If you’re reading this, I presume you’re already following the news and know how close this election is. There are two options, either Hillary Clinton or Donald Trump will be elected president of the United States on November 8th. It’s looking more likely that Trump will win, which would have serious ramifications for the world economy. Here are just a few of them.
The Stock Market Plummets
Currently the stock market is slightly up, but that’s because the majority of the market participants expect Hillary Clinton to win. As I write this, the Dow is down more than 300 points. That’s a significant amount of money tied up in the stock market. When a presidential election becomes a fight between dollars and cents, the financial markets usually take a wild ride. Of course, it’s not just the financial markets that would feel the effects, it would be the entire world economy if Trump wins.
Trump has talked up some pretty crazy ideas in the past, but this time might be different. He’s promised to dismantle much of what his opponent, Hillary Clinton, stands for. If that includes breaking up the big banks, cutting taxes, and repealing healthcare reform, there’s a chance the stock market could take a serious hit. At this point, though, it’s unclear what stock market reaction Trump’s victory will bring. The good news is that if Clinton loses, the markets could bounce back pretty quickly. For now, it’s best to stay away from all major stock market movements until after the election.
Gold Reverses Course
If you’re keeping track, this election was previously seen as a race between Trump and Clinton to see who could get the most votes. Turns out that wasn’t the case at all, because a lot of people didn’t actually vote. As a result, there was more than one candidate on the ballot in a number of states. That caused a lot of issues because the winner was determined by the amount of ballots cast, which then determined how many of the country’s seats in the Senate and House of Representatives the candidate would get. Basically, the rules were changed so that the more voters a candidate collects along the east coast, the more seats he or she gets in Congress. Basically, it’s an attempt to create a more even playing field.
When this situation occurred, investors naturally feared it would cause a massive upset in the market. After all, the last time this happened was in 1824 when John Quincy Adams actually beat Andrew Jackson in the popular vote, but Jackson won because there were more electoral college votes than Adams. That was over 100 years ago, and while the economy was much different back then, there are some eerie similarities.
The good news for gold (and silver for that matter) fans is that this situation didn’t occur, and it’s highly unlikely to occur again. The reason is that most states now require voters to have an ID, and a voter ID doesn’t match the rules of 1824. There’s also legislation in the works that would require voters to show a form of identification when they vote. So, while it’s still quite possible that the electoral college could decide an election, the odds of it happening again are extremely low. It could still happen, however, if someone decides to change the rules, which is why it’s still a good idea to own some gold and silver as an investment. Even if the rules don’t change and Trump wins the presidency, it’s still a wise investment to own some gold and silver simply because the odds of another financial disaster are still quite high.
Interest Rates Spike
Last but not least, we have interest rates, which are currently at an all-time low. The Federal Reserve has cut interest rates repeatedly because they think the economy is improving and more people have jobs. While this might be true, it’s also true that a lot of people are still struggling to make ends meet. It’s like the old saying goes, the economy grows at the expense of the majority. If Trump wins and follows through with his promises, there’s a chance interest rates could increase significantly. Of course, that wouldn’t be good for the economy either.
Of course, none of this would happen if Hillary Clinton wins. The stock market would bounce back, gold would remain at a healthy level, interest rates would remain low, and America and the world would continue on its merry way. For now, at least it’s best to sit back and watch the news, keep an eye on the markets, and do whatever you can to help your financial situation. The outcome of this election will have serious ramifications for years to come. Hopefully, we’ll all be able to learn from it.