By Zacks Equity Research
Gold is all over the investors’ mind this year thanks to its fascinating returns. A flight to safety following a spike in volatility at the start and end of 1H16 brightened the appeal for the safe-haven asset gold (despite the metal’s moderate fundamentals). As a result, despite only decent fundamentals, gold bullion ETFSPDR Gold Shares (GLD - ETF report) added maximum assets worth about $12.2 billion in 1H (read: 1H ETF Asset Report: Gold Glows; Equities Fade).
Notably, most of the 1H threats – be it global growth slowdown or the yet unseen Brexit fallout or the sudden momentum loss in the otherwise-improving U.S. economy – are palpable in the second half too. Plus, there is the presidential election in November which may cause considerable uncertainty, adding more shine to the yellow metal (read: ETF Strategies for 2H).
But it will be more interesting to see is what happens to gold after the election? Let’s take a look (read: ETF Strategies for 2H).
What Will Happen to Gold Post Election?
Investors should note that gold normally shares an inverse relation with the stock market. As per a source, “during the most recent 15 years during which Republicans have held the presidency, the value of the Dow has increased by 42%. During the Democratic presidencies, it has increased by 609% — 14.5 times faster.”
Since 1900, the annualized return of the Dow Jones Industrial Average Index was 7% in Democratic rule and 3% in Republican rule. It means that Democrats are good for stocks and Republicans are less beneficial for the risky stock market. It means that safe havens like gold should shine more in Republican presidency (read: Gold ETF Rally Unstoppable after 2 Beaming Quarters).
Why Donald Trump May Be More Good for Gold?