Investors looking to play the presidential election can expect gold to rise should President Barack Obama be re-elected and more traditional asset classes like stocks to rise should GOP nominee Mitt Romney win, said Al Korelin, a market analyst and chairman of AB Korelin and Associates.
An Obama victory would likely allow the Federal Reserve to continue with loose monetary policies such as quantitative easing, under which the Fed buys bonds held by banks, pumping them full of liquidity in a way that drives down interest rates to encourage investing and hiring.
Such a policy, also known as printing money out of thin air, weakens the dollar and pushes up stock prices, though inflationary pressures rise as well, and gold tends to shine when inflation rates rise.
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