How Trump’s Campaign Affected Equities and Precious Metals



Trump’s campaign

As Donald Trump’s campaign called for tax cuts and increased infrastructure spending, the US dollar and equity markets saw an initial boost. This boost resulted in a sell-off in the Treasuries market. Due to the rise in interest rates offered on Treasuries, precious metals also declined initially. However, they recovered after the interest rate hike occurred in December 2016.

Many investors kept off their hands off risky assets as Trump began his presidency. The chart below shows the comparative price performance of gold alongside the equities market over the past six months.

[marketrealist-chart id=1872487]

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It appears that investors have been avoiding risky positions. In the chart above, the SPDR S&P 500 ETF (SPY) tracks the performance of equities, while the SPDR Gold Shares ETF (GLD) tracks the performance of gold.

Some downward movement of SPY shown during the past month could be an indication of investors who resisted risky assets. The performance of mining stocks usually tilts in accordance with the performance of precious metals. Although mining stocks are part of the equity market, they react more carefully to precious metals.

Miners rose

Among the mining stocks, Franco-Nevada (FNV), Barrick Gold (ABX), Coeur Mining (CDE), and Cia De Minas Buenaventura (BVN) saw 30-day trailing gains of 8.7%, 7.8%, 11.8%, and 16.8%, respectively, on January 11. These four mining stocks together make up ~15.6% of the VanEck Vectors Gold Miners ETF (GDX).


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