President Trump to Boost Gold Prices?
Exactly one year ago, Donald Trump won the bid to become the President of United States. Right after his presidency was announced, we saw a massive sell-off in gold prices. We were told the yellow precious metal could go much lower, that it’s not worth it, and that President Trump could be bad for gold.
What happened?
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The initial reaction to Donald Trump winning was horrible for gold prices. The yellow precious metal tumbled to as low as $1,125 an ounce by mid-December 2016.
But, since then, gold prices have been trending higher. Since the lows, the metal has increased roughly 14%—from $1,125 an ounce to $1,285 an ounce now.
What changed?
Investors bought into the idea that President Trump’s plans would follow through and that everything will be great for the U.S. economy. The dollar would rise, the economy would grow immensely, and the list goes on.
If you follow the news, not a lot has been done. It’s been over a year already.
Here’s one more thing: Investors paid too much attention to the noise and ignored the fundamentals.
This statement may sound bold, but it’s worth making: President Trump could be the greatest president for gold prices. In the coming years, we could see a massive rally in gold.
Tax Cuts And Possible Infrastructure Spending to Send Gold Prices Soaring
Why?
We are hearing a lot about corporate tax cuts these days. The bill hasn’t been passed yet, but if we assume it passes, it could severely impact the U.S. government’s financial conditions. All of a sudden, the government will be receiving less. The budget deficit could balloon very quickly. Know that higher deficits hurt the value of the dollar. As a result, gold prices could soar.
But it doesn’t just stop here.
If you recall, there was an infrastructure plan promised, too. Recently, the U.S. Transportation Secretary, Elaine Chao, talked about it. It’s supposedly a $1.0-trillion plan that will be focused on replacing crumbling infrastructure in the U.S. Don’t forget, this $1.0 trillion would be coming from U.S. government as well. (Source: “Trump’s Transportation Chief Just Hyped His $1 Trillion Infrastructure Plan Again. But She Offered Few Details,” Fortune, October 11, 2017.)
Now, add together the tax cuts and infrastructure plan, and the deficit suddenly gets much bigger. It will not be shocking to see the U.S. government budget deficit soaring to $1.0 trillion or more very quickly. This could have dire impacts on the U.S. dollar and the economy. In the midst of this, gold could shine.
Gold Prices Outlook: $2,000 Gold Remains Possible
Dear reader, obviously, with time we will know more.
But, gold price action suggests investors’ perception of gold is changing. They are starting to realize the potential growth of the yellow metal. As said earlier, gold prices have increased 14% from their lows. Mind you, this happened at a higher volume. So it looks like there’s some excited buying.
Don’t forget, there are still at least three more years left in Trump’s presidency and possibly four more after that.
With all this said, I can’t help but be bullish on gold prices. Patient investors could reap massive rewards. $2,000 gold price remains possible.
