On the evening of June 27th local time in the United States, the first televised debate of the 2024 U.S. presidential election between the current Democratic President Biden and former Republican President Trump was held in Atlanta.
The U.S. media and commentators were disappointed with the performances of the two candidates. The Associated Press summed up the performance of both sides in the first half hour of the debate by stating, “Hoarse-voiced Biden gave disorganized responses, sometimes incoherent when defending his policies and record. Trump lied on issues such as the economy, abortion, and defense spending by NATO members. They also engaged in fierce personal attacks on each other.”
Michele Schneider, Chief Strategist of MarketGauge.com, stated that as the remarks made by Biden and Trump both failed to alleviate ongoing geopolitical and economic concerns, gold would ultimately emerge as the winner regardless of who wins the election in November.
Although the U.S. stock market experienced strong growth during the terms of both Biden and Trump, inflation pressures reached their highest level in 40 years during Biden’s term, while the U.S.-China trade war cast a shadow over U.S. economic growth during Trump’s term. Additionally, the U.S. government’s debt burden continued to increase during the terms of both presidents. Many analysts and economists believe that U.S. debt levels are nearing a critical point and are continuing to rise on an unsustainable path.
With the Federal Reserve raising interest rates over the past two years, inflation has significantly dropped from its 2022 highs. However, Schneider stated that neither presidential candidate has presented reasonable economic policies on how to address the slowing economy and rising inflation. In this environment, it is essential to consider holding some gold. Many investors may find that the previously allocated proportion of precious metals in their portfolios is inadequate.
The strategist also pointed out that many economists and political experts are praising the benefits of the new artificial intelligence revolution, expecting AI to drive new economic growth without affecting inflation. However, without power and a stable electrical grid, AI can not do its magic. She added that without more resources, technologies using AI cannot exist, and this demand will drive up commodity prices and keep inflation pressures rising.
While all eyes are on gold as a geopolitical asset, Schneider expects silver’s performance in the precious metals sector to outshine other precious metals as industrial demand far exceeds supply.
To hedge against persistent inflation and geopolitical uncertainty, the strategist recommends investors create a commodity portfolio with silver accounting for 50%, gold for 25%, and other metals like copper, aluminum, and platinum for 25%. This basket of commodities should represent around 10% to 15% of a broader investment portfolio.
Regarding the recent trends in silver and gold, Schneider stated that as long as gold prices remain above $2300 and silver prices above $29 per ounce, there is almost no downside risks.
