“Buy Gold No Matter Who Wins The Election”

“Buy Gold No Matter Who Wins The Election”

That’s the words of banking giant HSBC who think there will be only one certain winner in next week’s US election… gold.

They are predicting at least an 8% jump regardless of who wins. The key word there is ‘least’ as they are calling much higher, of course, if it's Trump.  At the time of the report from Bloomberg 2 days ago gold was at USD1289 and has already risen to USD1303 at the time of writing on renewed fears of a Trump victory.

HSBC are predicting $1500 if Trump wins (that’s up 15%!) and $1400 on Clinton.  It’s not just a flash in the pan rise either as both have policies that are supportive of gold in the longer term too.  Both are looking to employ fiscal spending to stimulate growth.  Trump at one point in his ever changing ‘policy’ positions said he would put at least half a trillion dollars to work.  Can we remind you that the US is over $19.5 trillion in government debt already!  That is over 105% of GDP and rising and the highest level since World War II.  So yes you could see an initial flurry of growth but that debt burden is getting mighty overwhelming.  It’s incredibly ironic too that Trump is looking to increase deficit spending when he had this to say about raising the US debt limit:

“Let's say you come home from work and find there has been a sewer backup in your neighbourhood. Your home has sewage all the way up to your ceiling.

‘What do you think you should do? Raise the ceiling, or pump out the s**t?”

It’s not just fiscal policy with Trump of course, as HSBC says:

"Gold is seen as a hedge against political uncertainty, and President Trump would bring more political unpredictability than any president for generations, particularly over the U.S. Federal Reserve’s leadership and monetary policy strategy,"

We’ve written before about Jim Rickards views.  Via the Daily Reckoning guys, this is what he just said in an interview:

“There are a lot of reasons to think this is going to be extremely close and he could win. Now, here is the point, markets are fully priced for Hillary; gold, stocks, everything is priced for a Hillary victory. If she wins, nothing happens because it’s already priced. But, if he wins, the markets are going to go like this [points higher] — gold will go up $US100 an ounce.[pretty much identical to HSBC]

‘So, I would buy gold now, or shortly before the election. If Hillary wins nothing is going to happen, you won’t lose much. But, if Trump wins, you’ll make a fortune. So, it’s an asymmetric trade.”

Rarely in life so you get an asymmetric trade.