After more than a year of anticipation, the U.S. presidential election is finally upon us. News coverage is at a fever pitch, and rhetoric from both sides has turned increasingly intense. Many people are experiencing election fatigue, ready to get past the noise and move on with their lives. Naturally, precious metals investors are wondering how the election outcome will impact their holdings. Is there a simple answer, such as "Democrats boost gold and silver, while Republicans don’t" (or vice versa)? In this article, I’ll explore historical data to address that question and share additional insights that support a bullish outlook for precious metals in the years ahead.
Since early October, presidential candidate Donald Trump’s election odds have risen significantly against candidate Kamala Harris. According to Polymarket, the world’s largest prediction market, Trump’s chances surged from 48.9% against Harris’s 50.0% to a peak of 66.9% against her 33.1% by October 30th. During this period, gold gained a solid 5.8%, and silver rose 8.5%. The U.S. Dollar Index, equities, and Bitcoin also saw increases, in what became known as the “Trump trade.”
By October 30th, however, Donald Trump’s election odds had peaked and subsequently declined to 55.4% at the time of writing. As Trump’s odds fell, precious metals, the U.S. Dollar Index, equities, and Bitcoin also experienced pullbacks. While other factors may be influencing these trends, the initial impression suggests that the prospect of a Trump presidency is bullish for gold and silver.
Many are curious whether one political party tends to be more bullish for gold and silver than the other. To address this, the World Gold Council recently analyzed gold's performance before and after U.S. presidential elections from 1972 to 2022. Their findings indicate that none of the results are statistically significant, however, leading them to conclude, “Overall, our analysis of gold and U.S. presidential elections suggests that gold does not react directly to party affiliation or changes in leadership.”
The same World Gold Council study found that gold bullion coin sales were higher when a Democrat was in office. They theorized this trend is likely because gold buyers tend to lean Republican and feel more apprehensive when a Democrat is in office, making them more inclined to purchase gold, traditionally viewed as a safe-haven asset (a theory I agree with). I’d also like to point out that the major gold-buying episodes of the past few decades have coincided with Democratic presidencies, though were not due to the actions or policies of any particular party—for example, the Y2K scare in the late 1990s, the Global Financial Crisis from 2007 to 2011, and the COVID pandemic in the early-2020s.
As we’ve seen, there’s no clear link between the party in the White House and the performance of precious metals—at least historically. I believe that regardless of which party wins, the long-term outlook for gold and silver remains bright. Both parties have shown a strong tendency to increase the national debt—a factor that supports a bullish case for precious metals, as illustrated in the graph below.
Though Republicans are often viewed as the more fiscally conservative party, the national debt—now nearing $36 trillion—has grown at an average annual rate of 10.4% under Republican presidencies since 1980, compared to 7% under Democratic administrations. It’s worth noting that the higher debt growth during Republican terms is largely due to Ronald Reagan’s significant defense spending during the Cold War. There’s a real risk that ambitious Democratic-backed initiatives, such as a potential Green New Deal, universal basic income (UBI), and funding those through the principles of Modern Monetary Theory (MMT), would drive national debt far higher—an outcome that would be very bullish for gold and silver.
