What Happens to Silver During—and After—the Election?

This is the second article in a series by Goldco Precious Metals founder Trevor Gerszt on the U.S. presidential election and its effects on precious metals investing. Previously Mr. Gerszt discussed gold pricing and its relationship to the election of our next president.

As the 2016 Presidential Election fast approaches, there has been a lot of discussion as to its potential impact on the U.S. economy. How will markets react to a Donald Trump victory? How will a Hillary Clinton presidency affect inflation, or the strength of the U.S. dollar?

Many experts are speculating about the potential economic repercussions, both positive and negative. But one sector that’s gone largely overlooked in this discussion is precious metals. For instance, how will the Presidential election affect the price of silver? It’s difficult to say in the long term. But based on both past trends and current performance, there are a few indicators as to how silver might be impacted in the immediate future.

Silver’s Election Decline

If you look at the price of silver over the last month, as recorded by mining authority InfoMine, you’ll see a decline from over $20 an ounce to just above $17. Taken on its own, this may seem a little worrying—until you look at it in a historical context.

As experts at Wyatt Research pointed out in the last presidential election cycle, gold quite often goes down in the months just before an election, and silver tends to follow it. But then directly afterwards it skyrockets. This holds true regardless of which candidate wins, and thus far this trend is on track for this election cycle as well. Even in non-election years, silver often suffers a slight dip around the end of the year; however this is generally offset by a spike in December. Why? For one reason, consumers are doing their holiday shopping, including jewelry and other items that incorporate silver. So while the metal may currently be experiencing a lean moment, history shows it can be expected to improve significantly in the near future.

Silver and the Economy

Another indicator of silver’s performance in the coming months is the economy. Like gold, many people consider silver a safe haven to protect their assets against a volatile stock market. In this, one of the most contentious elections in recent memory, many investors on both sides of the political spectrum are worried that if their candidate doesn’t win, the economy will fail.

The actual long-term direction that the nation will go under either Trump or Clinton is difficult to predict until they actually get into office. But voters’ fears and speculations about the economy tend to have a significant impact on markets, often well before the event they’re worried about even occurs.

Thus, regardless of who wins, panic on the opposing side could cause significant fluctuations in the stock market. The current volatility, combined with anticipation of turmoil to come, will likely in turn drive more people to put their money into safe havens such as precious metals, and this increased interest will send prices up even further.

Silver in the Coming Years

In looking at the price of silver, it’s important to remember it’s more than just a commodity to be bought and sold. Part of what gives the metal its inherent value is the fact that it is vital in a wide array of technologies, from consumer electronics, including computers, cell phones and flat screen TVs—another reason silver may be affected by holiday shopping—to medical devices and more. As these industries continue to explode over time, their need for silver will as well.

One particular use of silver that could very well be impacted by the election is solar panel manufacturing. Specifically, the disparity between the two candidates’ views on solar power could prove significant. As the League of Conservation Voters notes, Hillary Clinton has endorsed the use of solar energy and expressed a desire to power more homes with the clean energy source.

Meanwhile, Donald Trump also supports a shift in our energy policies, but by different means. He’s on record as saying that solar panels are too expensive and inefficient. With this in mind, it seems likely support for the increased use of solar panels under a Clinton presidency could help boost the price of silver higher than would the pursuit of clean coal promised by a Trump administration.

Again, there’s always a difference between what a candidate says during a campaign and what they actually do once in office. Speculating as to what will happen over the next four years, and how it will impact our economy is difficult, even once we do have a clear winner.

However, no matter what the results are of the upcoming Presidential election, past trends are a clear indicator that silver, along with gold and other precious metals, are poised to go up in the foreseeable future. Plan your investments accordingly, especially in much-needed retirement accounts, like your Gold or Silver IRA.

Trevor Gerszt is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.