will stop it. Tax cuts and cutting federal spending may be good things in and of themselves, but by themselves there’s not much they can do to stop the forces of recession.

So while some people may be hopeful that the economy will right itself, there’s still a lot of fear that things will only continue to get worse.

If the economy were to fall into recession, we might see the gold price continue rising over the long term. But don’t be surprised to see the gold price fall before it rises, just as it did in 2008.

During the last recession, gold rose 25% during the same period that markets fell by over 50% (October 2007 to March 2009). But gold also fell significantly during 2008, dropping 28.8% from March 17th to October 23rd.

Because gold is often held as a hedge asset, and because gold markets are highly liquid, gold can be one of the first assets sold when cash is needed. So if the economy does get worse, don’t be surprised to see the gold price fall before it rises again if history repeats itself.

Gold and Your Money

Even if you’re hopeful that a Trump presidency could right the economy, what about the possibility of recession? If the economy does fall into recession, how would you go about preserving the wealth you’ve worked so hard to build up?

Could you afford to lose 75% of your savings, as happened to numerous Americans during the 2008 recession? And could you recover from those losses?

That’s a question that many Americans may have to grapple with in the coming years. But many others have started to answer those questions for themselves, and for them the answer is gold.

Gold has a long history as an inflation hedge, a store of value, and a safe haven asset. When times get tough, people look to gold to get them through it.

If you think the economy may end up going through a rough patch before things get rosier, then maybe it’s time to start thinking about buying gold.

At Goldco, we pride ourselves on helping thousands of Americans benefit from owning precious metals like gold and silver. With over 6,000 5-star reviews and over $2.5 billion in precious metals placements, we have worked hard to make ourselves one of the best gold companies in the country.

Don’t let your savings sit on the sidelines if the economy deteriorates further. Call Goldco today to talk to our precious metals specialists and learn more about how you might be able to benefit from owning gold.