If you are an auto maker, defense contractor or other major U.S. manufacturer you’ve probably already been consulting with your PR firm on how to handle potential Twitter talk from President-elect Trump.

Individual investors are getting in on the game too.

Brokerage firms have seen an increase in trading activity and companies that have been called out by President-elect Trump have seen trading volumes surge.

Here’s just one example:

Market reaction: This particular Twitter message drove Lockheed’s stock price into a nosedive in after-hours trading, and triggered a jump in Boeing’s

In an interview with the Wall Street Journal, TD Ameritrade Chief Executive Tim Hockey said trading surged following Mr. Trump’s win and continued to pick up whenever the president-elect targeted his tweeting at a specific company. TD Ameritrade said its average daily client trades surged 11% in the quarter ended Dec. 31. 

The Tweets Are Moving Markets

A new ETRADE survey found that three-fifths of those between 25 to 34 had traded based on a tweet by President-elect Trump. The survey included more than 900 active investors, who had a minimum of $10,000 in an online-brokerage account.

How can investors trade Trump tweets?

The answer may well lie in buying physical gold as a hedge and safe-haven against broader stock market volatility and the greater unknowns of what could develop on the world political stage in the months ahead.

Some market strategists concede that investors really don’t have a choice – but must monitor the Trump twitter account – simply because the tweets are moving market. The President-elect is also making views known in the international arena regarding potential trade issues with China via the social media platform.

Rising Gold Demand Seen Ahead

The World Gold Council outlined 6 major trends in the global economy that will support gold prices in 2017.  Part one of the Blanchard analysis focused on the first three factors. Read more on that here.

The second three factors – could well be triggered by the Trump twitter feed as well as new developments from the upcoming administration’s policies. Here’s a close look at them now.

Inflated Stock Market Valuation  

The U.S. stock market is trading at all–time highs and, by most traditional measures, is overvalued. The current bull cycle in stocks is old – it started in March 2009 – and is vulnerable to a correction or cycle turn at any time. Bull markets don’t last forever.

Long-Term Asian Growth

Chinese and Indian investors have long shown an affinity to buying and holding physical gold. It is a cultural phenomenon backed by hundreds of years of action. The continued rise in the middle class of these growing global powerhouses means more money that can be funneled to their investment of choice – gold.

Trump’s twitter feed upset official diplomatic channels back in early December – when he messaged about his call with the Taiwanese president. He broke decades of precedent and said the “One China” policy was up for negotiation. China considers Taiwan a breakaway province, with no rights to any kind of diplomatic relations with other countries.

Tensions are running high at the start of the new Administration.

The Chinese president has already been making public statements and is poised to enter what may be a global void of leadership as the United States backs away from globalization. Look the Chinese to continue to grow their economy and to seize a greater footing on the global power stage in the months ahead. The global economy is shifting from West to the East and Trump’s policies may help speed that along.

   “Macroeconomic trends in Asia will support economic

growth over the coming years and, in our view, this will

drive gold demand. In Asian economies, gold demand is

generally closely correlated to increasing wealth. And as

Asian countries have become richer, their demand for gold

has increased. The combined share of world gold demand

for India and China grew from 25% in the early 1990s to

more than 50% by 2016. And other markets such as

Vietnam, Thailand and South Korea have vibrant gold

markets too. “World Gold Council Report.

Opening of New Markets

Gold is becoming more mainstream, the World Gold Council says. While day traders may get bogged down by individual company-specific tweets, the better strategy may well be to build a physical gold position that can protect your wealth and your portfolio against a variety of risks.

What’s in your portfolio now? Call Blanchard today for a private consultation with a portfolio manager at 1-800-880-4653.

In a new report, the World Gold Council has identified six key trends that will support continued gold demand in 2017. These include:

• Heightened political and geopolitical risks
• Currency depreciation
• Rising inflation expectations
• Inflated stock market valuation
• Long-term Asian growth
• Opening of new markets

GEOPOLITICAL RISK

Political risk is rising around the globe. The World Gold Council pointed to a number of upcoming elections in Europe in 2017, including Netherlands, France and Germany.

Some market watchers have warned that the outcome of these elections could prove to be a destabilizing force for the European Union, depending on the votes. Rising waves are populism are seen in Europe and there is speculation that Russia could attempt to influence the European elections.

The Eurasia Group outlined top geopolitical risks in its 2017 outlook report > Read it here.

Closer to home, one of the worries for financial markets are trade policies. There is “a meaningful risk that negotiations on trade will turn belligerent” and suggests that “confidence in markets could be affected by geopolitical tensions triggered by the new administration,” says Jim O’Sullivan, Chief US Economist at High Frequency Economics, in the World Gold Council Report.

As a high-quality, liquid asset, gold benefits from safe-haven inflows, which could emerge from rising geopolitical risks in 2017.

CURRENCY DEPRECIATION

Paper (or fiat) money has fallen in value over the last century, while gold has vastly outperformed. See Figure 1 below.

Over the past century, gold has vastly outperformed all major world currencies as a means of exchange, the World Gold Council says.

A key reason for this is:

• The available supply of gold changes little over time, growing about 2% per year through mine production
• That compares to paper money, which can be printed in unlimited quantities to support monetary policies.

Since the global financial crisis, central banks around the globe have turned to quantitative easing or “money-printing” policies in an attempt to stimulate economic growth. At its heart – that devalues the paper money. It is simple economics – more supply of anything decreases its value.

Investors have turned to physical gold investments in recent years in an attempt to preserve the wealth and protect it from depreciating paper money values.

RISING INFLATION EXPECTATIONS

The World Gold Council points to expectations that inflation will rise in 2017 as another factor that is supportive to gold demand.

“An upward inflationary trend is likely to support demand for gold for three reasons. First, gold is historically seen as an inflation hedge. Second, higher inflation will keep real interest rates low, which in turn makes gold more attractive. And third, inflation makes bonds and other fixed income assets less appealing to long-term investors.” – World Gold Council report

It is well known that gold holds its value and often increases significantly during inflationary periods. What is not as well known is that rare coins are an even better hedge and tend to rise in price even faster than gold during inflationary periods.

Read more:  Rare Coins Are An Excellent Hedge Against Inflation

Stay updated with the latest gold market news: Subscribe to the Blanchard Newsletter (scroll to bottom of the page).

Check back here on Thursday for part 2 of this report and a look at the final 3 factors that the World Gold Council believes will support gold demand in 2017.

Blanchard and Company has was founded in 1975 and has a rich legacy of helping individual investors access the gold and rare coin market. We believe that gold and silver bullion in physical form is an appropriate asset for a small portion of any properly diversified investment portfolio. Contact Blanchard at 1-800-880-4653.

The stock market has soared to new all-time highs following the election of Donald Trump to the White House. In the now infamous Trump Bump –traders have priced in a spate of good news including tax cuts, deregulation and massive infrastructure spending.

Wednesday’s press conference and the inauguration will see a switch in market drivers from speculation on what Trump may do to what he actually does.

Buy The Rumor, Sell The Fact

The stock market is notorious for a phenomenon called “Buy the rumor, sell the fact” in which traders price in news before it has happened and then dump stocks once it occurs. There are growing rumblings among market watchers and traders that Inauguration Day could mark a top in the stock market.

Analysts are warning that the stock rally and the massive gains in the U.S. Dollar have hit an “exhaustion phase” and are vulnerable to a correction. The recent rally in stocks has been accompanied by weakening stock market breadth, as the number of declining stocks outnumbers gainers. That is a weak signal for the stock market overall.

Gold Is Starting To Move Higher

Gold prices have been climbing in recent weeks as a small bottom has formed on the daily chart at $1,124.30 for Comex February gold futures. Gold hit a high at $1,190.50 in early trading Tuesday – a $66 per ounce move in just three weeks.

If you are a first-time gold buyer, or if you are looking to add to

your existing position, you may not want to wait any longer. Gold

prices are rising again, with higher levels seen throughout the year.

“We forecast gold prices to average $1,420 in 2017,” says Thomson

Reuters in their Gold Survey 2016 Q3 Update and Outlook

Call Blanchard at 1-800-880-4653 to discuss your investment goals

with one of our portfolio managers now.

Politics – The Next Big Trigger For Gold?

“As Mr. Trump’s inauguration date nears, we suspect gold investors will monitor political developments more closely. Any significant ratcheting higher in geopolitical tensions could help trigger safe-haven bullion demand. The market may be more sensitive than usual to political developments in the early days of a Trump Administration,” according to a January 9 HSBC research report.

Blanchard is the premiere tangible assets adviser in the United States for serious investors and serious collectors. Learn more about our firm here.

As the three main US indices (Nasdaq 100, S&P 500, & Dow Jones Industrial Average) continue to hover near all–time record highs, investor fear continues to hover near all–time record lows.

One of the most common ways to gauge investor fear in the market comes from the CBOE Volatility Index, commonly referred to as the VIX, which measures the implied volatility of S&P 500 options. The concept is simple: when turbulence is expected in the market, investors are willing to shell out more money to protect their portfolios by hedging with options, and when no turbulence is expected, investors don’t have the need or desire to protect their portfolios. A higher VIX = more volatility expected. A lower VIX = less volatility expected.

Recently, any small spike in the VIX has been abruptly quashed due to the relentless and steady rise of the major indices. Out of 252 equity trading days in the past year, there have only been 38 days where the VIX has been south of the $12 level. Therefore, based on the current low price of the VIX, equity market participants are pricing in virtually zero downside risk or fear, even at record market highs.

However, this is where the plot begins to thicken. Although the VIX suggests that there is essentially zero fear in the equity market, the gold market tells a slightly different story. Currently, gold is already up approximately 2.3% for the year, adding more than $50 since the low point of $1124.3 in mid–December. Analysts attribute the recent rally in the precious metal as a flight–to–quality amid lingering concerns about what 2017 has in store.

Perhaps the biggest cause of doubt and uneasiness for US financial markets comes form an unexpected presidential election result. This is not to say, however, that investors are not also keeping a careful watch on European political changes as well.

Adrian Day, the president of Adrian Day Asset Management, which oversees $190 million noted how “the euro zone has plenty of crisis triggers over the coming months; Indian and Chinese buying [of gold] remain strong and Trump’s policy threatens inflation. All this is positive for gold.”

This is likely why gold is off to a very solid start for 2017, because unlike the VIX in US equity markets, there are other factors besides fear that are pushing the precious metal higher.

With that said, US institutional investors are closely monitoring China’s mounting currency problem, because it was China’s government devaluation of the yuan back in August of 2015 that sparked a severe US equity sell–off and sent gold soaring.

Therefore, not only are investors from China buying gold to seek refuge from a drowning currency propped up by the government, but US investors are also purchasing gold as a heaven in case the yuan crisis worsens and the effects are felt in the US stock market, again.

Macroeconomic factors like China’s currency crisis, trepidation about new US politics, and complacency with stocks at record highs are all valid reasons to own gold, and this consequently explains the recent rally. Once again, this underscores the benefits of owning gold as an investment, because not only can market fear instigate a rally, but other underlying economic factors can as well – and this is precisely what is happening.

The commodity sector, as a whole, closed out its first positive year in 2016 since 2012. The good news for hard assets, including precious metals, is that positive years in commodities usually come in bunches.

Gazing into the crystal ball for 2017: Jodie Gunzberg, global head of commodities and real assets at S&P Dow Jones Indices, finds that the path upward could continue into 2017 and beyond.

She points to three key factors that could impact the commodity sector as a whole this year:  inflation, a potentially weakening dollar and OPEC. Let’s take a look at each factor.

Trump and Inflation

Historically Republican presidencies are favorable for grains and gas which are key for rising inflation, Gunzberg says.  

“Copper, lead and nickel have had their best performance with Republicans. That in itself does not promise growth since rising inflation from commodity prices can cause stagflation – but stagflation is less likely if Trump builds infrastructure and jobs growth which may propel GDP and help the metals.

“Also, industrial metals outperformed precious metals last month by the most in 26 years. This is considered extremely bullish,” Gunzberg says.

US Dollar

The US dollar has been on a tear –rising significantly in recent weeks, which in turn has pressured commodities including gold and silver. Precious metals are priced and sold in US dollars on the world marketplace and a rising dollar tends to depress the price of these and other commodities, as it makes them more expensive to foreign buyers.

Although the dollar theoretically should rally from rising interest rates, that relationship hasn’t held, Gunzberg says.

“So, even if rates rise more, there is a chance the dollar will revert after continually hitting new recent highs – that can lift commodities substantially. In fact, every single one of the 24 commodities we track rises from a falling dollar, especially industrial metals which can rise as much as 7% for every 1% the dollar falls.”

Watch OPEC

Crude oil prices are on an upward path. Since bottoming at around $26 per barrel in February 2016, crude oil climbed as high as $55 per barrel at the start of 2017.

Perhaps you’ve noticed higher gasoline prices at the pump? Get used to it. A significant impact of rising crude oil is higher inflation throughout the economy. Higher crude prices not only impact pump prices, but almost every good you buy from milk at the grocery store to that sweater at your favorite department store.

Why? Higher crude oil prices mean higher transportation costs for all goods in the economy, which usually are passed along to consumers.

OPEC’s decision to cut production in late 2016 has given a lift to the energy sector. In 2017, Gunzberg points to two factors to watch:

Whether all the participants follow through on the agreement.

How the U.S. producers respond.

Big Picture

Big Commodity Winners in 2016

Energy  + 41.9%

Industrial metals  +17.6%

These two sectors had their best years since 2007 and 2009, respectively Gunzberg says.

“The comeback in these two sectors is meaningful because they are the most economically sensitive, and the last time these two sectors were up this time together, they led commodities to return nearly 360% in the next eight years (1999-2007).”

Focus On Gold

Despite the sell-off in precious metals in the second half of 2016 –gold still closed out the year 2016 with an 8.5% gain.

Recent action: Since bottoming out at $1,2430 in mid-December, gold has gained 5.47%.

Do You Have An Investment Plan?

Gold prices are already starting to move higher. Is your portfolio properly diversified? Many investors are using the recent strength in stocks to book profits on the equity portion of their portfolios and use the proceeds to diversify into tangible assets. A Blanchard portfolio manager can help design an investment plan tailored to your personal goals. Call us at 1-800-880-4653.

Read More:

10 Coins That Gained More Than 100% In Value In 2016

How To Buy Precious Metals and Rare Coins

There’s no question that 2016 has been one of the most interesting and surprising years for every market across the globe. In US equity markets during the beginning of the year, January and February were home to some of the most consecutive violent selloffs and volatile trading days in history.

Major US indices plunged 10% in a matter of days, and this launched everybody’s favorite precious metal, gold, into a tremendous month long rally before it finally plateaued.

About five months later, in the early hours of June 24^th, the United Kingdom voted in favor of withdrawing from the European Union which caused the British pound to suffer its worse intraday loss in history. Major US, European, and Asian stocks also suffered brutal beatings before US index futures temporally halted trading on the CME due to the relentless selloff.

Because an event like the UK leaving the EU (Brexit, as its colloquially called) has never happened before, volatility and gold saw some of their biggest rallies since the infamous collapse of Lehman Brothers in the midst of the 2008 financial crisis. After it was determined to be highly implausible for the UK to remain in the EU, gold rallied more than 8% while volatility spiked a whopping 70%.

Shortly after this Brexit induced selloff in global stocks and currencies, almost every large cap index fully recovered and made new highs within a matter of weeks; to many investors, this rally displayed the tremendous strength and resilience of an almost decade long bull market. Moreover, despite much of the fear rapidly draining out of the marketplace during the global equity rally, gold continued to make new yearly highs and stayed well above $1,300 until the beginning of October.

Markets around the world were fairly quiet until November 8^th came around. Throughout the night of November 8^th as votes slowly poured in to determine the next president of the United States, the main US stock index futures (S&P, Nasdaq, & Dow) began free-falling in unison before trading was eventually halted to stop the carnage; the similarities between Brexit and the US election are shocking.

Of course, investors flocked to gold for safety, and gold futures traded all the way up to $1,338, which was 20 dollars higher than the final closing price during Brexit. However, something very interesting happened in the middle of the miniature stock market crash that night. Sentiment completely changed when news broke that the famous billionaire activist investor Carl Icahn left a celebration party early to buy $1 billion in US stocks.

Like a volcano erupting from the ground, the S&P 500, Nasdaq 100, and Dow Jones futures all shot up with so much velocity that investors didn’t physically have enough time to cover their hedges and short positions. This 5% reversal in only a few hours was likely one of the biggest in recent history besides the flash crash in 2010. Needless to say, the rally in gold was short lived and the precious metal barely finished positive for the trading day. Additionally, in the fixed income market, the 30-Year US Treasury Bond futures plummeted as a result of the unexpected election outcome.

Since then, US stocks have enjoyed quite a healthy month-long rally with only a few negative days. As for the precious meals, gold and silver pared most of their event driven gains. For all of 2016, however, gold is still up around 9% which is an extremely decent year-to-date ROI.

Moving forward, many analysts and market pundits are completely unsure of what effect the new year and new president will have on markets. It is interesting to note, however, that in times of widespread uncertainty, like starting a new year with unprecedented political and economic forces, it pays (quite literally) to own risk averse assets like gold.