Although that headline might shock you to contemplate, the outcome of the US Presidential Election next week could have a significant impact on the price of gold, silver, platinum, and palladium in the coming weeks and months. At JM Bullion we’ve already discussed in past blogs how the spot price of precious metals can be drastically impacted by geo-political events. There’s an old saying in economics that plays in well here too, “when America gets a sneeze, the rest of the world gets the flu.”

To parse out that saying, it refers to the massive impact small changes to the American economy or the American political landscape can have on the greater global economy. In many cases, those ramifications can play out on a larger scale with greater devastation globally speaking. With a heated 2016 political campaign for the highest office in the land, for the position as Leader of the Free World, how will the outcome of the United States presidential election in 2016 impact precious metals?

What Gold is Doing Right Now

As of November 3^rd, Reuters reports that gold continues to edge higher in response to a sinking dollar and uncertainty around the outcome of the US presidential election. So far, gold is holding back about $1,300 and is likely to continue doing so until the election is over. Spot gold, which has been lower, rose 0.2 percent on Thursday to $1,298.91 per ounce and had touched a one-month high over $1,300. U.S. gold futures fell 1.4 percent at the same time to settle at $1,298.30. While some signals point to gold moving higher with a Donald Trump victory than a Hillary Clinton win, there are reasons to buy gold regardless.

HSBC suggests that investors might want to flock toward gold regardless of the outcome because both candidates have put forth trade and internal policies that could spur the price of gold higher, but the benefits for those who believe in safeguarding their wealth are seemingly greater with a Trump victory.

How it Might Play Out for Each Candidate

Bloomberg News has a detailed piece on the potential outcome for both candidates as it regards gold and silver prices. For the time being, let’s focus first on business magnate Donald J. Trump, the Republican candidate for office. Trump’s protectionist, America-first policies and calls to renegotiate effectively all trade major trade deals in place currently for the country have some expecting a Trump win to send gold as high as $1,500 per ounce.

According to HSBC, a Donald Trump victory would be the best outcome for those wishing to see higher gold prices because it would be seen as more than a safe haven investment, but a “protection against protectionism.” If you thought Hillary Clinton’s policies and approach to trade seemed timid in comparison to Trump, analysts aren’t so sure it won’t impact gold in a similar fashion.

HSBC continues on by stating that a Clinton win could still push gold toward $1,400 per ounce by the end of the year. Should Clinton win and the Democrats sweep to victory with control of Congress as well, the expected boost in fiscal spending by a Democratic-controlled government in the US could further stoke demand for precious metals.

James Butterfill, the head of research and investment strategy at ETF Securities believes gold could increase 10 percent during the first year of a Trump administration, stating:

“Gold is seen as a hedge against political uncertainty, and President Trump would bring more political unpredictability than any president for generations, particularly over the U.S. Federal Reserve’s leadership and monetary policy strategy.”

Other Factors at Play

For those who don’t pay attention to notes from Fed meetings, there is another player in the game at the moment that goes beyond whether a Democrat or Republican ends up in the White House. The Fed recently announced this week that rates would stay unchanged for now, but that the American economy is gaining steam and job growth remains solid. American Congressional leaders and policymakers are buoyed by the fact that inflation is moving closer to the target percentage of 2%.

The Fed has made comments in the aftermath of its latest meeting that it would be open to raising the key rate in the US by December, which would be a negative for gold. The precious metal is particularly vulnerable to rising rates, which have the effect of lifting the opportunity cost for holding non-yielding assets, boosts the dollar, and drags down gold prices.

Expect the Unexpected

While most analysts suggest that a victory for either candidate will bring higher gold prices, there’s no knowing what will happen come the morning of November 9^th. The Brexit vote back in June 2016 brought the world, precious metals included, a great deal of shock and surprise. The 2016 US presidential election could do the same. You could also wake up on November 9^th and see that not much has changed.

One thing seems clear at this point. A Trump victory is likely to mean higher gold prices in the short term based upon nerves around the globe for his first 100 days in office, while a Clinton victory would also likely bring higher gold prices, but with a much lower ceiling and at a much slower rate of increase.