SPDR Gold Trust (ETF) (NYSEARCA:GLD) was set to open more than one percent higher on Friday morning after months of steady losses. The exchange traded fund, which follows the price of gold, is in an uncertain mood at the moment. With the Federal Reserve looking to normalize policy, and political risks grip Washington.
That’s all bringing to the fore the idea of a second Trump driven trade on Wall Street. One of the big targets of such a trade could be the SPDR Gold Trust (ETF) (NYSEARCA:GLD).
Looking at Trump Trade part 2
The original “Trump Trade” was the bullish run that hit the stock market after President Trump was elected to lead the country last November. According to market commentators the rise in stock prices was based on hopes that the new administration would both lower corporation tax and put a fiscal stimulus, likely in the form of infrastructure spending into place.
As the US Congress revealed its problems in putting a healthcare plan into place Wall Street cooled on that Trump Trade. We could be in store for a much more memorable version, however.
Mr. Trump is known for his own particular, personal love for the yellow metal. Investors are hoping, however, that it’s his weakness rather than his strength that could drive its price higher. The controversy surrounding the meeting of Donald Trump Jr. with a claimed agent of the Russian government is just the latest in a long line of events linking the trump team to Russian influence.
In terms of a smoke to fire ratio, i.e. how much of this is criminal rather than simple rumor, we simply don’t know how these events will pan out. That is in the hands of the US Congress and Robert Mueller, the special investigator.
SPDR Gold Trust (ETF) is worth looking at
If things get very risky in the United States, investor may run to gold in order to protect their capital. That would seem to make the SPDR Gold Trust (ETF) (NYSEARCA:GLD) a viable bet if you believe Washington’s Russian inquiries are going to get proactive sooner rather than later.
We don’t have a huge amount of historical evidence to back up this claim however. Looking at the resignation of President Nixon and the impeachment of President Clinton, the two great political crises of the 20th century doesn’t offer many clues. Nixon’s resignation saw a bull market for gold. Clinton’s impeachment saw the opposite.
Those experiences probably mean that market fundamentals and trends are more important than political crisis. Watergate happened in the midst of the oil crisis, while Clinton’s impeachment hearings took place in a booming economy.
Articles of impeachment have already been filed in the House of Representatives. Though few political commentators are taking them seriously right now, they show a progression in the crisis gripping Washington. Traders will need to set down markers to inform them when to start trading for a crisis. They also need to decide if this time is going to be different for the SPDR Gold Trust (ETF) (NYSEARCA:GLD).