Historically, election years in the US have a complex relationship with gold and silver investments. That’s because the price of gold, which affects the price of silver, fluctuates wildly between a Democrat- and Republican-controlled Congress. Understanding the nuanced relationship between the ruling party and the multifaceted factors that influence the price of gold/silver can help you navigate the volatile financial markets during an election cycle.
The looming showdown between Donald Trump and Vice President Kamala Harris on November 5, 2024, is no different. Dig in as we explore how an election year influences the prices of gold and how you can safely navigate the resultant uncertainty when buying or selling precious metals.
How U.S. Elections Affect/Silver Prices
As a gold and silver investor, you’re closely watching the US elections because perceived differences in policy preferences among the presidential candidates often trigger volatility in gold/silver prices during an election year. For instance, one candidate may favor fiscal stimulus with generous policies that may buoy gold prices. Conversely, the opponent may lean towards fiscal austerity, which may lower gold/silver prices.
But that’s not all—the party controlling progress matters too. Typically, gold prices gain almost 21% when Democrats control the house vs 3.9% in a Republican-controlled Congress. When neither party controls the house, the average gold/silver price grows by 3.5%.
How Will the 2024 Election Cycle Affect Gold/Silver Prices?
The 2024 pits the former president Donald Trump—famous for his protectionist and American First policies—against Kamala Harris—who will likely uphold the current policies and trends. A quick look at the historical trends paints a clear picture.
Gold Prices Under Trump Regime
The price of gold rose dramatically by $630 during Trump’s tenure as president. The cost of the precious metal peaked at $1,839 on his final day in 2021, up from $1,209 on his first day, January 20, 2021. Trump’s abrasive leadership made trade wars with allies and competitors common. He applied new restrictions on Chinese goods to protect and promote local manufacturing, souring relations with China.
The global pandemic outbreak and its devastating effects threw a wrench in the works. Government policies to contain the virus and protect the citizenry weakened the US dollar. Eager to hedge their losses, jittery investors turned to gold as a haven against a weakening US dollar.
Trump has vowed to advance his America First agenda should he prevail in November. The former president promised to impose a 60% tariff on all imported goods, stoking global tension. The perceived fallout from such a policy can have a drastic impact on gold/silver prices as countries rapidly drop the dollar as the universal currency.
Gold Prices Under the Biden’s Regime
Gold prices have soared considerably under Biden’s watch. Gold prices peaked at $2,474 on July 17, gaining $603 with 5 months left on the Biden-Harris presidency. Although Biden’s policies are more democratic, black swan events and geopolitical conflicts—factors beyond his control—are behind the rallying gold prices.
As such, Kamala Harris will likely continue down the current path, which includes strict sanctions against Russia following the Ukraine incursion. Her policies will likely continue to promote and protect American interests by lowering the country’s reliance on China’s supply chain.
While many countries welcome the move to support Western supply chains, other superpowers find it unacceptable. They label this approach an attempt to weaponize the US dollar, which may further push the BRICS nations—Brazil, Russia, India, China, and South Africa—to drop the US dollar as a reserve currency.
China is the tip of the de-dollarization spear. The superpower dumped US Treasury bonds worth over $50 billion in the first quarter of 2024. The anticipated fallout from a weakening dollar may drive investors toward safer investment assets.
The Relationship Between Gold and Silver Prices
As the go-to options for safe-haven assets, gold and silver have continually demonstrated a positive correlation, especially in the last two decades. Silver prices often follow suit whenever gold prices rise—a move often attributed to increased investor appetite during an election year.
Surging gold prices can push precious metals out of reach for many investors looking to escape possible fiat devaluation. Silver’s lower pricing point makes it an attractive alternative, and the skyrocketing demand drives the price.
Surging prices also impact the gold-silver ratio—a crucial metric that you can use to gauge the relative value of the two precious metals. Historically, the gold-silver ratio has hovered around 65:1.
As of July 2024, the market price for an ounce of gold was $2,387 while an ounce of silver was $28, creating a gold-silver ratio of about 85:1. Besides expressing the relationship between the two precious metals, the ratio is tradable. You can bet on the short-term direction of the gold and silver prices and their resultant ratios and maximize your returns.
Why Invest in Gold and Silver During an Election Year?
Historical trends indicate investing in gold and silver during an election year is a smart move. Typically, economic and geopolitical development and psychological factors such as uncertainty, fear, and market psychology drive the price of gold/silver.
The unpredictability of presidential elections and the following regime-changing outcomes compound the psychological drivers. The looming change in leadership and the ripple effect on the economy stoke investor anxiety, leading to volatile asset prices.
You can assume a defensive posture and invest in safe-haven assets such as gold and silver. Precious metals serve as a psychological refuge that offers investors a sense of security in a terse political environment.
How to Invest in Gold and Silver in an Election Year
Investing in silver and gold can help protect your wealth from the impact of currency devaluation during an election year. The most effective strategy is to regularly buy a measured amount of precious metals and hold them for a long time.
To get started, you must identify a reliable precious metal dealer. If you want to sell, enter search phrases such as “Who buys gold and silver near me?” or “Who buys gold and silver near me?” on Google. Check the result and identify the most reputable store in your locality.
Alternatively, if you wish to sell, use search phrases such as “Coin buying near me” or “Sell precious metals near me.” Google will help you locate the store nearest to your location. If you aren’t sure what your gold is worth, use the search term “appraisal service near me” and pick a reputable store from the search results.
At Doylestown Gold Exchange, we specialize in helping people buy and sell gold and silver—and we’ve been doing it for more than two decades. You can count on our expertise to help you maximize your returns when investing in gold, silver, or coins.
Contact us today or visit our store to learn more about investing in gold and silver.
