To The Moon

As the 2024 U.S. presidential election approaches, gold, Bitcoin, and global markets are moving in ways that reveal market sentiment, fears of geopolitical conflict, and investor caution. Here, we explore these dynamics in light of past trends, current economic and geopolitical tensions, and the wisdom shared by prominent financial leaders.

Gold Price Movements Around Trump's First Election

In the six months leading up to Donald Trump's first election in November 2016, gold prices experienced significant volatility. From May 2016 to November 2016, gold prices rose from around $1,200 per ounce to approximately $1,300 per ounce, reflecting investor uncertainty and a flight to safe-haven assets. Following Trump's election, gold prices initially spiked but then declined as market confidence in the new administration's economic policies grew. By May 2017, gold had stabilized around $1,250 per ounce.

Gold's Performance in 2024

In 2024, gold has seen an upward trend, making notable gains as investors continue to lean on it as a safe haven. However, recent price corrections—gold dropped nearly $50 in a single day after a record high—suggest shifting sentiment. According to BMI, a unit of Fitch Solutions, the election itself is the most significant factor affecting metals like gold, with traders wary about how the electoral outcome will impact policy, the dollar, and market stability. A strengthening U.S. dollar, driven by positive economic indicators and increased expectations of a Trump victory, is also adding pressure on gold prices, signalling mixed investor sentiment on economic resilience and potential post-election volatility.

TradingView: Gold Price Chart

Bitcoin's Recent Decline

Bitcoin reached an all-time high of $72,360 on October 29, 2024, but has since stumbled. This decline reflects a shift in market sentiment, with investors becoming more risk-averse as the election approaches. The heightened volatility in Bitcoin's price indicates uncertainty about the future regulatory environment and economic policies under the next administration.

BTC Chart

Geopolitical Conflict: An Amplifying Force

This year, ongoing conflicts in Ukraine and the Middle East are adding layers of complexity. Such tensions are reshaping investor priorities, turning them away from riskier assets like Bitcoin and towards perceived safe havens like gold, albeit with reservations. Jamie Dimon, CEO of JPMorgan Chase, has weighed in on the severity of current geopolitical threats, likening today’s landscape to the period preceding World War II. Dimon’s stark warnings highlight concerns that these regional conflicts could escalate, destabilizing global structures and dragging the economy into unforeseen crises. His recent comments underscore the extraordinary risks posed by nuclear proliferation, suggesting that these dangers dwarf even climate-related threats. Citing a Washington Post article, he asserted:

World War III has already begun. You already have battles on the ground being coordinated in multiple countries.

Dimon’s words serve as a reminder of the unpredictable nature of today’s geopolitical risks. By emphasizing the possibility of World War III and the historical parallels to past global conflicts, Dimon reflects the level of vigilance and preparedness he believes is essential. He urges a strong stance on mitigating risks, especially as tensions among powerful nations like Russia, North Korea, and Iran grow more palpable.

The Investor's Playbook: Caution and Adaptation

For the average investor, these times call for a balanced approach. While Bitcoin offers a high-reward potential, its recent volatility suggests it might be best approached with restraint, especially until election outcomes and geopolitical tensions become clearer. Gold, meanwhile, remains a solid choice for those seeking a safe-haven asset, though it’s important to be aware of short-term fluctuations driven by dollar strength and evolving U.S. policy expectations. Investors could consider incremental allocations in gold or gold-backed assets, with a view to holding through potential post-election volatility.

Dimon’s commentary also serves as a stark reminder of the need for diversification and prudence. Given the unprecedented nuclear risks he highlights, investors may benefit from allocating a portion of their portfolios to assets less sensitive to geopolitical shocks, such as diversified bond funds or income-generating equities in sectors resilient to global disruptions.

Conclusion

Gold and Bitcoin, long hailed as safe-haven assets, face significant challenges as the 2024 U.S. election looms and geopolitical tensions escalate. While gold appears stable with recent gains, its retreat reflects market sentiment wary of potential post-election shifts. Bitcoin, on the other hand, is showing increased sensitivity to global risk, marking a new chapter in its journey as a mainstream asset. Jamie Dimon’s warnings underscore the gravity of the current geopolitical climate, pushing investors to weigh not only financial but existential risks.

In these uncertain times, the key for investors is cautious adaptability—balancing safe-haven assets, monitoring election and geopolitical developments, and remaining vigilant to sudden shifts in sentiment. Whether holding digital or physical gold, the only certainty is the need for resilience as markets navigate the turbulence of this pivotal moment in history.

@TigerWire