Donald Trump Could Spike Gold to $1,850

donald trump goldZacks Equity Research is out this morning with an interesting look at how Donald Trump as president could be a huge boon for gold prices.

The crux of the Trump-bullish-for-gold argument is that he would ultimately be a wet blanket on U.S. economic growth. Zacks notes:

Now with the Republican candidate Donald Trump racing closer to the Democratic candidate Clinton, all eyes are now his policies. And so far, what he has delivered in speeches are mostly “inward looking”, as per ABN Amro. As per the research organization, Trump’s policies may hinder U.S. growth and thus may cause an upheaval in the U.S. market pushing the safe-resort gold to as high as $1,850.

Trump’s tax reform plans could help push gold higher. He’s claimed tax cuts across the board, for individuals, corporations, families, and even for the ultra rich. Such cuts would likely spike budget deficits, making gold an attractive hedge against U.S. debt.

His dovish interest rate stance is another potential bullish factor for gold. “…Trump is ‘a low interest rate person’. Concerned about the U.S. economy’s $19 trillion of debt, Trump wants to keep interest rate low ahead so that the country does not have to end up in paying much higher interest payment.” In general, lower rates lead to greater demand for assets other than bonds as investors chase any form of returns — including commodities like gold.

Finally, Trump has also proposed massive tariffs on imports, which in turn would discount the U.S. dollar’s value against foreign currencies and gold alike.

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The SPDR Gold Trust ETF (NYSE:GLD) rose $0.53 (+0.42%) to $126.00 in morning trading Tuesday. The GLD has gained 24% year-to-date.

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