Election years always have an impact on the economy and the U.S. stock market to some degree, with varying effects on specific industries and sectors. However, there is a growing consensus among industry insiders and investors that, regardless of the outcome of this November’s presidential election, the predicament the U.S. economy is facing will remain the same, and hard assets, including gold, will ultimately benefit.
At Metals Investors Forum Vancouver 2024 in January, Gold Newsletter editor Brien Lundin pointed out that the macro picture is changing, which means that the price of gold will rise. The U.S. is moving from a cycle of interest rate hikes to a cycle of interest rate cuts, which is a huge pivot. In the year 2023, gold is still outperforming and hitting all-time highs near the end of the interest rate hike cycle, which is a bullish sign.
Lundin reminds investors to keep an eye on the level of $2,100. He explains, “This is a trend and it’s sustainable. We’re going to see more money coming in. Western investors are not participating in this market yet, and when they start buying, it will push the price even higher, and inflows into gold exchange-traded funds (ETFs) will be a strong indicator.”
As for this year’s US election, Lundin believes that either a Trump or Biden win will have to deal with high debt levels and the need for lower interest rate policies, which will ultimately favour hard assets such as gold.
Of the other metals, Lundin is most bullish on copper. He says that there is no substitute for copper in the battery metal sector. In addition, it takes 10 to 15 years for a copper deposit to go from mining to production, and exploration funding has been scarce for the past fifteen years. Set aside the whole electrification trend, copper supply will still face a shortfall in the coming years. If you add electrification to that, then much more copper will be needed than the current amount.
He added that many of the known large deposits controlled by junior mining companies have not been developed for one reason or another, and there are probably 40 or 50 such deposits globally. They all need to be developed and brought into production to meet the upcoming demand for copper, so it’s a very exciting area for investors to pay attention to.