The 2024 U.S presidential elections occurred on 5 November, where Donald J. Trump was elected for a second term as the 47Th American president. The final election results – whereby Trump defeated the Democratic candidate Kamala Harris by 312 to 226 – was deemed by pundits as a repudiation of neo-liberal ideologies that included identity politics, loose border and immigrant policies, and a jump in the cost of living. A McDonald’s McChicken burger cost $1.29 in 2020, whereas in 2024 that same burger costs $3.70 – a tangible 46% annual inflation rate felt by many typical American households.

The U.S Fed again lowered the Fed Funds rate for a second time since July 2019 – dropping the Fed funds rate by 0.25% (25 basis points) on 7 November – this followed a 0.5% lowering in September. Fed chair Jerome Powell remarked that the Fed will continue assessing data to determine the ‘pace and destination’ of interest rates, and that another 0.25% cut could happen before 2025.

Overall, following Trump’s election, the U.S Dollar strengthened, along with a sharp increase in U.S longer-term bond yields (interest rates). This indicates a positive market expectation for future growth of the American economy. However, it also indicates that the market likely expects U.S fiscal policy to remain spend-thrifty, Trump’s policies to remain inflationary, and hence that inflation won’t subside soon.

On the geopolitical front, Trump made several promises on his campaign trail to de-escalate several of the current global conflicts – mainly getting Putin to stop the war in Ukraine, and Iran and Israel to put down their weapons in bringing about a truce. This certainly allays a bit of the concerns for widespread war now that he’s been elected, but whether he can succeed in executing his plans remains to be seen in 2025.

Central banks and governments continue to buy increasing amounts of gold to back their ‘balance sheets’ with stable value, as Russia and China now both hold about 2,300t of monetary gold. Central bank gold buying now makes up 20% of global gold demand and is set to rise as smaller nations like Poland and Uzbekistan are seen continuing their gold buying spree in unison with Russia, China and India.

Also - Troygold, that gold fintech, has gone live with Flash group’s 1Voucher service – a South African network of cash to product terminals in over 100,000 informal market merchants and big retailers. You can now convert cash into gold by topping up your Troygold account at a Pep, PepHome, Ackermans, Pepcell, Shoprite and Boxer stores.

Gold has come off its record highs ($2,800/oz) post the U.S election after dramatic momentum lately – so as election results gave more certainty on the economic and policy direction of the world’s largest economy, some market participants took this as an opportunity to close out positions and take profits.

Commerzbank's commodity analyst Carsten Fritsch notes, “Selling pressure was caused by a significantly stronger US dollar and a sharp rise in US bond yields. In previous weeks, neither of these factors had been a hindrance for Gold. However, the extent of the USD appreciation and the rise in yields were apparently too strong this time to be ignored by Gold.”

“However, we do not expect the Gold price weakness to last for long… The Fed's interest rate cut by 25 basis points yesterday and the prospect of further rate cuts continue to favour Gold. In addition, Trump's policies are likely to increase inflation risks, which is why gold is likely to remain in demand as a hedge against inflation.”

I mentioned in my previous letter that gold has become a barometer for the fiscal and monetary policy actions undertaken by governments. The recent dip is as a result of the optimism that a Trump presidency brings to both U.S economic growth (as he promises to free up the economy), and the de-escalation in global wars (Trump promises to broker these peace deals). However, Trump’s tax cuts, tariffs and immigration reform will, from a monetary perspective, further increase the budget deficit of the U.S government, reducing federal income and additional input costs to consumer goods - hence future price rises. The U.S budget deficit has jumped 287% year over year from $67 billion to $257 billion… the U.S is going bankrupt, fast.

Debt - in Trump’s first term as president, he added $7.8 trillion in debt. Biden shattered that by adding $8.2 trillion, and the next four years is projected to add $10 trillion to the US debt, which is now at a staggering $36 trillion. It needs to be paid for, and that will be through money printing and inflation. Gold is on a launchpad still.

Here’s an updated snapshot of gold price returns over the past 5 years in the four main currencies. Although down from the latest high, gold owners have still done very well, and will continue to do so.