Gold Price Surge Linked to Trump-Era Policies, Franco-Nevada CEO Claims
NEW YORK, May 16, 2024 – gold’s recent rally is considerably tied to economic policies enacted during the Trump governance, according to Paul Brink, CEO of Franco-Nevada corporation, a leading gold-focused royalty and streaming company. Brink stated that the previous administration’s fiscal policies and geopolitical approach created an habitat conducive to gold’s price appreciation, a trend continuing to benefit the precious metal today.
The connection between Trump-era policies and gold’s performance stems from increased government spending,tax cuts,and a more assertive foreign policy stance,all contributing to a weaker U.S. dollar and heightened global uncertainty.Thes factors historically drive investors toward gold as a safe-haven asset. With gold currently trading near record highs, understanding the underlying drivers - including the lasting impact of past political decisions – is crucial for investors and policymakers alike. The implications extend beyond the financial markets,influencing inflation expectations and broader economic stability.
Brink highlighted the impact of the 2017 tax cuts, which boosted economic activity but also increased the U.S. national debt. “The fiscal stimulus under the Trump administration, while initially positive for growth, ultimately contributed to a larger deficit and a weaker dollar,” he explained in a recent interview. “A weaker dollar makes gold more attractive to international investors.”
Moreover, the former administration’s trade disputes and geopolitical tensions, particularly with China, added to market volatility and fueled demand for gold as a hedge against risk. Brink noted that this environment encouraged central banks globally to increase their gold reserves, further supporting prices. “central banks were actively diversifying away from the U.S. dollar, and gold was a natural beneficiary,” he saeid.
Franco-Nevada, which holds a diversified portfolio of gold and other precious metal royalties, has benefited directly from the price increases. The company reported strong first-quarter results, driven in part by higher gold prices. Brink anticipates continued support for gold prices,citing ongoing geopolitical risks and the potential for further U.S. dollar weakness. He emphasized that the legacy of the Trump administration’s policies continues to shape the current economic landscape and, consequently, the gold market.