Debate Trump Clinton | The Impact on Gold & Silver Tonight
Debate Trump Clinton | The Impact on Gold & Silver Tonight
Trump Vs Hillary | The Great Debate that Sets the Stage for The U.S. Dollar | Gold | Silver
Tonight will be as important an indicator as many of the economic indicators we follow. The United States election is a struggle between two futures:
Hillary Clinton | An extension of the Obama / Democratic reign in America which is essentially more of the same, whether that is beneficial or not.
Donald Trump | A new unpredictable approach which adds uncertainty to the financial markets due to the harsh verbal stances taken losing profits and jobs to other countries and the outspoken condemnation of the candidate against policies such as T.P.P (Trans Pacific-Partnership).
The Impact on the U.S Dollar, Gold and Silver
The outcome of the debate will set the trend for the US Dollar until the next Fed Rate Rise meeting, barring any worse economic news from the United states. Both candidates and their policies will influence short term market decisions, similar to the Brexit Vote which caused quite a ruckus in the Forex, Equities and Commodities markets.
If Donald Trump is Tonight’s Clear Winner
If Donald J Trump is the clear winner of tonight’s debate in terms of public approval and polling, then the uncertainty regarding the trade agreements between the United States and Asia and even all partners will be placed under microscope and scrutiny. Investors, smart money, banks and institutions are likely to hedge against a Trump win by withdrawing US funds and distributing it throughout safe haven assets such as the Euro, the Yen and precious metals. Emerging markets would also take a beating since the economic wellbeing of these markets largely depend on the U.S Dollar and America’s attitude toward those markets. In addition, there is Obama’s recent veto of the 9/11 legislation that prevents affected families from the 9/11 disaster from suing and claiming against the assets of Saudi Arabia. While Obama’s veto is about to be challenged, a Trump victory could easily void any protection the Saudi Government has. The Saudis have already stated that they would pull billions of dollars out of the United States through bond sales etc in the event of such legislation passing. This would have dire ramifications for the bond market and the U.S Dollar. Gold will inversely appreciate not only due to the depreciating U.S Dollar but an additional boost will be factored into price due to safe haven asset buying. There are no straight lines but I expect a significant impact to be visible over the weeks leading up to the November vote and decision.
Looking at the Gold Price (Cash) graph above, I expect gold price to break out of the current Bull Flag and move into a continuation and perhaps consolidation at a higher price level. $1380-$1430 would not be impossible in my opinion over the coming weeks.
If Hillary Clinton is Tonight’s Clear Winner
If Hillary pulls ahead in the debate, upstaging Trump with her incumbent know how and savvy, then the polls and media coverage would significantly bolster the confidence that the international market has in the United States economy, international policy and the probability of a Federal Reserve Rate Hike in December. This would help the market stay the course with the T.P.P and other policies relating to Mexico (e.g No wall) and allay any fears that the Saudi government may have had, knowing that Hillary will continues Obama Middle-East friendly relationship and negotiations. Gold may very well see a lack of interest, however, given the previous Brexit surprise, I expect to see $GOLD maintain support and grinding higher into November. In the graph below I expect a Hillary debate win to create a consolidation box where Gold will trade in range as the U.S Dollar simultaneously trades in a range building up the election.
As I previously mentioned, the market has learned its lesson with regard to surprises (Brexit) so there will be a risk-off approach in the coming weeks which will bolster gold and silver prices.
The Australian Gold Miners in my stable, will in the meantime have drilling results releases, JORC revisions and cash flow guidance which is a boon for the portfolio I hold currently. It’s all cyclical, so I don’t expect for one second to be a holder till December. My exit is very likely to be around October/November/December on a final push up for gold, regardless of the election outcome. We will then fall into the next pull back where the accepted assumption is that we will be seeing a rate hike in December (I doubt there will be hike, which means my accumulation will commence again. But that is for another article at another time). Looking forward to the debate and the impact on the gold, silver, crude and the US Dollar (DXY). NASDAQ, NYSE, DOW and Futures will also be a fun watch.
See you around the ASX
| the Merchant
[Disclaimer: I’m not a financial advisor. Your wealth is at risk. Seek professional advice and do your own research. You’re reading the thoughts of a trader that has put his own wealth at risk. It’s like I’m letting you read my diary so don’t base your trades on this information. This entire site is for educational purposes only.]
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