Gold: The Ultimate Protection Against Uncertainty
Transition from Digital to Physical
The election may be scheduled for Tuesday, Nov. 5, but it is already well underway due to early voting, mail-in ballots, drop boxes, and ballot harvesting. Different states have different laws, but in many, voting has already begun. While the votes won't be counted until Election Day, a significant portion of the voting will be completed by the end of this week.
Early Indications Favor Trump
The early voting period coincides with a swing in the polls towards Donald Trump. This momentum could be critical, especially as early voting has begun in key battleground states. However, even after the votes are cast and a winner is declared, the election may not be over due to potential legal challenges.
Assuming Trump wins the election and takes office in January, certain market sectors are expected to thrive under his administration. These include oil and natural gas drilling, production and refining, mining, defense, and automobile manufacturing focused more on internal-combustion engines rather than electric vehicles.
Emphasis on the Physical World
Sectors that benefit from lower oil and gas prices, such as trucking and airlines, should also do well under Trump. His agenda is expected to incentivize billions of dollars of investments in U.S. energy and manufacturing jobs, prioritizing domestic oil drilling and refining. This could lead to energy independence and job creation in the energy sector.
Trump is also expected to reduce spending on projects like Kamala Harris' EV mandates, allowing automakers to produce more automobiles with traditional internal-combustion engines. In essence, a second Trump term could ignite a boom in the physical world, contrasting the past 15 years' focus on the digital, online world.
The Case for Refiners
U.S. refiners could thrive under a second Trump administration. They are entering a new golden age, with demand for refined products remaining strong despite high prices. The billion-plus fleet of internal-combustion engines around the world will need diesel and gasoline for decades to come.
U.S. refineries have a significant competitive advantage due to access to lower-cost natural gas, a crucial ingredient in the oil refining process. This advantage is especially pronounced when compared to competing refineries in Europe and Asia.
Gold: The Ultimate Hedge
Despite early indications favoring Trump, the uncertainty surrounding the election outcome makes it too soon to issue a final prediction. This uncertainty is likely to cause high volatility in several market sectors in the coming weeks.
In such uncertain times, gold serves as the ultimate hedge. It offers protection against political uncertainty, stock market collapse, geopolitical risk, social unrest, and an attack on the U.S. dollar. Therefore, it is recommended to allocate 10% of your investable assets to gold as a form of insurance.
Bottom Line
Whether you're looking at the upcoming election, the potential market sectors that could thrive, or the role of gold as a hedge, there's a lot to consider. What are your thoughts on these predictions and recommendations? Do you agree or disagree? Share this article with your friends and start a conversation. And don't forget to sign up for the Daily Briefing, which takes place every day at 6pm.
