What is the best hedge if Trump retakes White House? The answer is in all that glitters

Gold is the best portfolio hedge in the event Donald Trump retakes the White House, according to the latest Bloomberg Markets Live Pulse survey.

Proponents of the precious metal as a haven play in case of Trump’s re-election outnumbered those picking the US dollar two-to-one among the 480 respondents. Just over 60 per cent of those surveyed see the US dollar ultimately weakening in the event the Republican candidate secures another presidential term.

History is on their side. A Bloomberg gauge of the dollar slid more than 10 per cent while the spot price of gold rallied over 50 per cent during Trump’s four years in office.

Trump’s platform of tax cuts, tariffs and weaker regulation are viewed as inflationary on Wall Street and could even force the Federal Reserve to increase interest rates again. A red wave in November that ushers in Republican control of Congress, granting Trump greater leeway in enacting sweeping economic policies, could further ignite the precious metal as prices hover near all-time highs.

“Gold sits in a prime position to rally,” according to Gregory Shearer, an analyst at JPMorgan Chase. Geopolitical tensions, the growing US deficit, reserve bank diversification and inflation hedging have all driven bullion prices higher, “these factors likely endure regardless of the election outcome but could be further magnified under a Trump 2.0 or ‘red wave’ scenario,” he wrote July 24.