The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) and other gold exchange traded products such as Rex Gold Hedged S&P 500 ETF (GHS) and Rex Gold Hedged FTSE Emerging Mkts ETF (GHE) have been widely cited as perhaps the lone beneficiaries of Republican nominee Donald Trump winning Tuesday’s presidential election.
Looking ahead, the ongoing negative interest rate environment, with European and Japanese central banks cutting benchmark rates deeper into the red to promote growth, could push investors toward gold bullion as a more stable store of wealth.
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Interestingly, historical data suggest gold performs better when Democrats are in the White House.
“While volatility and fear generally have supported gold around election uncertainty (in fact, this year through Oct. gold in the index is posting its 6th best year ever going back to 1979 (+19.3 percent) and is on pace for its best year since 2011,) gold does significantly better under the historical Democratic presidencies, adding 24.3 percent on average in Democratic terms versus Republican ones since 1978,” according to a recent note by S&P Dow Jones Indices.
[related_stories]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.
SEE MORE: Record Investment Demand for Gold ETFs
Additionally and perhaps not surprisingly, should there be Election Day controversy on par with what was seen in Florida in 2000, it is almost a certainty that gold will rise.
“The most obvious answer is that this will be good for the gold price. As we have seen in the month of October, gold thrives in an uncertain environment. Yesterday, it dropped seemingly on the news that the FBI had dropped the investigation into Hilary Clinton and, therefore, some assumed this meant she was once again the likely winner and putting rest to uncertainty,” notes ETF Daily News.
For more information on the gold market, visit our gold category.
SPDR Gold Shares
Tom Lydon’s clients own shares of GLD.