As President Trump prepares to take office, market reactions have been swift, with investor sentiment heavily influenced by his political agenda. For instance, his pro-crypto stance has led to a surge in Bitcoin’s price, as the market anticipates favorable policies for digital currencies. However, while these short-term movements may capture attention, the value of an often-neglected asset—gold—does not rest on political winds but rather on its enduring ability to provide stability amid systemic economic challenges.
The Role of Gold in Times of Political Uncertainty
Gold has long been regarded as a sanctuary for wealth preservation during times of political unrest. From the global economic turmoil of the 1970s to the 2008 financial crisis, gold has consistently retained its value when other assets falter. During elections or transitions of power, markets may experience volatility, as seen in the market swings following Trump’s 2016 victory.
While short-term political outcomes may impact gold prices, its intrinsic value as a store of wealth during economic turmoil remains undiminished. Unlike 2016, Trump inherits an “empty fridge”—a country grappling with two proxy wars, stubborn inflation, and soaring debts and deficits, including $8 trillion of U.S. Treasuries that will require refinancing in 2025. Although some supporters may hope for a quick end to wars and a return to economic prosperity, such outcomes are far from certain. For investors, hedging against this uncertainty by holding assets like gold becomes a prudent strategy.
Sovereign Debt, Monetary Policy, and the Flight from the Dollar
Gold’s enduring value is deeply tied to three interconnected dynamics shaping the global financial system: unsustainable sovereign debt levels, especially in the U.S.; continued liquidity injections and accommodating monetary policies; and increasing global efforts to diversify away from U.S. Treasury bonds and the dollar.
The U.S. national debt has surged to an unprecedented $36 trillion, raising concerns about the government’s creditworthiness. Once the gold standard of stability, U.S. Treasuries are now viewed with greater caution as ballooning debt levels test the country’s financial sustainability. Persistently accommodating monetary policies, low interest rates, quantitative easing, and aggressive liquidity injections—have further eroded confidence, fueling inflationary pressures and undermining fiat currencies.
Compounding these challenges is a growing movement among countries to reduce dependence on the dollar and Treasuries. This shift stems from multiple factors: the increased risk associated with U.S. debt, the geopolitical weaponization of the dollar through sanctions, and a desire among nations to insulate themselves from the unpredictability of U.S. leadership. Under Trump’s leadership, with his confrontational rhetoric and propensity for harsh measures, efforts to diversify reserves may accelerate further. Nations are seeking alternatives to reduce exposure to the economic influence of an increasingly unpredictable U.S.
As Trey Reik, Managing Member of Bristol Gold Group LLC, notes, “Global efforts to immunize sovereign reserves and diversify the international payment system will continue to gain traction. And it is becoming increasingly clear to the global financial system that the Federal Reserve is locked in a perpetual cycle of artificial liquidity and debasement.”
This confluence of factors underscores the rising appeal of gold as a hedge against systemic risks. Amid soaring debt levels, inflationary pressures, and a declining appetite for U.S. Treasuries, gold offers a tangible, stable alternative. Its resilience makes it an essential safeguard in today’s increasingly volatile economic environment.
Gold’s Structural Demand Drivers
Gold’s value is also driven by systemic, structural factors that persist long after any political victory or loss. Inflationary pressures, fiscal imbalances, and the evolution of investment portfolios contribute to sustained demand for gold. Investors and financial institutions increasingly recognize gold’s role in protecting against inflation, especially as central banks pursue aggressive monetary easing.
Moreover, as wealth managers and institutional investors diversify their portfolios to guard against systemic risks, gold’s appeal as a hedge against both inflation and currency devaluation grows. This enduring demand highlights the need for tangible, stable assets capable of weathering financial uncertainty.
Much like the Smoot-Hawley Tariff Act of 1930, Trump’s proposed tariffs could intensify economic downturns abroad, potentially sparking repercussions domestically. In such an environment, the resilience of gold becomes even more critical, offering stability when other assets falter.
The Long-Term View: Why Gold’s Value is Here to Stay
While political events like Trump’s victory may temporarily affect market sentiment, gold’s value is shaped by far more enduring forces—namely inflation, fiscal policy, and global financial stability. Historically, gold has outlasted political cycles, demonstrating resilience in the face of economic upheaval.
In today’s volatile market, investors should prioritize antifragile assets like gold over bonds. With its low equity correlation and resistance to currency debasement, gold remains a cornerstone of wealth preservation. Whether during times of prosperity or financial crisis, gold has remained trusted by both investors and governments.
In contrast, assets like Bitcoin, despite their appeal as a store of value, are more susceptible to political and speculative influences. Bitcoin’s price often reacts to regulatory announcements or political developments, making it a more volatile and less reliable hedge against long-term economic risks. Gold, on the other hand, remains a stable and trusted asset, impervious to political noise and speculative trends.
Conclusion
In conclusion, while President Trump’s reelection may have short-term effects on market sentiment, the true value of gold lies in its resilience to political fluctuations and its long-standing role as a reliable store of wealth. From geopolitical instability to global monetary policy, the fundamental forces driving gold’s value remain unaffected by the outcomes of any single election.
For investors, the lesson is clear: while political events will continue to shape market reactions, gold’s enduring appeal lies in its capacity to provide stability amid the uncertainty of long-term economic forces. By focusing on these drivers, investors can better appreciate why gold’s value is here to stay—no matter what political winds blow.
About the Author
Steven Feldman is the Co-Founder and CEO of GBI, the leading precious metals investment platform with ~$4.5B in assets and $1B in annual trading. He is also Co-Founder and Chairman of Goldcrest Farm Trust Advisors and a former partner at Goldman Sachs, with a deep expertise in finance and asset management.
