Donald Trump has now been sworn in as the 47th president. As he gets to work on his agenda, many are speculating as to how his presidency and policies will affect the precious metals markets. Since gold, silver and precious metals are seen as safe-haven assets, there are many questions swirling as to the impacts of Make America Great Again (MAGA) policy on these metals.
It stands to reason that Trump will pursue policy that makes the dollar stronger, historically meaning that precious metals prices stagnate. However, I for one don't think we should expect the uptrend for gold and silver to stop any time soon…and I'm not the only one.
Gold is Attracting Investors
Recently, Kitco published an article that quotes James Stanley of Forex, a leading precious metals market analyst. Mr. Stanley says the following:
“Trump is not going to rein in spending. He is not going to balance the budget. He’s not going to be a president of austerity,” he said. “Gold is attracting more attention from investors because they are expecting to see some element of monetary dilution in fiat, global currencies.”
Simply put, Trump can't stop the flow of money to the bureaucracy and economy that is dependent on government spending any time soon. This means:
- The dollar printing presses will continue to run.
- The Treasury's spending habits will continue unabated.
- The inflationary pressure will continue, even under Trump's watch.
Since gold and silver remain among the most tried and true inflation-hedging assets, the outlook for these precious metals remains bright.
Tariffs
The potential of imposing tariffs on foreign goods is another aspect to consider regarding President Trump's stated agenda. Tariffs used to be among the greatest source of cash flow for the Treasury. In recent decades, the cash inflow from tariffs has decreased to virtually nothing. President Trump intends to use tariffs to make imported goods more expensive, thereby incentivizing domestic manufacturing for goods we currently import from foreign nations like China. Long term, returning manufacturing to the USA would in theory result in job and wage growth. Short term however, imposing tariffs would most certainly contribute to a higher rate of inflation as the price of goods increases to offset the tariff.
We will soon learn how serious President Trump is about the tariff issue, but even the threat could put more wind in the sails of gold, silver, and precious metals as people seek to protect their purchasing power by putting more of their wealth in safe-haven assets.
Protect Your Purchasing Power
If you are considering protecting your wealth and purchasing power from inflation, we would love to discuss how gold, silver, and precious metals could be a part of your strategy. We stock a wide variety of gold and silver coins, bars, and rounds to meet our clients' needs.
Additionally, we work with our clients one-on-one to provide the best experience possible. At Nashville Gold and Coin, we will strive to meet your needs whether you are a longtime gold bug or a first-time buyer. We provide safe and discreet service and only offer the most commonly traded physical gold and silver products with no high-pressure tactics.
If you are interested in learning more about us, please give us a call at 615-535-2785 or visit our website at NashvilleGoldandCoin.com.
