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How election uncertainty is impacting gold prices

Yahoo Finance’s Brian Sozzi and Ines Ferre break down the market action for gold with GraniteShares CEO, Will Rhind.

Video Transcript

BRIAN SOZZI: We're keeping our eye on the price of gold as the state of the president's health remains unclear and election uncertainty continues. Let's talk about it with GraniteShares CEO Will Rhind. Will, always good to see you here. So, listen, the stock market does not like uncertainty. But the flip side of that, that is good for gold. What's your latest thinking on gold?

WILL RHIND: Yeah, I think, you know, today, we're seeing a move upwards in the price. And that's positive, obviously falling on. Perhaps no surprise for people that follow the gold price with all the uncertainty around the president's health. But I think leaving aside that, it's more about stimulus. And I think, in terms of the election, we can already declare one winner today. And that is stimulus.

Irrespective of what happens in terms of who gets elected, I think that more stimulus is coming. And that's really what's underpinning the move in gold at the moment.

BRIAN SOZZI: Will, talk to us. Talk to us about the near-term price direction in gold. It's getting a bid today, sure. But do you expect it to spike into the election? And then what do the last few weeks after the election look like for gold?

WILL RHIND: Yeah, there was a bit-- obviously, the prices declined from the over 2,000 highs that we saw from months ago. And we tested that below 1,900 level, which, it didn't go down there for a really that long at all. So I think 1,900 seems to be that sort of resistance level. At the moment, obviously, we're firmly above that at the moment. So I think, leading up into election, we could easily reach $2,000 again. And obviously, towards the end of the year, I think it could be higher than that.

INES FERRE: Will, Ines here. What happens to gold should more members of Trump's administration test positive for COVID-19, or perhaps if members of Biden's group were to test positive?

WILL RHIND: I think, going back to what Brian was saying, it's really all about the uncertainty. Because with more kind of senior leaders of both administrations getting sick, that just creates uncertainty in terms of not just the immediate health consequences, but I think in terms of policy and potentially how they react to that and whether it changes anything from their stance vis a vis the virus itself.

So I think more uncertainty in terms of leaders getting sick, that's something that is almost guaranteed. And I think from that perspective, any more uncertainty means, typically, higher price.

INES FERRE: And what happens if there is a contested election?

WILL RHIND: Well, again, I think that's a huge question mark. And it's something that is sort of extraordinary to think about, that we could be in a situation where we don't know who the winner is for potentially up to a couple of months afterwards, which kind of, again, another use of this most overused word of 2020, "unprecedented," but an unprecedented situation. And so more and certainly, I think that is helpful to gold. Because while this that sort of, you know, vacuum of power, if you will, people will look to be more defensive. I think that means buying gold.

BRIAN SOZZI: Will, are there other metals investors need to watch out for, on the thinking, as gold spikes, these metals might also spike?

WILL RHIND: I think the one I talk about most is platinum. The reason being is because the other metals, i.e. Silver and palladium have actually done very well this year. Palladium is at or around kind of all time highs. The price of silver has gone up pretty significantly. But platinum is the one that, you know, trading still less than half the price of gold. Platinum for a long time used to trade above gold. It used to be a premium to the gold price. But now, less than half of the price of gold.

And I think that for people looking for a metal that may represent value in the complex outside of gold, that may be one to look at.

BRIAN SOZZI: And I guess, no surprise, Will, over the weekend, watching some TV, just trying to stay updated on the news, starting to see a lot more silver coin commercials pop up on TV, I suspect because of the uncertainty. How should investors go about trading what might be a near-term spike in prices? Is it an ETF? Is it buying a couple of thousand dollars worth of gold coins? How would you do it?

WILL RHIND: Well, in terms of trading the price, I would say-- and obviously, I'm a little bit biased-- but I would say the ETF is 100% the way to go. And a simple reason, because you can get in and out when you want. And it replicates the exact spot price of gold. If you buy coins, there's nothing wrong with buying coins. But you're going to pay a premium typically to the actual spot price to buy, and then, obviously, if you come to sell, the discount. They're not the most effective mechanism if you want to follow the spot price. But certainly something very nice to have.

BRIAN SOZZI: All right, we'll leave it there. GraniteShare CEO Will Rhind, always good to speak with you.

WILL RHIND: Thank you.