Will the Change in the White House Cause a Boom or a Bust in Precious Metals?
It won’t be long until we get a new president. Will the change cause the trading prices of gold scrap, silver scrap, platinum scrap and other precious metals to rise or fall? Will those precious metal refineries, “we buy gold” stores near you and pawnshops be paying more for that old piece of jewelry you want to sell, or paying you less?
Here are some answers to questions that might have been on your mind.
Will Donald Trump’s Loosening of Environmental Protections Affect Prices?
This is a logical question to ask. If a lot of new gold mines opened in North America, for example, you could assume that an increase in the supply of that precious metal could cause prices to soften slightly.
And even a month before he is scheduled to leave office, President Trump is allowing new mining projects in federal lands. Yet if you scour the news carefully, you will notice that the construction of few, if any, of the mines that the current administration has approved will produce precious metals. Three examples? A new copper mine in Arizona, a uranium mine in South Dakota, and a lithium mine in Arizona. While those materials are valuable, they are not precious metals. Plus, there is the fact that the incoming Biden administration could take steps to halt some of the plans.
So in our opinion, it seems unlikely that expanded mining projects, if they do happen, will cause a drop in the prices of the precious metals we trade in.
When Trump-Era Tariffs Fall, Will Precious Metal Prices Drop?
This again is a logical question to ask, because the law of supply and demand is always at work. So when individuals who bring gold, silver and other precious metals into the U.S. from China will be paying lower tariffs, isn’t it logical that more precious metals will begin flowing into our country? And isn’t it equally logical to assume that when they do, the trading prices of gold, silver, platinum, and other metals will fall?
The answer is that although it is logical to assume that will take place, logic is not a reliable predictor of what will actually happen. Then there is the fact that the trading price of gold, at least, has been high enough to act as a cushion against immediate, sudden changes.
Will New Efforts by the Biden Administration to Increase Restrictions on Business Kill the Growth in Precious Metal Prices?
This is a big question too. And it impacts on precious metal prices, because when businesses ramp up productivity, those that use precious metals in their manufacturing will need more of them. So if President Biden rides in and increases limits on the way companies are allowed to conduct business, isn’t it logical that demand for precious metals will fall, causing prices to soften?
Again, that idea is logical. But that doesn’t mean it will happen.
When Donald J. Trump entered office, he promised to reduce environmental and other restrictions that he (and his followers) believed were limiting companies from doing business the way they wanted to. He promoted his view that if Obama-era restrictions were taken away, businesses could profit more and be more productive in a new, laissez-faire environment.
How well did that philosophy work to stimulate profits in American companies? The reality is, it is difficult to know, even though you can find charts and graphs online that give some hints. One reason it is hard to know is that the last quarter of Trump’s presidency occurred at the same time the Covid-19 pandemic stalled our economy, and the ability of American businesses to operate profitably.
In Our View . . .
So what immediate effect will the arrival of the Biden administration have on precious metal prices? Is it time to pack up all your investments in a shoebox and sell them at your nearest refinery or scrap yard?
We don’t think so. Our experience, and probably yours as well, has taught us that change in any kind of market usually takes place gradually, even when major changes are taking place all around it. As an analogy, think of precious metal markets as though they were a motorboat. A new pilot arrives, spins the wheel in a new direction and opens up or closes the throttle. Yet the boat, which has momentum and direction of its own, takes a while to respond.
So the bottom line is, this is a great time to invest in gold, silver, platinum, and other precious metal scrap. This has been a good time to invest in precious metals, and a new set of hands on the controls seems likely to cause only gradual, not immediate, change.
Want to know more about profiting from your holdings in gold, silver, platinum, and other scrap? Give our consultants a call today at 800-426-2344.