The SPDR Gold Shares (NYSE:GLD) is the largest gold-backed exchange-traded fund, it has retreated from recent highs but it is up 24.37% YTD.
In the run-up to this Presidential election GLD and other gold ETFs may be in the headlight, but history tells up indicates gold and the other precious metals are not as politically sensitive as some believe.
As it stands now investors added $21.47-B to GLD YTD, a total surpassed by only the Vanguard S&P 500 ETF (NYSE:VOO).
Buoyed by low interest rates worldwide and stocks’ volatility caused by The China Act of War Virus earlier this year, gold ETFs are on a Fassst pace of asset gathering beating prior records.
While pre-election caution could be a catalyst for GLD, post-election is the frame investors should examine and it looks good for gold ETFs.
The precious yellow metal has historically performed better when a Democrat has been in the Oval Office compared with a Republican, 11.2% Vs 10.2%, respectively. And while gold appears to fare well regardless of party politics when it comes to the Presidency, this does not appear to be the case for the US Congress.
Notably, GLD investors may want a Congressional blue wave and not a victory by Joe Biden because when Democrats control Congress, gold’s average annual returns approach 21%, more than 5X that of when the GOP is running things on The Hill.
Whether it happens this time remains to be seen, but of the 2 political parties, Democrats are viewed as the bigger spenders and that often provides some help for gold when Dems hold congressional majorities.
Higher fiscal spending helps to explain gold’s performance during frames when the US budget deficit as a percent of GDP grows.
Such a scenario is bad for USDs and a weaker Buck is supportive of higher gold prices.
If history is accurate guide, investors may not want to expect much out of GLD if President Trump wins the election on 3 November, because in the past when the incumbent party retained control of the White House, gold tended to underperform against US stocks and Treasuries
Have a healthy day, Keep the Faith!