Trump Gets Gold Off to a Strong Start in 2017

Amid the clamor of protests over immigration restrictions, the recent appointment of a new Supreme Court Justice, confirmation of cabinet-level appointments and a flurry of executive actions by President Trump, it is clear that the new administration is intending to follow through on many of the campaign promises made during the election season.  This is good news for gold investors.

A weaker dollar and investor uncertainty about the economic impact of many of the Trump’s plans are contributing to a rise in gold prices. A number of analysts have said that a push by the Republican-controlled administration and Congress toward increased domestic infrastructure spending (roads, bridges, tunnels), increased geopolitical risk (China, Iran, Russia), protectionism (China, Mexico, Canada) all add to economic uncertainty and increase risk of a supply disruption, either of which can lead to higher gold and silver prices.

Gold is up 3.98 percent in USD over the past 30 days (from January 3 to February 5).

Although most experts are predicting gold to rise again in 2017, it is unlikely to follow the same uneven trajectory as 2016, where the United States Presidential election and the United Kingdom’s unexpected decision to exit from the European Union (EU) sparked volatility in the precious metals markets and saw gold rise in all currencies in 2016 – 9 percent in USD, 13 percent in EUR and 31.5 percent In GBP (impacted by Brexit).

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Collector interest is also a source for continued optimism for increasing gold and silver prices.  In 2016, U.S. Mint sold 1,204,500 oz of gold coins, which is a 17.9 percent increase compared to 2015.  2016 total sales by volume marked the best year of U.S. coin sales since 2010 and the third best year on record (since 2006).  Sales of coins totaled 2,188,000 coins in 2016, up 6.2% year over year, following a 55.8% jump in sales in 2015.  As a harbinger for a strong 2017, last year marked the busiest year on record for the U.S. Mint in terms of number of coins sold.

At GSI Exchange, we saw a surge in demand toward the end of 2016 and collector and investor interest in releases such as the uncirculated 2016 Canadian Silver White Falcon (also known as Snow Falcon or Gyrfalcon) coins, including the 1/4 ounce Gold Gyrfalcon and the 1 1/2 ounce Silver Gyrfalcon.

A recent report by the World Gold Council noted: “we believe that there are six major trends in the global economy that will support gold demand and influence its performance this year:

1. Heightened political and geopolitical risks;
2. Currency depreciation;
3. Rising inflation expectations;
4. Inflated stock market valuations;
5. Long-term Asian growth; and
6. Opening of new markets.”

As we look ahead to the rest of 2017, we will continue to monitor trends and gold and silver performance.

Photo Credit:  DonkeyHotey (Flickr)