The “Trump effect” has already finished! The uncertainty of Donald J. Trump being elected meant an elevation in the prices of precious metals in the lead up to the US Presidential election but after he won (by November 6th) there was a massive sell off and price drop. In light of this I wanted to see how it has effected the trends in the prices of gold and silver.
Based on the suggestion of Rafi Farber, the Endgame Investor, I made price predictions for the prices of both gold and silver by translating to the present time period the exponential price breakouts that occurred for both metals back in the late 1970s.
Both metals’ prices peaked in real terms by 1980 after exponential growth. I used the same exponential price growth curves to extrapolate the current nominal prices after the underlying real value of gold and silver was determined by stripping out the inflationary effect of the M2 currency supply growth. The results are shown in Charts 1 and 2 below.
For an understanding of the method please read Update: Gold and Silver Prices Above Predictions.
So again we may now ask, how are we going on those price predictions?
Since March 2024 the nominal prices of gold and silver have been tracking above the predictions. See Charts 3 and 4 below.
The run up to the November 5, 2024 US Presidential election saw strong price growth in both gold and silver. But after Donald J. Trump won in a landslide vote both metals prices dropped significantly in nominal terms. The peak is indicated by the label “Trump effect” on both charts. However it would now seem that that slide has finished. That is the “Trump effect” on prices has already dissipated.
On both Charts 3 and 4 I have added a second curve (blue) which is the Prediction + $300 for the gold price and the Prediction + $5 for the silver price. These new curves align well with the current prices of gold and silver and also they show the rapid jump in prices that occurred after March 2024.
Perhaps these two blue curves may be viewed as an upper bound to the Predictions. Of course this is very speculative but it gives a guide the eye to where those prices might go.
It will be interesting to see if the actual price data tracks between these two curves as time passes.
Related Reading
Gold and Silver Real, Uninflated Prices Break Out | How High Will They Go?
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