Every four years America, and much of the world, watch the spectacle of another United States presidential election. The election of 2016 is no different, with too many television and radio advertisements and endless debate and discussion by just about everyone. It is no secret that the presidential election cycle influences business and the economy. The endless debate and all the outlandish promises by each candidate stir up fear and frustration in the people.
Will taxes go up or down? Will the economy get better or worse under this new president? These are just two of many questions that are on the minds of many. But what about the price of gold, how will it change depending on who the winner of the contest is? In this Hub, I go back and look at the election results back to 1976 and see how the price of gold changes over the two months after the election. Gold is a classic “fear factor” hedge – during uncertain times, the price of gold tends to rise. When all is quiet in the world, the price generally declines.
The Results of Election 1976 to 2012
In the table below are the results of the presidential elections from 1976 to 2012 and the change in the price of gold from election day to the end of that year. The prices are the London Fix taken from the kitco website. The far-right column shows the percent change of the price of gold from election day until the end of the election year. As you can see, most year the price of gold doesn’t change much in the two month after the election. The biggest years of change occurred in 2008 when Barack Obama defeated the Republican John McCain. The year the price of gold shot up 19 percent in two months. Followed by the next election cycle where the price of gold dropped two percent when the incumbent president Barack Obama defeat the Republican opponent Mitt Romney. To get a better feel for the what happens to the price of gold, let’s consider only the years where there was a change in party or the party in control of the presidency didn’t change.
What if Hillary Clinton Wins?
If Hillary Clinton wins the election there won’t be a change of hands of the political party in control of the White House. These would be like the years: 1984, 1988, 1996, 2004, and 2012. Looking at the chart we see that for those five years the price of gold was down slightly from election day to the end of the year in four of the years and say a slight price increase of three percent during Bill Clinton’s second term. The average price move during the two months after the election is down three percent. If Hillary wins, don’t expect much to happen to the price of gold.
What if Donald Trump Wins?
If Donald Trump wins the election then there would be a change in the office of the president from Democratic control to Republican control. A change in administration always gets people worried. Let’s see if this change is reflected in the price of gold. From the table, we the years where the price of gold changed was 1976, 1980, 1992, 2000, and 2008. For three of the five years gold went up, with 2008 be the largest jump of 19 percent. The average change in the price of gold for those five years was plus four percent. So, we can say that if there is a change in the White House there will probably be a small change of the price of gold in the upward direction.
Normal Seasonal Trends for Gold
No matter who wins the presidency, the price of gold probably going to change much based the historical record. To get an understanding of the normal change of the price of gold during November and December. The chart below is stockchart.com website and give the change in gold for the last 20 years reduced to monthly changes. What the chart tells us is that for November, on the average, gold will go up 1.9 percent 55 percent of the time and December is even quieter. From the 20-year seasonal chart we can conclude that the price of gold does change much during the last two months of the year – maybe a little change in the positive direction.
No matter who takes over the White House come election day, don’t expect the follow two months to see a large change in the price of gold. If Trump wins, there will probably be a slight uptick in the price. If Clinton wins, the price of gold will probably won’t change much and may drop a little.
October 18, 2017 Update on the Price of Gold After the Election
This article is for educational purposes only Before making any financial decisions, contact your financial advisor.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
Larry Rankin from Oklahoma on November 07, 2016: