Is Donald Trump Good for the Gold Price?

Gold Price Forecast and Gold Stocks to Watch
© 2017 Gold Investing News 1
Table of Contents
Is Donald Trump Good for the Gold Price? .............................................................................. 2
Is Trump Really Helping American Mining Companies? ........................................................... 5
POLL — Will Trump Bring Back the Gold Standard? ................................................................ 8
What Would a New Fed Chair Mean for the Gold Price? ........................................................ 12
How to Play Gold When Trump Tension is High ..................................................................... 14

Is Donald Trump Good for the Gold
Price?
Plus a look at what his presidency could mean for gold stocks and
the gold standard.
Everyone’s got an opinion on US President
Donald Trump. Whether it be about his
policies or outrageous statements, people can’t
stop talking about what he’s done and what he
may do next.
But while opinions on Trump abound, it’s hard to get
concrete answers about what impact his actions
could actually have. His failure to push his
healthcare reform bill through Congress has led
to doubts about how much he will be able to accomplish, and many experts agree that
it’s fruitless to make guesses.
For resource-focused investors, one key question about Trump is how he may affect the
gold price. Though he’s definitely caused the the yellow metal to move both up and
down since he was elected (and even before that), gold market watchers don’t seem to
have reached a consensus.
Read on to learn more about what’s happened to the gold price since Trump was
elected, and for a brief look at what his presidency could mean for gold stocks and the
gold standard. As mentioned, it’s hard to find concrete answers, but it’s certainly
possible to explore the possibilities.
The gold price under Trump
Trump was elected president on November 8 of last year, and on the back of the news
the gold price took a fairly steep plunge. The Kitco chart below, which lays out gold’s
movement from November 8, 2016 to April 5, 2017, shows that gold was trading at just
under $1,260 per ounce the day of the election, but was below $1,200 by December.
That price drop was a surprise for many involved in the gold space. Prior to the election,
a slew of analysts were predicting that a Trump win would push the gold price higher —
perhaps even to $1,400. Their thinking was that a Trump victory would lead to
widespread uncertainty; gold, which tends to fare well in times of turmoil, would thus
benefit.

So what happened? While the gold price had many influences in the days after Trump’s
election, overall it appears that its drop was largely the result of strength in the US
dollar and concern that the US Federal Reserve would raise interest rates in December.
“Mr Trump managed to sound quite conciliatory and presidential in his victory speech …
There was none of the harsh rhetoric that we heard during the campaign,” Mitsubishi’s
Jonathan Butler explained the day after the election. “This calmed the markets and
helped boost the dollar, eroding gold’s gains.”
Chart via Kitco.
Since mid-December, the gold price has largely staged a recovery — in fact, as of the
end of the day on April 5, it was up 10.58 percent since the beginning of 2017.
It would be difficult to argue that Trump is entirely responsible for gold’s rise, but it’s also
clear that in some cases he’s been able to stoke the gold price. For instance, on
January 12, when he held his first press conference since being elected, gold pushed
past the $1,200 mark; experts suggested at the time that the increase was the result of
uncertainty returning to the market.
Gold mostly continued to rise throughout Q1, even after the Fed raised interest rates for
the second time in three months. As the period drew to a close analysts were
giving Trump-related uncertainty some credit for the increase. “The fear trade has
driven the market so far this year,” David Govett of Marex Spectron told Reuters.
The upshot seems to be that as usual a variety of factors affecting the gold price.
Currently Trump is one of them, and — at least for now — the impact he’s having is
positive.

What about gold stocks?
While it’s important to consider the impact Trump is having on the gold price, it’s also
worth looking at what what his presidency could mean for gold stocks. Again, so far it’s
hard to say. But many experts believe that companies mining for gold — and other
metals — in the US could benefit during Trump’s time in office.
Rob McEwen, chairman and chief owner of McEwen Mining (TSX:MUX,NYSE:MUX), is
one person who sees Trump’s presidency being a boon to miners. “The market is very
excited about reducing the amount of regulations, so speeding up the ability of business
to put money to work, cutting taxes. It’s a very pro-business environment, I think it’s very
exciting to see,” he said.
David Morgan of the Morgan Report and Mercenary Geologist Mickey Fulp are a couple
of other market watchers who have suggested that Trump could make it easier for
mining companies to move forward.
Trump and the gold standard
As a final note, investors may want to be aware of Trump’s comments on the gold
standard. The system, which would link the value of the US dollar directly to the price of
gold, has not been used in the country since 1971, but there’s been speculation that
Trump might be interested in returning to it.
That idea stems from the fact that Trump has praised the gold standard in the past. “We
used to have a very nice country because it was based on a gold standard and we do
not have that any more,” The Guardian quotes him as saying early last year. The news
outlet notes that many Republicans are also fans of the gold standard.
More recently, Forbes pointed out another of Trump’s comments on the gold standard:
“[b]ringing back the gold standard would be very hard to do, but boy, would it be
wonderful. We’d have a standard on which to base our money.”
Of course, the fact that Trump and other members of his party like the idea of the gold
standard doesn’t mean they will push for a return to it. If they do, however, gold would
almost undoubtedly benefit.

Is Trump Really Helping American
Mining Companies?
When US President Donald Trump was elected, many mining
companies thought he would help them move their projects
forward. Has that actually happened?
When US President Donald Trump was first elected,
there was a strong sense of optimism in the mining
sector.
Many market watchers believed a Trump presidency
could be beneficial for the gold price, with some predicting
massive gains for the yellow metal. Indeed, prior to the
election, HSBC (NYSE:HSBC) said that gold could hit
$1,500 per ounce by the end of the year with a Trump win, while Societe Generale
(EPA:GLE) was calling for a “knee-jerk rally” to $1,400.
There was also hope that Trump would make it easier for mining companies to operate.
All miners — not just those focused on gold — were expected to benefit from looser
regulations, faster permitting times and the like. As Mercenary Geologist Mickey
Fulp said not long after Trump’s inauguration, “he wants to do away with the
Environmental Protection Agency (EPA) … and he wants to build out infrastructure, so
that’s all going to be very positive for the commodities space.”
Those early predictions have not all been accurate. The gold price didn’t
come anywhere near $1,400 or $1,500 after Trump was elected — in fact, as of mid-
August, it was down about 1.75 percent since November 8, 2016. But what
about predictions about the mining industry as a whole? Below we explore what
Trump’s presidency has meant for the sector so far.
Trump’s coal industry revival
Trump’s work to revive the US coal industry is arguably the most noticeable way he’s
impacted the mining sector since being elected. Trump has been a longtime advocate
of coal, and after becoming president he quickly began trying to make it easier for coal
companies to thrive. Among other things, he has eliminated Obama-era measures such
as a ban on new coal leases on public lands.
That said, questions have been raised about how many jobs Trump has created by
making those and other changes. Even Robert Murray, head of the largest privately
owned coal company in the US, has encouraged the president to “temper his

expectations” about bringing jobs back. He believes it is more likely that Trump will be
able to “level the playing field” between coal and renewable energy sources.
Others have pointed to the fact that while Trump has introduced some measures that
are beneficial to coal miners, he has put others forward that will hamper the
development of clean coal, also known as carbon capture and storage. The argument is
that without policies to make clean coal more appealing to power providers it will be too
expensive for them to use.
Nevertheless, some companies believe Trump has the power to spark changes. Major
producers Arch Coal (NYSE:ARCH) and Peabody Energy (NYSE:BTU) both made
positive comments on his efforts earlier this year, with the former saying, “Arch
anticipates that the new administration will constructively address the regulatory burden
that has pressured the industry in recent years.”
Trump is also pursuing policies that could be beneficial for commodities other than coal.
For instance, during his campaign he promised to spend $1 trillion on infrastructure in
the next decade, a move that could push up copper demand and prices; recent
reports indicate that this plan is still in the cards.
He’s also interested in giving nuclear power a more important role in America’s energy
mix — at the end of June, he announced the launch of a complete review of current
policies with the goal of identifying ways to revive the industry. Trump is also pursuing
two different initiatives that could eventually benefit US aluminum producers.
A change in sentiment
While the above examples help show what Trump has done to try to help mining
companies, they don’t necessarily shed light on what impact his actions have had. To
find out, we asked a number of experts what effect he has had so far — overall, they
agree that while change has been slow, a shift in attitudes toward mining is taking
place.
“There hasn’t been a lot that has changed yet, but he’s put people in power who are
hostile towards environmental regulation and all that. So there is an agenda in place to
reverse all the rules and regulations and make it easier to develop projects,” said John
Kaiser of Kaiser Research.
Louis James, editor of the International Speculator at Casey Research, made a similar
comment, noting, “Trump’s EPA is visibly different from Obama’s EPA, and that
EPA has, for example, come to the table as a more honest and fair player with Northern
Dynasty Minerals (TSX:NDM,NYSEMKT:NAK).”
Northern Dynasty, whose Alaska-based Pebble project spent several years at a
standstill under Obama, recently reached a settlement with the EPA that paves the way
for it to move forward. James added, “they still don’t have their permit … it’s not a

guarantee that that project will go forward. But at least they’re not facing a hostile
agency that seems to have it in for them. This is a very positive change.”
A number of mining company execs are also optimistic about what Trump may be able
to help them accomplish. Speaking earlier this year at PDAC, Rob McEwen, chairman
and chief owner of McEwen Mining (TSX:MUX,NYSE:MUX) said, “the market is very
excited about reducing the amount of regulations, so speeding up the ability of business
to put money to work, cutting taxes.”
More recently, Scott Melbye, executive vice president of US uranium producer Uranium
Energy (NYSEMKT:UEC), commented after returning from a visit to Washington that he
is very encouraged about the Trump administration’s stance on nuclear energy.
“Nuclear is not just part of the mix in [US] energy policy going forward, it’s a priority,” he
said.
What’s the verdict?
All of that said, there are limits to what Trump will be able to do for mining companies.
As Kaiser pointed out, no matter what policies he rolls back or what new regulations he
puts in place, local interests will remain a major factor. What’s more, slow permitting
timelines and delays remain an issue. “We have yet to see a change in the speed in
which stuff gets approved,” he said.
Relatedly, Adrian Day of Adrian Day Asset Management pointed out, “certainly the
president has already begun to ease restrictions on mining on federal land … we’ve
seen the Keystone pipeline approved.” However, “it’s only part of the equation,” with
state and local permitting being additional hurdles.
So is Trump really helping American mining companies? While it’s clear that
he’s instigated some positive changes in sentiment, it will likely be awhile before
measurable differences in the US operating environment become apparent. As Day
said, “[Trump is] definitely a positive, it’ll work through over time.”

POLL — Will Trump Bring Back the Gold
Standard?
US President Donald Trump has praised the gold standard in the
past, but could he really bring it back?
The gold standard hasn’t been used in the US since the
1970s, but lately there’s been some speculation that US
President Donald Trump could bring it back.
Rumours that it could return center largely on positive
comments Trump has made about the gold standard. The
president has said it would be “wonderful” to bring back the
gold standard, and a number of his advisors think so too —
Judy Shelton, Robert Mercer, John Allison and others have also expressed support for
the idea.
But could the US really return to the gold standard? And what would would it mean if
Trump brought it back? Read on to learn what the gold standard is, what Trump has
said about it and what could happen if he actually brought it back. Plus take our poll to
let us know whether you think it could happen.
What is the gold standard?
The gold standard is a monetary system where the value of a country’s currency is
linked directly to gold. Countries that use the gold standard set a fixed price at which to
buy and sell gold, and then use that fixed price to determine the value of their
currency. For example, if the US went back to the gold standard and set the price of
gold at $500 per ounce, the value of the dollar would be 1/500th of an ounce of gold.
The gold standard was first introduced in Germany in 1871, and by 1900 most
developed nations, including the US, were using it. The system remained popular for
decades, with governments worldwide working together to make it successful, but when
World War I broke out the system became difficult to maintain. Changing political
alliances, higher debt and other factors led to a widespread lack of confidence in the
gold standard.
In the years following the war, Britain’s pound sterling and the US dollar became the
world’s reserve currencies, and other countries began to accumulate those currencies
instead of gold. The stock market crash of 1929 exacerbated the situation — many
countries raised interest rates in order to keep people interested in owning gold, but
ultimately the higher rates worsened the global economy.

Finally, in 1933, Franklin Roosevelt, then president of the US, largely removed the
US from the gold standard and made private ownership of gold illegal. The move
allowed the government to “pump money into the economy and lower interest rates.”
Foreign governments were allowed to exchange gold for dollars until 1971, but
President Richard Nixon put a stop to that in an effort to halt the depletion of the
country’s gold reserves. He also completely severed the link to the gold standard at that
time.
Today no countries use the gold standard, instead employing fiat systems where the
value of currency fluctuates dynamically against other currencies and is not based on
any physical commodity.
What has Trump said about the gold standard?
While it’s perhaps not common knowledge, Trump has long been a fan of gold. In fact,
as Sean Williams of The Motley Fool points out, Trump has been interested in gold
since at least the 1970s, when private ownership of gold became legal again.
He reportedly invested in gold aggressively at that time, buying the precious metal at
about $185 per ounce and selling it between $780 and $790.
In more recent years Trump has specifically praised the gold standard. In an oft-quoted
2015 GQ interview that ranges from marijuana to “man buns,” Trump says about the
system: “[b]ringing back the gold standard would be very hard to do, but boy, would it be
wonderful. We’d have a standard on which to base our money.” In a separate
interview from the same year he also says, “[w]e used to have a very, very solid country
because it was based on a gold standard.”

Aside from that, Trump hasn’t said much about the gold standard. However, some
believe actions speak louder than words. And if that’s the case, then there are a few
things Trump has done that are worth considering.
As noted, he’s “surrounded himself with a number of advisors who hold extreme, even
fringe ideas about monetary policy,” as Politico’s Danny Vinik puts it in an article
published earlier this year. Of those advisors, “at least six … have spoken favorably
about the gold standard.” Shelton, Mercer and Allison, all mentioned above, are just a
few of them. Others include Ben Carson and David Malpass.
Emphasizing how unusual that is, Joseph Gagnon, a senior fellow at the Peterson
Institute for International Economics, told the news outlet that the support for the gold
standard around Trump “seems like nothing that’s happened since the Great
Depression.” Gagnon, who has also worked for the US Federal Reserve, added, “[y]ou
have to go back to Herbert Hoover.”
Politico also quotes libertarian pundit Ron Paul, another supporter of the gold standard,
as saying, “[w]e’re in a better position than we’ve ever been in my lifetime as far as
talking about serious changes to the monetary system and talking about gold.”
All of that said, it’s important to remember that a return to the gold standard is by no
means a done deal. Indeed, the consensus seems to be that despite Trump’s apparent
positivity it’s highly unlikely.
Why? For the most part, even the most ardent supporters of the gold standard
recognize that going back to it could create trouble. As The Motley Fool’s Williams
explains, by and large economists agree that moving to a lower-key version of the gold
standard in 1933 “was a big reason why the U.S. emerged from the Great Depression,”
and believe that a return “would be a mistake.”
For one thing, going back to the gold standard would make it impossible for the Fed to
offer fiscal stimulus — after all, if the US had to have enough gold on hand to exchange
for dollars on an as-needed basis, the Fed’s ability to print money would be incredibly
limited. Gold standard supporters believe that could be the perfect way to get the US
out of debt, but it could also cause problems during times of economic crisis.
A return to the gold standard would also mean “accepting the wild swings that are
sometimes inherent in the lustrous yellow metal.” Though the gold price rose 7.5
percent in the first half of 2017, it dropped steeply from 2011 to 2016. “[R]ecessions
would be particularly hard for the U.S. economy to overcome if gold’s per ounce price
was also low,” says Williams.
In addition, Money Morning’s David Zeiler suggests that returning to the gold standard
would require the gold price to be set much higher than it is currently. “West Shore
Group chief global strategist Jim Rickards has calculated the gold price would need to
be $10,000 an ounce,” he comments. The US dollar would be “severely devalued” in

that scenario, and since global trade relies on the US dollar as a reserve currency, it
would “grind to a halt.” Conversely, returning to the gold standard and keeping the gold
price low would cause deflation.
What do you think?
So will Trump bring back the gold standard? At least for now it seems unlikely. Too
many obstacles exist, even aside from the ones discussed above, and there is not
enough support outside of Trump’s inner circle. A more realistic outcome, suggests
Politico’s Vinik, is that the Trump administration may “weigh gold much more heavily in
their monetary policy decisions” — in other words, the government may put more
emphasis on gold, but not directly.

What Would a New Fed Chair Mean for
the Gold Price?
Four inside sources have said that US President Donald Trump is
unlikely to nominate Janet Yellen for a second term as Fed chair.
Janet Yellen’s days as US Federal Reserve chair
may be numbered.
According to a Politico article published on Tuesday
(July 11), four people close to the process have said
that President Donald Trump is “increasingly unlikely”
to nominate Yellen for a second term.
The leading candidate is now Gary Cohn, an investment banker who served as
president and COO of Goldman Sachs (NYSE:GS) from 2006 to 2017. Cohn is
currently Trump’s chief economic advisor and director of the National Economic
Council.
“It’s Gary’s if he wants it, and I think he wants it,” a Republican source said. A senior
congressional GOP aide commented that Cohn would likely receive widespread
support, adding, “[h]e would be easily confirmed.”
Cohn’s appeal stems from a variety of factors. For one thing, if appointed he would be
the first Fed chair in 40 years who is not an economist. “Speaking as a non-economist,
it’d be kind of refreshing,” said Cam Fine, president of the Independent Community
Bankers of America.
Others have pointed to Cohn’s straightforward approach to solving problems. “[H]e
approaches things with a little more common sense [than others in the administration,”
said Senator Jon Tester (D-Mont.). “More realism, less idealism.”
However, not everyone sees Cohn as a good choice. Politico points out that his
appointment “could enrage economic nationalists in the White House and some
staunchly conservative Republicans on Capitol Hill who don’t like [his] background as a
Democrat who generally favors free trade.”
Cohn himself has not said he is interested in the job. Speaking recently about the
position to CNBC, he said, “[n]o, I have a great job right now. Serving the president has
been a dream come true.”

The sources tapped by Politico said that if Cohn doesn’t take the helm at the Fed, the
job will probably go to former Fed governor Kevin Warsh. Other possibilities include
John Taylor, Jerome Powell and Jim Rohr.
It’s unclear how any of them would guide Fed policy, though the consensus seems to be
that whoever gets the job will be taking charge at a crucial moment. The Fed is currently
in the midst of hiking interest rates, and will have to get the timing right in order to avoid
a recession or getting behind on inflation.
The gold price tends to fare better when interest rates are low, and often struggles when
interest rates increase. The Fed has raised rates twice so far this year, but due to the
slow pace of the increases, plus other geopolitical factors, gold was up about 8 percent
year-to-date halfway through 2017.
Politico says that Cohn “is viewed as closer to Yellen’s preference for gradual rate
hikes,” but notes that he does not have a track record on monetary policy. Any changes
to the Fed’s current policy could potentially impact the gold price.
Yellen seems to be aware that she will not be asked back for a second term as Fed
chair. When asked if her appearance this week before the House Financial Services
Committee could be her last, she said, “[it] may well be.”
Trump was highly critical of Yellen during his election campaign, going so far as
to accuse her of keeping interest rates low at the request of then-President Barack
Obama. Trump has backtracked since then and said this past spring that he respects
her.
Yellen’s term as Fed chair will end on February 3, 2018.

How to Play Gold When Trump Tension
is High
The gold price nearly hit $1,300 last week due to strong words
between the US and North Korea. Here's what to do next time
tensions are running high.
Recent tensions between the US and North Korea have largely dissipated, but
many market watchers are now wondering when the next bout of pressure may
hit.
And for good reason. With just a few comments, US President Donald Trump was able
to significantly ratchet up hostility with North Korea, leaving investors — and the rest of
the world — wondering whether nuclear war could be imminent.
Among other things, Trump said the US would meet North Korea’s threats “with fire and
fury,” then followed up by saying, “[i]f North Korea does anything in terms of even
thinking about attack … they can be very, very nervous.” Those statements had a major
impact on the gold price, which got closer to the $1,300-per-ounce mark than it has in
months.
Some investors were likely able to reap the benefits of that gold price rise. For those
who didn’t, two high-profile investors recently gave some advice on how to cash in when
tensions are running high.
“When it comes to assessing political matters (especially global geopolitics like the
North Korea matter), we are very humble. We know that we don’t have a unique insight
that we’d choose to bet on,” Ray Dalio, manager of the world’s largest hedge
fund, wrote in a LinkedIn post.
That said, Dalio went on to suggest that investors “stay liquid, stay diversified, and not
be overly exposed to any particular economic outcomes.” He added, “[w]e can also say

that if the above things go badly, it would seem that gold (more than other safe haven
assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of
your assets in gold as as hedge, we’d suggest you relook at this.”
When asked by CNBC to comment on Dalio’s call to buy gold, commodities expert
Dennis Gartman, who edits and publishes The Gartman Letter, agreed wholeheartedly.
“I do agree, and I think you should always have at least 5 percent in gold just in case —
one never knows when geopolitical risks will arise, one never knows when something
untoward will happen economically,” he said.
“So yes, you should have some part of your portfolio in [gold]. I think you should have a
tad bit more than 5 or 10 percent at this point. I think the stock market looks a little
vulnerable, the geopolitical circumstances are getting worse and worse. So I think that
you probably need to bring that up to 10 to 15 percent rather than 5 to 10, and take that
out of your position that you have in the equities market.”
Dalio and Gartman didn’t specify how exactly investors should get exposure to gold,
though it’s reasonable to assume that like many other top investors they’re most
interested in buying physical metal.
That said, gold ETFs are often a popular option (though interest was muted in Q2
compared to Q1), and some experts have argued that it’s now a good time to buy gold
stocks. For instance, Adrian Day of Adrian Day Asset Management recently
commented, “this is a very good time to invest in gold and an even better time to invest
in gold stocks.” Other options for gold investing include gold futures and gold IRAs.

Is Donald Trump Good for the Gold Price?

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