Market Jitters: Biden's Potential Exit and Its Ripple Effect on Gold and Bitcoin

U.S. President Joe Biden faces increasing pressure to withdraw from the White House race, but how could Democrats replace him as their nominee? Who are the top candidates, and how will markets react, including gold and Bitcoin?

Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, hosts a power panel. Wendy Patrick, President and founder of BlackSwanVerdicts.com; Richard Roth, Founder and partner of The Roth Law Firm; Michael Lee, Founder of Michael Lee Strategy; and Todd 'Bubba' Horwitz, Chief Market Strategist at BubbaTrading.com, break down the likelihood of Biden getting replaced as the Democratic nominee and what this process could look like.

Democratic lawmakers are urging President Joe Biden to withdraw from his re-election campaign following a lackluster debate performance against Republican challenger Donald Trump.

The call for withdrawal gained momentum this week when Peter Welch became the first Democratic senator to publicly advocate for President Biden to end his campaign. "We cannot unsee President Biden’s disastrous debate performance. We cannot ignore or dismiss the valid questions raised since that night," Welch said in a Washington Post op-ed. “For the good of the country, I’m calling on President Biden to withdraw from the race.”

Hollywood actor George Clooney, a significant donor to the Democratic Party, echoed Senator Welch's appeal. “It’s devastating to say it, but the Joe Biden I was with three weeks ago at the fund-raiser was not the Joe ‘big F-ing deal’ Biden of 2010,” Clooney wrote in the New York Times op-ed. “He wasn’t even the Joe Biden of 2020. He was the same man we all witnessed at the debate.”

President Biden has remained steadfast despite these developments, reiterating his intention to stay in the race. In this week’s letter to congressional Democrats, Biden said he is "firmly committed" to running.

In a nearly hourlong solo press conference on Thursday, Biden said he believes he is the most qualified person to go up against Trump. "I beat him once, and I will beat him again," he said.

Yet Biden continues to face scrutiny following two most recent significant gaffes. At the NATO summit on Thursday Biden mistakenly introduced Ukrainian President Volodymyr Zelenskiy as Russian President Vladimir Putin during an event. Shortly after, during his own press conference, he fumbled a response to a question about Vice President Kamala Harris, stating that he “wouldn’t have picked Vice President Trump to be vice president” if he did not have confidence in her.

All eyes are on the 2024 Democratic National Convention, which will take place from August 19 to 22, 2024, at the United Center in Chicago. Delegates from the Democratic Party will gather to select their nominees for president and vice president for the upcoming election.

“The decision [not to run] is his and only his,” Richard Roth, Founder & Partner of The Roth Law Firm, told Kitco News. “There is no way to force him out … They can't involuntarily replace him. He has the delegates going into the convention. But if he decides he is not ready, willing, and able to be the candidate, he can step aside and let the delegates fight it out.”

Roth added that if Biden does decide to withdraw, it would be a political process between all the delegates to see who gets the most votes to win the nomination, with Biden having a decisive say in who would be the next potential Democratic candidate.

The conversations happening within the Democratic party before the convention are key, said Wendy Patrick, President & Founder of BlackSwanVerdicts.com.

“We don't want to wait until the convention. This happens so infrequently … And remember, it's not about him being unpopular. It's about him being unfit,” Patrick said. “In terms of actually procedurally making this happen, it gets really complicated because he already has the delegates. It's not as if we're pre-primary, and we're going to be finding a way to get somebody else ready in the waiting. This is also complicated procedurally by the unwillingness of some of these younger 'whippersnappers' to step up and be seen as disloyal.”

If Biden decides to voluntarily withdraw from the race, the process would be much easier, she added.

Market reaction

Todd' Bubba' Horwitz, chief market strategist at BubbaTrading.com, stated that only 10% of the population controls 90% of the market, and the market trend is to go higher right now.

“We're building another massive bubble. There are a ton of warning signs out there. Six hundred regional banks have admitted to being in trouble. We're over-leveraged. Our consumer is overspent. Credit card debt is at all-time highs. The markets will continue to go as long as the hope for more Fed money or lower interest rates is in play.”

Howrwitz compares the current market environment to the Dot-Com and the 2008 housing bubble. “The new candidate is not going to really affect these markets as it stands right now,” he stated.

Does a Democratic candidate swap so late in the game increase the likelihood of people losing faith in the U.S. dollar? Watch the video above for insights. 

Republic vs. Democratic November win

Markets have so far been muted regarding elections news, with investors more focused on the increased chances of a rate cut following Fed Chair Jerome Powell’s testimony in front of Congress this week.

If Democrats win in November, the macro environment will remain largely unchanged, according to Michael Lee, founder of Michael Lee Strategy. “It's going to be hard to get inflation down to 2%, and with the government spending that we're seeing, we're not going to get lower inflation,” Lee said.

For market returns, this means the leadership of big AI names will continue to dominate, he added. “Above all else, tech is going to be rewarded.” 

Also, Lee pointed out that if Trump wins, he’ll avoid the energy stocks. “You're going to see energy policy change dramatically. You'll see much more supply come to market and much less regulation. You'll probably see energy stocks correct. And the flip side, with the Democrat victory, you'll see an elevated value with elevated energy prices.”

Gold and Bitcoin

Regardless of who wins on November 5, the U.S. debt problem is what makes Lee favor gold and Bitcoin.

“I'm a huge crypto and gold bull at the moment because we have this debt hanging around the neck of our country in perpetuity. And the only way out of almost all these problems is printing more money,” he said. “Gold's on a one-way ticket to $5,000 after the last breakout, and $200,000 is the next stop for Bitcoin.”

This article originally appeared on Kitco.