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Red or Blue: Who Really Wins the Gold Race?

The GoldSilver Team 
NOV 10, 2023

Historically, gold and silver have been the bastions of stability during the uncertainty that elections can bring. Today, we’ll take a look at how much impact political cycles truly have on the prices of these time-honored assets.

Plus, we’ll also bring you the highlights as Mike Maloney sits down with the veteran precious metals aficionado, Rick Rule, to delve deep into the realm of gold.  

But before we dive into that, let’s look at some stunning facts about gold that might pique your interest...

Gold’s Timeless Elegance Revealed — Gold is one of the few ‘noble’ metals. That means it won’t rust or tarnish over time. Even the gold mined thousands of years ago in ancient Egypt is still around, as pristine as ever.

Gold's Unique Spot on the Metal Spectrum — Did you know gold is the only yellow metal? All other metals darken or turn a yellowish color after they have oxidized or reacted with other chemicals.

A Glimmer in the Sun’s Core — While the sun's core primarily consists of hydrogen undergoing nuclear fusion to form helium, trace amounts of heavier elements, including gold, are also present. Scientists estimate that there's enough gold in the core of our sun to coat the Earth's surface with a layer of gold about half a meter thick.


❓Nuggets Trivia of the Week❓


The world’s largest solid gold sculpture, which contains up to 5.5 metric tons of gold, is located in which country?

A. India
B. China
C. Turkey
D. Thailand

Scroll to the bottom of this email for the answer...


Gold, Silver, and the Ballot Box

As we enter another election season, it’s a moment of reflection for many investors, particularly those of us with an eye on precious metals. Historically, gold and silver have been the bastions of stability amidst the uncertainty that elections can bring. But how much does the political ebb and flow truly affect the prices of these time-honored assets?


Elections bring promises of policy changes, shifts in economic strategies, and sometimes, upheaval. Such environments can spur investors to seek shelter in assets that are perceived as less vulnerable to political whims. Gold and silver traditionally fill that role, often seeing a surge in interest as elections approach.


Our analyst Alan Hibbard put together this chart visualizing gold’s performance along with the political party in power. As we analyze historical data, it’s apparent that gold and silver prices sometimes do rise in the lead-up to elections, possibly due to increased uncertainty. Yet, it’s not a universal rule.

Annualized Return During 4- Year Term

While it’s tempting to speculate on the 'election effect,' the data suggests that whoever occupied the White House has little to no material impact on the price of gold. 

The broader economic context and global events tend to overshadow electoral politics.

Recently State Street global advisors analyzed the performance of gold in various US political environments, including the average annual returns for gold based on which party occupied the White House. The results are displayed below.

Source: State Street Gold Advisors

In reality, there are many fundamental reasons to hold gold. And these fundamentals are stronger now than at any time in U.S. history: 

  • Unlimited monetary stimulus
  • Unchecked fiscal stimulus
  • Record fiscal deficits
  • Runaway national debt levels
  • Positive real interest rates after a decade or more of negative real rates
  • Interest rates rising at the quickest pace in over 40 years
  • Dollar debasement and loss of purchasing power
  • Higher consumer prices
  • Currency wars – global competition to devalue sovereign currencies
  • Geopolitical conflicts

And, importantly,

  • Lack of Fed options
  • Lack of Government alternatives

Analysts at JPMorgan Chase have indicated that investors might favor gold due to its potential as a buffer against the possibility of a US recession this year, citing increased demand for gold as a hedge against scenarios.

And Jeffrey Currie of Goldman Sachs has placed a gold price target of $2,500, noting that gold may benefit from structurally higher macro volatility and a need to diversify equity exposure. Goldman Sachs also sees gold outperforming Bitcoin in the longer term.

Remember, gold and silver's value transcend fleeting political cycles. These metals are not just investments; they are long-term assets that store value and outlast any single election cycle.


Rick Rule Sits Down with Mike Maloney to Talk Gold

Last week, Rick Rule sat down with our very own Mike Maloney for a crucial conversation that's making waves. In just a few minutes, we'll give you the essence of it, and why you should watch the full video for all the details.

Rick began with a stark statement: "I have real FEARS the gold market will triple..." Intriguing, right? But why would a prominent gold investor fear rising prices? 

There's more to this story...

Rick's concern stems from his belief in an impending crisis that could reshape our world. While gold may thrive in such times, the potential consequences could be far-reaching and more devastating than we can imagine.  

Later the discussion moves to energy, where Rick takes a critical stance on the goal of "carbon neutrality."

Did you know that over the past 40 years, humankind has collectively spent $5 trillion promoting alternative energies? And that has resulted in fossil fuels dropping from 82% global market share all the way down to... 81% global market share.

As Rick says, “No, that’s not a typo...” Four decades and $5 trillion later we’re still as dependent on fossil fuels as ever. That’s why both Mike and Rick say going completely carbon neutral by 2050 just isn’t feasible.  

Rick also sheds light on what this shift could mean for your wallet, mentioning potential costs like "$25 a gallon gasoline and 60 cent per kilowatt-hour electricity."

Now, this is just a glimpse of the insights shared by Rick Rule. For the full story and a deeper understanding, we encourage you to watch the entire conversation in Mike's latest video.

WATCH THE FULL VIDEO NOW

If you own any gold or silver, it’s a conversation you won’t want to miss!

That’s it for this week’s GoldSilver Nuggets – until next time!

Best,
Brandon S.
GoldSilver

Thomas Kaplan Gold Quote


❓Nuggets Trivia of the Week❓


The world’s largest solid gold sculpture, which contains up to 5.5 metric tons of gold, is located in which country?

A. India
B. China
C. Turkey
D. Thailand

Thailand

Answer: D - The Golden Buddha, officially titled Phra Phuttha Maha Suwanna Patimakon, is a gold statue weighing 5.5 tons (5,500 kilograms), located in the temple of Wat Traimit, Bangkok, Thailand.