Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
According to major financial institutions, gold is set to surge during President-elect Donald Trump’s second term. JP Morgan and ANZ–New Zealand’s largest bank–are predicting higher gold prices under the next administration, despite the yellow metal’s current pullback. Both banking giants expect investors to continue choosing gold as a protective measure against anticipated inflationary hurdles brought on by economic and geopolitical upheaval.
Gold’s Routine Post-Election Pullback
Following the presidential election, gold prices fell from $2,743.98 to a relative low of $2,562.10. The yellow metal has clawed back most of that 7% drop, and prices are now holding steady above $2,660. This isn’t uncharacteristic behavior as gold has entered similar slumps after the last six out of nine elections. In the wake of Trump’s first victory, prices dropped by more than 11%. ANZ analysts explain: “While a post-election selloff was expected as investors de-hedged their positions following the results, the intensity of the fall was sharper than expected.”
Why Trump is Gold for Gold
A promise to obliterate the status quo has been a cornerstone of Trump’s campaign, and the Republicans’ trifecta of power in the presidency and both houses of Congress seems likely the admin’s transformative policies will be implemented. JP Morgan and ANZ analysts warn of potentially inflationary and debt-laden consequences:
Inflation & Stagnation
Many experts anticipate Trump’s more aggressive fiscal policies to exacerbate inflation which has ticked back up following victory cries of a soft-landing. The National Retail Federation (NRF) projected the President elect’s across-the-board tariff scheme to cut the country’s gross domestic product (GDP) by $50 billion annually. “Trump’s plans…will likely deteriorate the US fiscal situation, and this could pave the way for macroeconomic policy adjustments that would support gold,” warn ANZ analysts.
Geopolitical Tensions
Trump 2.0 is set to inherit a turbulent and uncertain geopolitical landscape. The war in Eastern Europe is reaching alarming levels of confrontation with Ukraine launching US missiles deep inside Russia and Putin lowering the country’s requirement for nuclear launches. As JP Morgan notes, “ Gold…has historically been one of the best-performing tactical hedges against geopolitical risk.”
Debt Burden
Adding to the national debt seems to be the only bipartisan policy, and Trump’s first term was no exception. His administration threw $8.4 trillion ($3.6 trillion related to COVID relief) onto the already heavy debt burden. A report from the Committee for a Responsible Federal Budget (CRFB) estimates Trump’s proposed policies would raise the debt by another $7.75 trillion. Even the soon-to-be-established “Department of Government Efficiency” claims to be able to slash the federal budget by $2 trillion–a small dent in a systemic problem.
Gold Forecasts Remain Elevated
Gold’s recent slump has done nothing to reverse gold’s shining outlook. Experts have had to raise their price predictions several times throughout 2024 in the face of relentless upward momentum. In fact, many have been eyeing the $3,000 milestone. The consensus seems to view this dip as a cool-off rather than a reversal. JP Morgan has described it as a “stumble, not a sea change”, reinforcing a bullish stance on gold.