Bullion investors took a breather when Donald Trump was elected in 2016. Demand for coins, rounds, and bars fell significantly on the day after election day and stayed down for the next 3 years.

After 8 years of Barack Obama, ultra-loose fed policy and a historic run-up in the national debt, investors felt things would get better under Trump.

Today, as we near the end of Trump’s first term, demand for physical precious metals has spiked. The COVID scare and the associated monetary and fiscal stimulus coupled with widespread social unrest has gold and silver bugs stocking up once again. Along with them, an entirely new wave of investors and savers has entered the markets

Politics are a big driver in the bullion markets. What can people expect when the voting is done in November?

Trump’s victory in 2016 caught many by surprise, and there could be another surprise this time around.

But we’ll leave the 2020 election forecasting to others and focus on the potential implications for the bullion markets.

Should Trump win, the question will be whether investors breathe a collective sigh of relief once again and turn their attention away from safety and toward risk assets.

In the short run, investor psychology is more important than the facts. Trump’s first election did little to change the fundamental drivers behind gold and silver prices and demand…

…the Fed still prints too much, Congress still borrows and spends too much, and mining production of gold and silver is flat to declining. The reckoning for all of this is closer today than it was in 2016.

However, it might not matter that Trump has little control over the metastasizing national debt or that he is anything but fiscally conservative.

If Trump wins, gold bugs may simply be relieved that Joe Biden and Kamala Harris aren’t taking the reins of power. Their confidence could be boosted even as the Federal Reserve Note continues down the path to oblivion, just as it has over the past several administrations.

The circumstances around this election are different, however. A Trump victory would not catch nearly as many people by surprise.

Investors will also be able to respond according to Trump’s actual track record rather than to his campaign rhetoric.

Prior to his 2016 election, Trump was critical of the Fed for running such loose monetary policy. Since his election, the president has been lambasting Jerome Powell for not being dovish enough.

Bullion investors gave Trump a pass on fiscal policy during the first 3 years of his term, and the stock market rallied bigly.

But today’s multi-trillion dollar annual deficits may be tougher to ignore. If the current activity in the bullion market is any indication, investors are already very nervous.

Should Joe Biden win, on the other hand, we expect demand for physical bullion to surge. Gold bugs may shift from nervous to terrified.

The trouble with any new drivers for demand is that mints and refiners are already having trouble coping. If buying activity doubles or triples again, dealer inventory – particularly at Money Metals’ weaker competitors – will go from sparse to completely barren and premiums will go completely out of sight.

Anyone who thinks Biden has a good shot at becoming president should definitely stock up now.