You can’t hide from the upcoming 2016 Presidential Elections and the surrounding media coverage, even if you wanted to. As an strategic or precious metals investor, you must take into account all the information at hand in order to make informed decisions about allocating capital into assets. So, because you know that political matters often have substantial effects on fiscal matters, you have some incentive to be aware of how the process is unfolding.
The Conservative Right in America will frequently advocate a free market and smaller government. While, on the other side of the coin, it’s common for Liberals to support policies that increase the size of government through a variety of federal and state-backed programs and taxes. Who ends up in office, at least by all appearances, is often a good indicator of how certain economic activity will occur. A strong US economy and a strong dollar usually go hand-in-hand.
If you are a student of economics, and you don’t ascribe to the Keynesian model of unlimited money-printing being a good thing for markets, you’re probably leaning towards a Republican or Libertarian candidate. If you reject the Austrian school of economics and you like the idea of governments being able to manipulate markets and print excess money in time
If you really wanted to, you could totally abstain from voting and that still wouldn’t make you impervious to the economic effects that result from whatever policy is enacted. Chances are that somebody is going to be inhabiting the White House once the elections are over and final and that individual will have fiscal plans. So, what are some things you can do as a private investor that may firm up your portfolio, as regarding potential election outcomes?
Well, in times where financial insecurity is abounding, such as when you have a Democrat or Democratic Socialist trying to advocate for greater state control of markets, there needs to be a hedge option. The greatest hedge the people have against fiat money (which is unbacked paper money that governments control and print on a whim) is
s of economic upheaval, then you are likely to vote Democratic. Even if you don’t vote entirely on party lines, there’s no disputing that political policy can have strong effects on fiscal outcomes.
hard assets in their portfolio. The best and most easily kept hard assets are arguably precious and strategic metals.
Most think of gold and silver as the main forms of precious metal assets available for the average investor seeking alternatives to paper currency, stocks, and bonds. While it is true that gold and silver are two of the most historically safe hedges against potential market failure, they are not the only options. Some folks will invest in platinum, copper and even more esoteric metals like tungsten, gallium, and other technological metals.
Whichever strategic metals you add to your portfolio in the years leading up to an election, the fact remains that the outcome of that event can have substantial effects on how the prices of precious metals change. In many cases, a strengthening dollar is going to have a downward price pressure on precious metals, making them less likely to bring a return on investment for those allocating funds into them.
It could be argued, especially of this current election cycle, that a chance exists that neither party has a candidate able to strengthen the dollar. It is probably fair to say that the conservatives are more likely to do so, simply on historical and rhetorical evidence alone. If a candidate from the Democratic party takes office and they enact policy that harms businesses and makes it more expensive to operate in America, the dollar will be threatened.
A weakened dollar means higher prices for many types of goods — precious metals among them. A weakened dollar can bring oil, food and housing prices up as well. This is especially true if central banks are able to print additional paper currency to stimulate the economy. At that point, it will be too late for investors to buy gold, silver and other strategic metals as a hedge against poor fiscal policy. They’ll have already missed the boat of today’s discount metal prices. Prior to an election taking place in a challenged economy such as this, adding a strategic hedge to your portfolio makes plenty of sense.