Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
Market participants in the resources sector have recently begun to discuss the outcome of the U.S. presidential campaign could have on the price of gold. Although gold market is driven by a number of factors, as the world’s largest economy, whoever runs the next US administration will still have an impact on a number of factors including the global geopolitical environment, interest rates and the performance of the US Dollar, which in turn will affect the price of the precious metal.
Lobo Tiggre, CEO of IndependentSpeculator.com, said in an email to Investing News Network that he doesn’t think either candidate will have a significant impact on the price of gold after the election. The email states that the election results will have an ideological impact, but will have no effect on the gold, silver, uranium or commodities supercycle.
An interesting comparison is that the price of gold did rise sharply during Trump’s presidency, from $1,209 on 20 January 2017, when Trump took office, to $1,839 on 19 January 2021, when he left. Of course, these gains can’t be directly attributed to Trump, but some of the former president’s policies did reshape the geopolitical landscape of the U.S. at home and abroad. During his tenure, the U.S. trade war with allies and rivals took centre stage.
Indeed, it was these and other “America First” protectionist policies and sanctions imposed by the Trump administration that tarnished the image of the United States as a reliable trading partner, and fuelled the BRICS countries (Brazil, Russia, India, China, and South Africa) to abandon the dollar as the global reserve currency and ultimately turn to gold. And Trump’s second term is likely to bring more of the same protectionist policies.
Gold has also seen considerable gains during Biden’s presidency. on 20 January 2021, when Biden succeeded Trump as president, the price of gold was $1,871 per ounce; today, as of 18 June, it is $2,330. But again, it’s hard to say how much of Biden’s policies have directly contributed to those gains. Geopolitical conflicts and a number of uncontrollable black swan events have been the driving force behind the rise in gold prices.
Biden promised to restore the United States in the international community when he took office, although he did heal the rift between important trading partners such as Canada and the European Union, but tensions with China remain.
Lobo believes that although this year’s presidential election may have a limited impact on the price of gold, but the Federal Reserve’s interest rate decision may affect the price of gold. The Fed’s decision is not controlled by the president, but its decisions have a significant impact on the dollar, and therefore often affect the price of gold.
He also pointed out that, historically, the Democratic and Republican presidency of the gold return rate of 11.2% and 10.2% respectively. In addition, during the Democratic Party control of Congress, the average increase in gold is 20.9%, while in the Republican Party control of Congress, the average increase in gold is only 3.9%, in the case of neither parties control Congress, the average increase in gold is 3.5%.
To summarise, investors should consider the impact of policies enacted by the executive branch of the US government as well as Congress and the Senate. In the case of gold, past experience has shown that US elections do not provide good investment opportunities and profits and losses are usually short-lived.
