The impeachment of Trump has been a revolving issue for quit a long time. What does impeachment mean? Impeachment is the process of getting rid of a president outside of election time. It is a long and difficult process at that – first, the House of Representatives has to vote by a majority to impeach a president and; second, it goes to the senate where two-thirds vote is required to actually remove the president. So, what happens to markets if the US President gets impeached?
In the history or America, two presidents have notably gotten themselves into trouble, Clinton and Nixon. These lead to the resignation of Nixon and the impeachment of Clinton. Clinton’s presidency was far from a clean slate and had gone through numerous scandals. Clinton was impeached on the December of 1998 for lying about his affair with Monica Lewinsky yet, in the end, he was able to keep his job. During that time, the price of gold remained stable despite the turmoil going around. The stock market suffered from jitters, but it lasted only for a short time.
On the other hand, Nixon was not impeached as what almost everybody assumed. He left the presidency of his own will just when the impeachment started. Then again, his impeachment did not cause the stock market to crash. A more significant event than Nixon’s resignation was his decision to close the gold window, making the U.S. dollar a fiat currency with no direct link to precious metals such as gold.
Basing from the two historical data, the impeachment of a president does not necessarily affect the market. Thus, if Trump will be impeached, the price of gold has little or no volatility at all, far from the misconception that the price of gold will fall right along with the market. In fact, the price of gold can soar high, which happens often, when to stock market crashes. It can be noted the gold’s biggest bull market happened while the stock market in flat. This is because the catalyst for higher gold is unrelated to the stock market.
Considering gold as the safe haven for traders when the stock market is on the rocks, gold can be then a good investment for potential gains if the impeachment of Trump happens, even though the impeachment does not spell bad news at all in the stock market. If the impeachment happens, then gold prices are more likely to retrace their gains which is the result of the increase of demands of the investors for relative shelter from market volatility.
In any case, the precious metals especially gold have the strongest recovery of any asset class. As history generally shows, a change in the presidency affiliation benefits the price of gold as gold performs well in times of uncertainty.
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Source:: Gold Silver Worlds
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From:: Junior Mining Analyst