By John McDonald
An impeachment vote that was bad news for President Donald Trump was good news for gold investors this December.
The yellow metal rose in value by a little over 2 dollars after the vote, while silver also rose in the wake of the results to $17 per ounce.
The impeachment vote was largely a forgone conclusion, which may be why gold values did not react as they usually do to events likely to create market volatility.
The president has been charged with obstructing congressional investigations and abuse of power, but the vote passed along party lines as was expected.
Now the process will move to the Senate, where most analysts believe it will ultimately die.
At present, the Senate has a republican majority, most of whom have been very clear about their intention to find the president not guilty of the charges.
However, a new wrinkle in the impeachment proceedings could send gold higher if it appears more conventions are likely to be flouted in the New Year during the next phase of the process.
This impeachment has already been slammed as a partisan move for political purposes, and now Democrat House Speaker Nancy Pelosi has further muddied the waters by threatening to hold the House-passed articles of impeachment against the president until the Senate agrees to certain procedural demands from House Democrats and commits to compelling certain White House staff members to testify.
As with anything that threatens market stability, these moves could certainly create unease in the minds of investors with large amounts of capital in stocks and bonds.
That could drive the price of gold upward over the holidays as media speculation runs rampant, vacationing members of Congress begin shoring up their bases and justifying their actions at home, and investors begin looking to diversify their portfolios.
History is certainly on the side of gold investors during an impeachment. In 1974 when President Richard Nixon was impeached, stocks collapsed and gold values soared after the details of Watergate began to emerge.
In 1987, President Ronald Reagan faced impeachment, and the rare coin index rose 665 percent while gold values rose as well. This happened even though President Reagan was never actually impeached.
The impeachment of President Bill Clinton had a slightly more chaotic effect on gold prices, likely because the event was so drawn out.
Although gold did hit a two-year high in September 1999, it had fallen by the end of Clinton’s second term.
This could be due to the failure of the Clinton impeachment proceedings and subsequent return to market stability following that failure.
With this impeachment attempt, gold investors should expect gold values to rise more steadily than they have during past impeachments because of the additional global uncertainties affecting investor sentiment.
The current president’s ability to negotiate a trade deal with China or work with the Fed to encourage ongoing economic expansion is likely to be viewed in light of how the impeachment is proceeding.
Throughout the process, however, it remains highly likely gold will move mostly sideways or upward.
That means stability and peace of mind for investors holding gold in their portfolios during this unconventional time in U.S. history.