With just a week to go before the US presidential election, there is growing speculation as to what a Biden or Trump win could mean for metals prices and the mining industry overall.
Gold prices have been performing well over the course of 2020 and for the duration of the COVID-19 pandemic, and analysts suggest that gold will continue to perform well regardless of who wins. Haywood Securities analysts noted on 23 October that “While there are many arguments over who will be the next US president, one thing most analysts appear to agree on is that the price of gold will be higher no matter who is in office.” Earlier this year, gold broke the $2,000 per ounce market, though has pulled back to around $1,900/oz more recently. The Haywood analysts have made a bull case for gold, suggesting that the fragile US economy and the ‘money printing’ stimulus measures have keep it at historically high levels.
Similarly, analysts at UBS have noted that investment demand for gold has kept prices high, and that they have noted cash flowing into bars, coins, and ETFs. “In [the first half of 2020], investment demand for gold, which consists of demand for bars and coins and inflows into gold exchange-traded funds (ETFs), accounted for nearly 56% of total demand. This ranks as the highest level over the last two decades and exceeds the previous record of nearly 46% in 2009.”
2020s historic rise in gold has supported exploration in the sector. Christopher Galbraith, analyst at S&P Global Market Intelligence noted that gold exploration budgets have remained relatively stable this year, while budgets for other metals dropped. “These strong indicators for near-term gold exploration, coupled with a still-strong gold price that is likely to set a new floor above estimated reserves prices, support the likelihood of continued strong gold exploration in 2021.”
Insider sources at the Biden campaign have noted that “A Biden administration would emphasize green energy, and in order to get more solar panels, you need more raw materials,” signaling Joe Bident’s support to boost domestic production of key metals for batteries, solar panels, and other products which are necessary for the global energy transition.
Both candidates are holding firm in their support to establish domestic supply chains for lithium, copper, rare earths, nickel, and other strategic materials, especially those that are historically imported from China. Sources from the Biden campaign confirm that he agrees with President Trump’s orders to encourage domestic mining, but that he opposes his anti-China rhetoric.
Part of Biden’s campaign platform has included a $2 trillion budget for electric vehicle infrastructure and other green projects which help to support decarbonization and climate change efforts. Biden’s policy advisers have met with coal industry executives and have noted a general understanding of the contribution of coal to communities within the US, however it is clear that Trump win would be better for the longevity of the coal industry. Biden’s policies are much more in line with clean energy efforts and in fighting climate change, including measures to completely cut fossil fuels from the US power mix by 2035. A Biden victory will certainly accelerate the decline of US thermal coal.