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Silver Linings: Understanding Election Year Trends in the Precious Metal Market 

The 2024 US elections are around the corner, bringing the curtain down on what will forever remain an unprecedented election year. President Biden’s resignation and two attempts on the life of the Republican Party’s flagbearer, Donald Trump, have shaken the world. The two separate incidents stoked simmering tensions in a visibly polar US electorate and fueled uncertainty among investors.  

As a result, this election year has seen gold prices soar to new historic heights. Spot gold has breached the $2,600 an-ounce barrier, representing a record-shattering 24% price hike in a single year. Spiking gold coin prices often profoundly affect the precious metals market, as other metals tend to ride the coattails.  

So, what’s the deal with US election years and the precious metal market? Dig in as we break it down. 

Understanding the Relationship between U.S. Election Year & Gold

Gold prices have risen in the lead-up to the US presidential election since 1980. Since 2000, the price of gold has increased by an average of 9.4% during an election year. Most notably, the price soared by 24.4% in 2020 as President Trumped squared off with Joe Biden.  

Why do gold prices spike during an election year? It comes down to political and economic uncertainty. Typically, US elections pit candidates with divergent economic, political, and worldviews against each other. If a candidate’s victory is likely to herald radical shifts in economic, political or security policies, it causes jitters in the investment world. That drives a frenzy in the precious metal market as investors seek real assets that retain their value through political and economic turmoil.    

Investors actively purchase gold bullion—the most popular haven asset—to hedge against uncertainty. That explains the massive gold price spikes in the 2016 and 2020 elections, which pitted President Trump against Hilary Clinton and Joe Biden, respectively.  

President Trump is known for his unapologetic, American-first approach, while the other two candidates are more liberal. The 2024 election is no different. It pits Trump against Kamala Harris, the incumbent Vice President, who’ll likely uphold the current policies of the Democratic-run government.  

As a global powerhouse, America’s stance on certain issues causes a worldwide ripple effect. Trump’s protectionist policies may antagonize allies and other superpowers, while Kamala’s liberal approach can be more accommodating.  

The divergent approaches extend to crafting domestic policies that impact the prevailing inflation rates, interest rates, and strength of the US dollar. Investors gravitate towards safe-haven assets as gold and silver coins if they perceive the likelihood of turbulence in the economy.  

How Gold Prices Shape the Precious Metal Market in an Election Year

Gold is the undisputed leader of the precious metal market. As such, soaring gold prices create a bullish environment. The prices of other precious metals, such as silver, platinum, and palladium, will follow gold’s rally but don’t quite match its velocity.  

Silver often mirrors gold price surges occasioned by uncertainty, inflation concerns, or geopolitical risks. Surging gold prices push the demand for silver as investors look for a more affordable alternative. Unlike gold, which trades for thousands of dollars, silver retails at around $30 per Troy ounce. The low pricing makes silver accessible to most investors seeking an affordable safe-haven asset.  

 Still, silver plays a dual role—it’s a monetary and industrial metal. Silver has diverse industrial applications, and its industrial demand often helps amplify prices when gold prices soar. In some market cycles, silver outperforms gold bullion percentagewise during rallies.  

The impact of bullish gold prices on precious metals such as platinum and palladium is more complex because of their heavy industrial applications. While they may double as stores of value during uncertain times, their prices tend to be more volatile.  

Unlike gold and silver, industrial usage largely drives the price of platinum and palladium. During an election year, investors may buy gold and silver as a store of value. If you’re up for it, you may sell your gold and silver coins and speculate on other precious metals.  

During a gold rally, industrial metals are often undervalued. Investors will often purchase them in bulk, hoping to make a killing once the prices catch up. When economic conditions stabilize following a presidential election, the growing industrial demand can spike the demand for precious metals such as platinum and palladium.  

Investing in Precious Metals During an Election Year

Investing in gold and other precious metals can help you hedge against uncertainty during an election year. Historic data shows a considerable gold rally during each election cycle over the last 4 decades.  

However, it’s important to understand that while elections have a profound impact on the precious metal market, they don’t act in isolation. Other macroeconomic factors are at play. Currently, bullish drivers for real assets like precious metals include central bank reserve diversification into gold, fiscal deficit concerns, inflationary hedging, and geopolitical risks.  

 For instance, geopolitical tensions arising from the conflicts in Ukraine and Israel fuel uncertainty and create economic hijinks that drive people towards safe-haven assets.   

The perceived outcomes of how each candidate will likely handle these conflicts on winning the race is a matter of debate.  

If elected, President Trump has vowed to facilitate negotiations between Russia and Ukraine and quickly end the war. Conversely, a Kamala presidency will likely continue providing financial and military assistance.  

Each scenario will have a profound impact on the global economy and industrial growth, which will undoubtedly affect the precious metal market.  

How to Invest in Precious Metals During an Election Year

Unravelling the impact of an election year on the precious metals market can prove difficult. Alongside the political factors, you must consider the broader macroeconomic factors that impact the price of gold and other precious metals.   

Working with a reliable gold exchange can help you make the best choices when investing in precious metals during an election year. You can count on their expert insights to help you make an informed decision. They can help you pick the best options based on risk tolerance and appetite.   

At Doylestown Gold Exchange, we help investors navigate the uncertainty of the election year. Over the last two decades, we’ve successfully helped investors safeguard their wealth from the devastating impact of currency devaluation. Whether you’re a first-timer or a seasoned investor, we can help you maximize your investment in the precious metal market.  

Need help investing in gold and other precious metals? Contact us today or visit our store to learn more. 

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