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Topics: General Base Metals / General Energy / General Market Commentary / General Precious Metals

Sprott's Thoughts November 2016 - Strategy Report

Sprott's Thoughts

November 2016 - Strategy Report

Strategy Report

Donald Trump’s victory in the 2016 United States presidential election has sent deep tremors through the political and financial landscape, both in the U.S. and around the world.  While we leave debate over future implications for financial markets to the markets themselves, we offer a few observations about relevance of the Trump victory specifically to precious metals.

The overwhelming implication of Trump’s shocking “upset,” is the glaring disconnect between harsh realities of broad American experience, on the one hand, and the increasingly “out of touch” focus of mainstream media, Wall Street analysis and Washington insiders, on the other.  As was precisely the case with Brexit, American elites appear to have lost sight of fears and concerns motivating Main Street.  In an electoral college in which 270 votes take the day, election-eve forecasts for Secretary Clinton’s likely electoral votes (330-350) were off by a range of 100 to 120 votes, a staggering misread of national sentiment. 

In Figure 1, below, we offer two visual depictions of the 2016 U.S election map, each organized by county.  On the left, a simple county-by-county map demonstrates President-elect Trump’s geographic sweep exceeded 85% of the more than 3,000 U.S. voting counties.  On the right, a three-dimensional relief map of population densities reveals how Secretary Clinton’s tiny share of U.S. geographies actually commanded a majority in the aggregate popular vote (by more than 1.5 million votes at last count).  The several decade trend for big city elites (and their constituencies) to dictate political and economic policies for the nation as a whole may have reached an inflection point!  We would argue that Fed policies favoring banks and holders of financial assets are a significant component of the status quo rejected by the 2016 American populist voice.  Simply put, Fed-induced financial-asset inflation has not trickled-down to the masses, as in prior iterations, and the collective has now registered their objection in no uncertain terms.

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