Waiting for Gold to Settle…It Could Take a While

gold stocks nov 2016

One of the defining characteristics of gold as an investment vehicle is its reputation for being a “safe haven”. When chaos is reigning, in the country or in the world, investors want the security of valuable tangible investments. And gold is at the top of that list.

Election Jitters

So…prevailing wisdom had been tying gold prices to all the possibilities for upheaval that Donald Trump could cause in the market. A Trump presidency, the consensus agreed, would destabilize not just the U.S. market, but markets around the world.

Nothing, but nothing, could have been more perfect for rising gold prices than a Trump win. Particularly since it was considered to be such a long shot by Election Day.

When it first became clear that Trump had won, the stock market started crashing, just as foretold. Even afterward, Nick Barisheff, President and CEO of Bullion Management Group Inc. (BMG), said:

“A Trump US presidential victory signals US$1,500 an ounce for gold and US$24 for silver in the intermediate term.”

And, for a day, it looked like he was right. Gold definitely hit some high notes yesterday.

But stocks started to bounce back, and gold prices began dropping. And nowhere were dropping faster or lower than in the United States. But they did also fall in India, France and the EU.

And then there’s the dollar.

The other thing that has a huge effect on gold is the stability of the dollar. And there were big worries about the currency exchange rate if Trump should win the election. Because, while UK markets bounced back fairly well after the Brexit vote, the pound is still taking a beating.

However, the dollar seems to be doing just fine, thank you very much. And that’s going to keep a lid on gold prices as long as the situation lasts. Things could very well change once Trump is actually president, but for now, gold is giving up its gains.