Here’s comment from theCEO of one of the USA’s biggest gold dealers suggesting that President Trump’s failure to push his health care changes through Congress could suggest he may also have difficulties in persuading Congress to agree some of his other proposed key reforms – notably on taxation and infrastructure. The end result could be strong growth in the precious metals markets he avers.
After a post-election equities march to record highs dubbed by some as “the Trump rally,” the new president’s failure to deliver on Obamacare repeal and replacement may spell similar doom for his tax reform initiative, says the CEO of Blanchard & Co, which claims to be America’s largest precious metals investment firm, and gold is poised for significant gains if that happens.
“President Trump’s tax reform plan has been largely predicated on the savings the federal government would have seen had Congress been able to repeal and replace Obamacare,” says Blanchard and Company President and CEO David Beahm. “The stock market rally above 21,000 was largely driven by Wall Street’s expectation that corporate tax cuts were a given, but I think those prospects are looking much less certain today.”
As the equities markets begin to shed some of the gains they’ve seen since Trump’s election victory, and as political analysts begin to advance the comparison between Watergate in the early 1970s and the FBI’s ongoing investigation into the ties between associates with the Trump campaign and Russian hacking into the U.S. election, a new geopolitical uncertainty begins to take shape that will impact the markets even more.
“Two of the big historic drivers for the price of gold have been risk and global geopolitical uncertainty, and over the last 25 years dating to the first Gulf War, the Middle East has been the hotbed for a lot of that uncertainty,” Beahm said. “Now that we have a sitting President in the middle of a growing FBI investigation placing the world’s top superpower into a potential storm of geopolitical uncertainty, this could certainly unhinge equities markets and drive gold much higher.”
Until there’s some clarity that an investigation into the president and his team has concluded and found no wrong doing, the markets are likely to be volatile and risky. But gold should see increased investor demand to hedge stock risk, and the precious metals complex could see strong growth as a result, Beahm said.