Trump Won but Gold & Silver Lost

Impact of Trump's Election Victory on Gold and Silver Prices

Trump won the Presidential election. Republicans have taken control of the Senate. They may have won a majority in the House too. Following the news, Gold and Silver were hammered lower. Some say it was the jump in bond yields and the DXY. Others focus on Trump’s plans to cut the fiscal deficit, thereby reducing inflation. While Trump and Musk say they will reduce spending by $2 trillion, seeing is believing. On the other hand, Trump plans to cut income taxes and corporate taxes to boost the economy. He also plans to significantly raise tariffs on imports. He also expects a friendly Fed. All of which are extremely inflationary. The last time Trump won in 2016, Gold and Silver soared. In summary, while the election results may have been a catalyst for the drops in precious metals and miners, they weren’t the cause.

Gold and Silver Market Peaks Before Elections

Gold peaked on Oct. 30 at $2802. Silver peaked on Oct. 22 at $35.07. GDX topped out at $44.22 on Oct. 22 also, the same day as Silver. No surprise there given that Silver and GDX are near perfectly correlated. All peaked before the election.
So what did cause the fall in the metals and miners? There are many possible triggers, but all of them relate to human behavior and sentiment. I’ll use Silver to illustrate, but the same goes for Gold and GDX.

Technical Analysis of Silver Price Movements

SILVER

Weekly Chart

Silver was extreme overbought on Oct. 22, and all the indicators were negatively divergent.

Daily Chart

The exact same on the daily chart as on the weekly.

4-Hour

The same on the 4-Hour chart as well, coupled with trendline resistance.
In a proverbial nutshell, Silver was extreme overbought and negatively divergent across multiple timeframes while running into trendline resistance.

Sentiment, COT Data, and Future Market Trends

SENTIMENT

Now add sentiment: Silver was extreme bullish on Oct. 22, the most since the peak on May 20 at $32.75. It was also negatively divergent.

COT DATA

Pile on positioning also: On Oct. 22, the Banks’ net short position reached its highest level since Aug. 2016, when Silver peaked at $20.84 and proceeded to fall to $15.68 by Dec. 2016, a drop of 25%.
The Funds had their biggest net long position since March 15, 2022, when Silver peaked at $27.50 and then fell to $17.40 in Aug. 2022, a drop of 37%.
As an aside, given the peak at $35.07, and using just 25% for the drop in Silver, that would target $26.30 for the bottom.

TREND

As for the strong upward trend, if we get a lower low below $30.34, then the upward trend is in doubt. Then a lower high, followed by a lower low, turns the trend down. Unfortunately, we had to suffer $5 down from the peak to consider a change in trend. Extremes in technical, sentiment, and COT data were far timelier.

Secure your wealth—invest in gold and buy silver today to protect against market volatility and inflation. Safeguard your future now!