Is it Smart to Wait Until After an Election to Buy Gold?

Feb 13, 2024

I often speak of gold as wealth insurance. Physical gold enables you to diversify your holdings and protect your savings and retirement when other assets are losing value. It's a role the metal has played for generations. And it's important today as it ever was.

But we're hearing from some of our clients that they're waiting to buy until after the November elections. They view Election Day with some trepidation and want to see the outcome before buying. Does this urge to wait make sense? No, it does not for several reasons. Let's start with the insurance analogy.

If you thought a hurricane was headed your way, would you wait to buy home insurance until you heard whether it was a category three or category five storm? Of course not. Responsible homeowners seek protection regardless of a weather forecast. They know the time to buy insurance is when they have something to protect. Not when it's under threat. Besides, insurance can be more expensive when danger looms. If it's available at all. Similarly, gold is likely to be more expensive as an election fraught with risk approaches.

Here's another reason not to wait: gold prices have risen under every president since 2001. That's right, from Inauguration Day forward, gold owners have profited under every president, Republican and Democrat. And over that period, gold prices have risen 800%. What other form of insurance performs like that? Not only increasing in value, but rising eightfold? The question has not been whether gold would rise during a president's term, but how much it would rise. So why wait? When whatever the outcome, gold is likely to be a winner.

Back in November, we published a blog post analyzing how the price of gold changed on every inauguration day since 1980, as well as in the two weeks and two years following. We found that the largest swing in prices two weeks after Inauguration Day happened in 2017, when Donald Trump became president and gold dipped 5.4%. However, over the course of his four year term, gold increased by 48%.

Now, under Joe Biden, gold has risen another 8%, setting an all time high of $2,135 an ounce just over a month ago. Waiting until after an election just doesn't make sense. If the historical pattern holds, and I believe it will, the smart move is to buy now before prices resume the dramatic rally they began late last year.

Another reason why some clients are hesitating to buy is they think gold is exclusively a bad news play. They want to wait until after Election day to see if they should expect good times or hard times in the coming four years. But these folks are mistaken. Since the turn of the millennium, gold has performed well in both good times and bad. That's right. Contrary to conventional wisdom, gold appreciation does not depend on bad news.

Our nation certainly has seen some hard times since 2001. The 9/11 attacks and the fight against terrorism. The wars in Afghanistan and Iraq, the global financial crisis, a great recession, a crippling global pandemic, and the inflation that followed. Conflicts raging today in Europe, in the Middle East. The saber rattling from China and North Korea. Our own domestic political divisiveness and paralysis. Gold has given us a safe haven throughout these difficult days, as I said, rising by 800% over the last 23 years.

And of course, those years have not all been hard ones. We've seen some very good times too. We recovered from the greatest financial crisis and worldwide recession since the 1930s. We came through the worst global pandemic in more than a century. Our economy has more than doubled in size. 24 million more people are employed today, and unemployment is the lowest in 50 years. And now, with inflation and interest rates falling, we're witnessing a historic rally in gold prices. Gold's strong performance in both challenging and prosperous times makes it a powerful addition to our portfolio, offsetting losses and hard times and supporting asset appreciation in good times.

So why wait? The smart move is to buy gold now.


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