With Election Day drawing closer, investors are reminded that financial markets are likely to react regardless of the next president.
As investors well know, healthcare stocks could be pinched immediately if Democratic nominee Hillary Clinton wins.
Likewise, an array of asset classes are seen as vulnerable should Republican nominee Donald Trump pull the upset.
The only asset class market participants can almost universally agree will move higher if Trump wins is gold, but 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 could also get a bump from a Clinton victory.
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.
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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.
“But gold prices are likely to climb even if opponent Clinton wins the presidency, said Milling-Stanley,” reports Myra Saefong for MarketWatch. “Gold probably wouldn’t see quite as dramatic a rise in the event of a Clinton win, compared with Trump, but Clinton as president is expected to have inflationary implications, which would imply higher gold prices as well, he said. Gold is often used as a hedge against inflation.”
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“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.