Effects of Joe Biden’s Policies on the Precious Metals Market
America has the world’s largest economy, and the US presidential elections play an integral role in shaping its future for the next four years. In fact, election outcomes affect the global economy in general.
Consequently, this event becomes a significant determinant for the global financial market growth, consisting of the metals market.
The stock markets saw increased volatility till the Election Day because more and more investors began acquiring safe-haven assets such as gold and silver.
Investors took the financial risks, taking into account that the race between Democrats and Republicans could result in a contested outcome.
After a historical week of elections, Joe Biden from the Democratic party was officially announced President-Elect on December 19th, 2020.
While various industries predicted this outcome, it’s critical to analyze his policies to determine how they impact the precious metals and mining industry.
The massive increase in gold and silver prices in 2020 during Donald Trump’s presidency makes it crucial to understand what Joe Biden’s victory would mean for the precious metals.
It’ll also help the top gold and silver IRA companies further assist investors in investing in gold or silver through bullion or IRAs.
Read on to learn how a Democratic win will impact the precious metals market for the upcoming four years under Joe Biden’s presidency and policy changes.
Precious Metals under Previous Presidencies
The gold price was valued at over $890 when former President Obama took office in January 2009. Silver prices also jumped 3% during this time and reached $32.01/oz.
The gold prices saw an 88.6% price growth by the end of his term, reaching $1685, while silver prices saw a 2% decline and went down 30.006/oz. in 2012.
Obama’s first term of presidency was extremely beneficial for the precious metals market, but it gradually became increasingly volatile during his second term.
Despite being the ultimate safe-haven asset, gold prices saw a significant decline of 28.9% between 2013 and 2017, from $1685 to $1195.
Apart from this volatility, Obama’s overall presidency escalated gold’s value by 34%.
Moreover, one of his tenure’s successes includes the gold prices reaching an all-time high of $1900 for the first time in the precious metals market.
The precious metals also moved positively under Donald Trump’s presidency.
Gold was priced at $1210 in January 2017. The precious metals market saw a fresh all-time high in gold prices as it reached over $2000 per ounce under Trump’s presidency. The
The pandemic and its economic impacts further led to a 54% increase in gold’s value under the Republican leader’s presidency.
Joe Biden’s Agenda and the Precious Metals Market
Now that the elections are over, the campaigning has ended, and Joe Biden is set to hold office, the market is looking upon him to make good on the policy changes he promised. His actions and decisions will affect around two dozen industries in the US.
While every sector’s success during this tenure depends on what might rise to the top of his plan, it’s crucial to analyze how every policy change will impact the market.
The Biden presidency could be a blessing or a curse for the precious yellow and silver metals. Analyzing his agenda can answer this vital question.
According to the official Biden-Harris Presidential Transition website, the new administration currently has four priorities.
These include tackling the COVID-19 pandemic, economic recovery, eradicating racial discrimination, and dealing with climate change.
Here’s how every step will impact the precious metals growth, investor interest, and prices during this presidency.
Fighting the Pandemic
One of the reasons that might’ve cost Donald Trump senior citizen votes and, ultimately, a second term is his indecisiveness regarding the coronavirus.
He couldn’t decide whether his government should fight the coronavirus aggressively or downplay the threat.
On the other hand, Joe Biden has prioritized beating the pandemic and seems determined to do so by putting it at the top of his things-to-do list as soon as he takes office.
Biden has repeatedly acknowledged this challenge and is now relying on scientists and healthcare professionals’ advice to propose a viable solution to the problem.
The new administration has a seven-point plan to combat the virus and its further spread in the country.
Two of the essential points of this comprehensive plan include providing safe, regular, and reliable access to free testing to the entire American population and the nationwide implementation of mask mandates.
Biden plans to collaborate with mayors and governors to encourage Americans to step up and take necessary precautions in a time of healthcare and economic crisis.
Free testing for all is an excellent step in the right direction. In fact, according to many epidemiologists, rapid and safe testing, combined with contact tracing, is the best way to deal with the ever-spreading virus. However, this action lacks the reference to a potential lockdown.
Nationwide lockdowns were critical players of the skyrocketing gold and silver prices under the Trump presidency.
Therefore, Biden beating the virus and its challenges without resorting to a lockdown could negatively impact gold and silver prices.
The new administration’s second priority is economic recovery. Biden has an elaborate economic retrieval agenda.
However, it significantly focuses on building extensive modern infrastructures in the country.
His developmental plans imply increasing government spending, mostly because he is determined to provide partial project funding for construction from the reversal of Donald Trump’s corporate tax cuts.
Furthermore, labor market reformation is also a noteworthy part of his economic recuperation agenda.
Biden’s presidency is adamant on more than doubling the minimum wage for the working class and is likely to raise it from $7.25 to $15 per hour.
It’s a bold labor reform that would ultimately escalate labor costs and might lead to unemployment in a time when small and medium-scale businesses are struggling to survive among their competitors in the market.
Moreover, successful corporate companies and Wall Street may disagree with Biden’s tax reversal plans.
However, if Biden moves forward with his plan to use the country’s large fiscal deficits for higher infrastructure spending, it’ll lead to a public debt escalation.
As a result, this economic plan could somewhat benefit precious metals prices and investors’ interests in buying gold and silver bullion.
The precious metals’ growth during the implementation of Biden’s economic recovery plan also depends on the market participants.
Gold prices may decline or struggle if investors contribute to the revival of infrastructure instead of cashing on the rising public debt.
Nevertheless, silver and gold values should perform well in an environment of low-interest rates, increasing public debt, and risk of inflation.
Biden’s schedule doesn’t expand on its plan of establishing racial equity in the country.
This plan includes specific points like introducing police reform legislation to diminish the racial disparities in America’s criminal justice system.
Political actions to push for racial equality aren’t likely to significantly affect precious metals, their value, or prices.
Joe Biden’s administration continues to promote sustainability as a prominent part of its plan to deal with climate change.
It aims to invest in green infrastructure and achieve a carbon pollution-free industrial sector by 2035. The goal is to reach net-zero emissions throughout the American economy by 2050.
This plan to deal with climate change indicates optimistic outcomes. However, an increased focus on environmental reforms could lead to increased private sector regulations and operations.
Consequently, it could disrupt the country’s economic growth, skyrocketing the gold and silver prices.
A ballooning federal debt, plans for higher government spending, and a fresh fiscal stimulus are all indicators of value and price growth of precious metals and their market.
Conclusively, despite introducing new policies to deter gold and silver prices in the market, Biden’s presidency’s long-term effects could somewhat make the upcoming years exciting for precious metals.
Escalated government spending, increased labor expenditures, and anti-corporate actions like the reversal of Trump’s tax cut may significantly impact gold prices.
Moreover, a Republican senate can further stabilize gold and silver rates in the market by blocking the new administration’s radical ideas.
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