Will U.S. Election Be a Brexit Repeat For Gold? – Jim Rickards
Tuesday November 08, 2016 21:25
(Kitco News) - The U.S. election may have similar repercussions on the gold market as the shock of a surprise Brexit vote had on the metal during the summer, this according to one best-selling author and known gold bug.
“There’s very little doubt it’s priced for Hillary…it’s already expected. If Trump wins, it’s a shock. So, I would rather own the shock,” said Jim Rickards, chief global strategist for West Shore Group, on Bloomberg Surveillance Tuesday. “Gold is priced for a Clinton victory, which means it’s going to go up $130 an ounce, it’s going to hit $1,400 if Trump wins.”
As Rickards put it, markets have already priced in a Hillary Clinton victory and because of that, markets will not move much if the outcome comes to pass. However, the Trump surprise would have similar effects on the gold market as the Brexit vote, which saw the metal shoot up over 7% the following day.
Gold has seen sharp gains as Trump leads in Florida, a key battleground state that has 29 electoral votes up for grabs. According to many political pundits, Trump can’t win the White House without winning Florida.
Rickards explained that the Brexit trade was to short sterling and buy gold. For the U.S. election, the trade to be in is short the S&P 500 Index and long bullion.
“It’s exactly like Brexit,” he said. “I can’t believe it’s happening twice in 6 months or less.”
As more results come in, December gold futures are trading around $1,296 an ounce, up more than 1.6% on the day.