Of course the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and other gold-related exchange traded products cannot vote, but if they could, some market observers believe it is clear which presidential candidate gold ETFs would prefer.
Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.
SEE MORE: 31 Gold ETFs Investors Should Size Up
“Some market participants say that a surprise Trump victory will cause considerable market anxiety, leading safe havens like gold to surge. Others say that Trump’s antipathy for stimulative monetary policies will mean more rate hikes down the line, spiking the dollar and consequently hurting gold prices,” reports CNBC.
Investors have flocked to U.S. Treasuries and bond-related exchange traded funds in a world of negative-yielding sovereign debt. However, with U.S. Treasury yields hovering around three-decade lows, government debt looks pricey and fixed-income investors are now exposed to greater risks. Interestingly, safe-haven Treasuries are also seen as vulnerable to a Trump victory, along with stocks, leaving gold as potentially the last asset class that could immediately benefit from a Trump win.
Investment in gold jumped to 448 metric tons in the second quarter, or more than double the figure of the same period year-over-year, largely due to a year-over-year increase in ETF investment to 236.8 metric tons, compared to a 23 metric ton outflow the year prior.
“Some say a Trump win would be a deeply negative event for equities. After all, stocks dislike uncertainty, and a Trump victory would leave much in the air about economically important issues such as trade policy and monetary policy,” according to CNBC.
For more information on the Gold ETFs, visit our Gold category.
Tom Lydon’s clients own shares of GLD.