Market and product

Americans have a lot to consider ahead of the presidential election. Some of the most pressing issues facing the head of state will be the country’s US$23.3 trillion in debt, rising COVID-19 cases and the growing chasm dividing the country socially.

Reviving the economy will also be an immediate challenge, no matter the winner.

In the resource sector, however, one of the most pressing questions investors have is what will happen to the gold price post-election. After a major increase this year and over the course of Donald Trump’s presidency, what would a Joe Biden win mean?

Biden and gold: History suggests potential upside

The last Democrat in charge of the White House was Barack Obama, and if Biden wins on November 3, the country he will lead will be markedly different than the one he saw as Obama’s vice president.

The overall US market is one reason why. Before the coronavirus outbreak, the Dow Jones Industrial Average (INDEXDJX:.DJI) had been on a steady upward trajectory since February 2009, and in February of this year, the index of 30 large US-listed companies reached an all-time high of 29,398.

The rally was of course short-lived. Markets plummeted globally just over a month later, and the Dow hit its lowest point since November 2016 at 18,588.

At the same time, the price of gold has been incrementally increasing since November 2016 — it’s risen from US$1,183 per ounce at that time to around US$1,900 a month before this year’s election.

When Obama took office in January 2009, the price of gold was valued at just over US$890. By the end of his first term, the metal had climbed around 88.6 percent to US$1,685.

While his first four years benefited the metal greatly, Obama’s second term proved more volatile. Gold slipped from the US$1,685 level in 2013 to approximately US$1,195 in 2017, a 28.9 percent decrease.

Over the entirety of his presidency, gold’s value increased by 34 percent. It should also be noted that the metal’s previous all-time high of over US$1,900 occurred during Obama’s tenure.

Notably, the Obama era also saw a significant increase to the value of the US dollar. The largest gain for the greenback came from mid-2014 to early 2015, when it grew from 79.47 to 100.08.

As mentioned, gold moved positively during Trump’s first term. In January 2017, the currency metal was priced at US$1,210, and there was a fresh all-time of more than US$2,000 set during his presidency.

By the end of September, gold had added roughly 54 percent to its value under the Republican leader. - investingnews-