Key Points

• Gold prices have been on an uptrend since the onset on the millennium
• The disputed U.S. elections in the year 2000
• GFC drove up precious metals
• Central Bank policies driving up Gold

Gold has long been regarded as a stable store of value and as fiat currencies lose value over the course of time investors are inclined to add more precious metals to their portfolios. The ever increasing debt levels across major countries is a cause for concern in the financial markets. Gold mining Exchange Traded Funds has performed very well, generating substantial returns to investors highlighting the resilience of gold during periods of weak economic performance and heightened geopolitical risks.

There is limited positive correlation between the U.S. elections and the medium to long-term prices of Gold. The disputed U.S. elections in the year 2000 provides sufficient evidence to support this proposition. Gold prices remained stable and maintained their upward trend despite the highly vicious struggle between G. Bush and A. Gore. The recounting and the ensuing court battle lasted until the 13^th of December, a month after the election. A. Gore conceded defeat but took the opportunity to shed light on his discontent with the entire recounting process and the supreme court’s decision.

Barak Obama versus Mitt Romney election battle was characterised by a sweeping victory for the former candidate. Prior to the elections Gold prices were slipping due to the massive market sell-off which characterised the Global Financial Crisis. Once in office, Barak Obama and Secretary of the Treasury H. Paulson initiated a US$700 Billion package to bail out the beleaguered financial sector. The stock market rallied along with Gold which went on reach record highs in September 2011.

The proceeding election in 2012, saw Gold prices shedding off some gains mainly due to the state of the economy and health of the financial markets. It can be noted that as long as the U.S economy is enjoying an economic boom precious metals remained subdued.

Debt Monetization and Quantitative Easing has prompted investors and traders to stash the extra liquidity in the buying up of Gold. QE is eroding the value of fiat money, therefore investors with a long term eye are dumping cash for Gold and other Gold related assets chiefly among them being Gold mining stocks and Gold related Exchange Traded Funds. Therefore, its worth emphasizing that CBs’ policies around the globe are driving up Gold prices.