How to Trade the US Election if Trump Loses

We’ve been talking about the ‘Trump Trade’ for over a week now.

The trade is based on the premise that if The Donald wins the US election, this will send shock waves across the world.

The majority — having bought into mainstream news polls — will be in disbelief.

During the initial period of uncertainty gold — classically a safe haven asset — should surge, while stocks will probably sell off. But you need to ask yourself, what if The Donald doesn’t win?

Although I still expect Trump to pull off an ‘upset’ victory, it’s a possibility that you must consider. It would very likely change the outcome of your trade.

I’ll take you through the details…

Get ready for a ‘rigged’ election?

Although the popular vote should be on Trump’s side (check out the numbers attending his rallies compared to Hillary’s), he could still lose the election.

Guccifer 2.0, who claimed to be behind the hacking of the nearly 20,000 Democratic National Committee emails, warns that the election will be rigged. The renowned hacker wrote on his blog on 4 November:

I’d like to warn you that the Democrats may rig the elections on November 8. This may be possible because of the software installed in the FEC networks by the large IT companies.

As I’ve already said, their software is of poor quality, with many holes and vulnerabilities.

Guccifer 2.0 isn’t the only one voicing concerns. Julian Assange, the founder of WikiLeaks, told the Russian Times on 4 November:

My analysis is that Trump would not be permitted to win. Why do I say that? Because he has had every establishment off his side. Trump does not have one establishment, maybe with the exception of the Evangelicals, if you can call them an establishment. Banks, intelligence, arms companies, foreign money, etc. are all united behind Hillary Clinton. And the media as well. Media owners, and the journalists themselves.’

The mainstream media — including The New York Times, CNN, CNBC, MSNBC, the Washington Post, and in Australia The Age and Sydney Morning Herald, are all convinced that Hillary Clinton will win. In my opinion, that’s because most of these ‘unbiased’ news outlets are bought and paid for by the political and banking elite.

You only have to tune into the evening news or open your morning paper to witness their artful ‘brainwashing’ in action…rightly or wrongly attacking Trump, and forever defending the Democratic candidate. Make no mistake. This will sway many voters.

In addition, most of the political polls have swung Hillary’s way for months. Here’s the latest New York Times poll:


Source: The New York Times
Click to enlarge

With a 2.3% lead in their poll, The New York Times is giving Hillary an 84% chance to win the election. You’ve got to wonder who came up with that number…and how?

And you’ve got to wonder just who responded to the poll. I doubt there’s a poll in existence that accurately reflects the ‘silent majority’ vote.

Remember, most polls also said that Britain would ‘remain’ in the European Union. And we all know how that turned out.

That said, some people watching the polls may be discouraged to vote. They’ll think, what’s the point in bothering to vote if Hillary is going to win anyway?

The bottom line: Hillary could easily win the election. Remember, the political elite and their powerful backers want to hang onto their power for as long as possible. And the best way for them to do that is to maintain the status quo by electing another Clinton.

Trading a Hilary Clinton victory

If the establishment candidate wins, I recommend reversing your ‘Trump Trade’. In that case, stocks should rally and gold should fall. That could be a great short term trade.

The Clinton campaign is financed by the major investment banks and hedge funds. Historically, the Clintons have served the bankers.

For example, the Clintons reversed Glass Steagall in 1999. The Glass-Steagall Act, also known as the Banking Act of 1933, was passed by Congress to stop commercial banks from engaging in the investment business. It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression of 1929–33.

The reversal of Glass Steagall led to a massive stock bull market, ending with the Global Financial Crisis of 2008/09. On the way, the investment banks reaped billions.

In my view, if Hilary Clinton becomes the next US president, we could witness the largest stock market rally in history.

Regards,

Jason Stevenson,
Resources Analyst, Money Morning

PS: Today we looked at the possible outcomes of a Clinton election victory. But if Trump wins, though, we’re likely to see a powerful move — gold up and stocks down. For more details on how to trade the uncertainty, go here.


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


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