How Could the US Economy Impact Gold and Silver?



Economic speculation

Investors’ worries about the economy abated initially when Donald Trump was elected president of the United States. His plan to increase spending on infrastructure reduced uncertainty in the markets, but as economic figures were released recently, investors’ doubts resurfaced. Often, the higher the speculation over the health of the economy, the higher the demand could be for haven assets such as gold and silver.

The graph below shows the changes in market volatility by comparing the Volatility Index and the price of gold. Often, these two walk hand-in-hand.

In the last quarter of 2015, when the first interest rate hike in a decade took place, market volatility and gold moved higher.

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Mining funds and shares

Most of the time, fluctuations in gold extend to mining funds such as the Sprott Gold Miners ETF (SGDM) and the iShares MSCI Global Gold Miners (RING). These two funds have risen 22.4% and 22.3%, respectively, year-to-date.

Mining stocks such as Newmont Mining (NEM), New Gold (NGD), Kinross Gold (KGC), and Eldorado Gold (EGO) have also seen significant rises over the last month.

Upcoming news this week about the US economy may sway precious metals. The better the economic numbers, the greater the fall could be for haven assets. The worse these economics numbers are, the better these metals could perform.


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