Written by: Steven Feldman, CEO Hard Assets Alliance
Dear Hard Assets Alliance Readers,
Many investors are asking if Trump’s reelection alters gold’s prospects. Veteran gold strategist Trey Reik’s answer is unequivocal: the fundamental forces driving gold prices are as robust as ever, regardless of short-term political shifts.
Trey is uniquely qualified to make this assessment. With over three decades of experience in precious metals investing, including managing multi-billion-dollar portfolios, he is widely regarded as one of the most thoughtful and incisive analysts in the metals space. His research has earned accolades for its depth and clarity, and he has advised some of the largest institutional investors on the strategic role of gold in their portfolios.
But to truly appreciate gold’s enduring value, it helps to recall its storied history…
Gold’s Enduring Strength: A Lesson from the 1970s
In July 1974, during one of the most severe recessions in U.S. history, the Federal Reserve slashed interest rates, an unusual move given the high inflation of the era. Stocks were down 50%, unemployment was climbing, and yet, gold soared to unprecedented heights. Why? Investors sought refuge from economic uncertainty and a declining dollar.
Fast forward to today, and we find ourselves in a similarly unprecedented situation. The Federal Reserve has already cut rates despite record-high stocks, low unemployment, and a strong economy—a clear signal of the system’s increasing dependence on artificial liquidity. As Trey notes, once central banks embrace quantitative easing, the cycle becomes nearly impossible to reverse without significant market disruptions.
Why Gold Matters Now
Trey emphasizes three “golden fundamentals” that underpin its value, irrespective of political shifts:
- Deteriorating U.S. Finances: The federal deficit now exceeds $2.5 trillion annually, with interest payments on debt outpacing defense spending.
- Anti-Dollar Sentiment: Globally, nations are actively diversifying reserves to reduce reliance on the U.S. dollar, favoring gold as a strategic alternative.
- Eroding Federal Reserve Credibility: Persistent monetary easing has exposed vulnerabilities in the financial system, intensifying demand for tangible assets like gold.
A Global Shift Away from the Dollar
The BRICS nations, representing nearly half of global GDP, have made significant strides toward reducing dollar dependence. At a recent summit, they discussed new trade systems designed to bypass the dollar entirely. Central banks worldwide are adding gold—and even silver—to their reserves as a hedge against geopolitical risk and economic sanctions.
Chaos and the Crypto Connection
Trump’s leadership style is anything but conventional. His previous presidency was characterized by unpredictability and policy shifts that often create volatility across markets. While structural pressures like mounting debt and global de-dollarization continue to buoy gold, the prospect of Trump’s unpredictability injects complexity and unpredictability into markets.
Moreover, Trump enjoys strong backing from the crypto community, which injected $130mm to support Republican candidates. This community will be cheering on any policy that increases volatility. Gold may see renewed interest as a stable hedge against such financial turbulence.
What This Means for You
History teaches us that short-term market movements often obscure the bigger picture. Following Trump’s 2016 election, gold dipped nearly 10%, only to recover as structural pressures reasserted themselves. Today’s fundamentals are even stronger, suggesting the recent pullback in gold may be a compelling buying opportunity.
As always, the Hard Assets Alliance is here to help you protect and grow your wealth with physical precious metals.
Warm regards,
Steven Feldman
CEO, Hard Assets Alliance
