Following Donald Trump’s presidential election victory, renowned economist Peter Schiff is advising investors to buy the dip in gold and gold mining stocks. Schiff believes that Trump’s economic policies will lead to a resurgence of inflation, echoing concerns expressed by many economists.
Schiff’s prediction hinges on his belief that tax cuts, a hallmark of Trump’s economic strategy, will be coupled with an inability to achieve substantial spending cuts. He draws a parallel to the Reagan era, suggesting that even a president known for his fiscal conservatism ultimately struggled to significantly reduce government spending.
“The best Trump trade now is buying the dip in gold and gold mining stocks,” Schiff stated on X, formerly known as Twitter. “Cutting taxes is easy. We know from experience that substantive spending cuts are impossible. Even Reagan couldn’t do it, despite making greater promises to do so. Trump will make inflation great again.”
This outlook is corroborated by a recent Wall Street Journal survey, which found that 68% of economists anticipate higher inflation under Trump’s economic policies compared to those proposed by his opponent, Kamala Harris. This represents a significant increase from a similar survey conducted in July, where only 56% of economists predicted heightened inflation under Trump’s policies.
The survey, conducted between October 4th and 8th, revealed that only 12% of economists anticipated higher inflation under Harris’s proposals. This suggests a strong consensus among economists that Trump’s policies are likely to lead to greater inflationary pressures.
In addition to his views on inflation, Schiff’s advice to buy gold is further supported by the recent decline in major gold mining stocks. Barrick Gold (GOLD), Newmont (NEM), and Royal Gold (RGLD) all saw declines of over 2% on Wednesday. Gold spot prices also dropped, trading at $2,656, down 0.09%. This dip presents an opportunity for investors looking to acquire gold and gold mining stocks at a lower price point.
It remains to be seen how Trump’s economic policies will ultimately impact inflation and the gold market. However, Schiff’s advice, backed by a growing consensus among economists, suggests that gold could be a valuable hedge against potential inflationary pressures in the coming years.
