Gold Isn't a Red or Blue Investment: It's Shiny Yellow

If you've been glued to the political news in recent weeks, you aren't alone. In the past two weeks, Americans witnessed a number of seismic political events from the assassination attempt on former President Trump to President Biden's decision to bow out of the presidential race.

The stock market is spooked. The S&P 500 is down over 4% and the tech-heavy Nasdaq has tumbled 7.50% in the past couple of weeks.

As we move toward the November presidential election, politics will continue to dominate the news cycle. The high level of uncertainty and political instability will continue to hold a tight grip on the American psyche and our economy.

As a precious metal investor, have you been wondering: does gold perform better under Democratic or Republication administrations?

While it's often economic factors like the level of the U.S. dollar, interest rates and inflation that drive the price of gold, the precious metal also serves as a safe haven investment.

Throughout history, gold has performed strongly during historical crises of any kind—from military, financial and economic to political—and that strong performance has occurred irrespective of the party that controlled the White House.

New research confirms that gold is not a red or a blue investment. Indeed, gold returned stellar gains for precious metals investors under both Biden and Trump. Let's look at the research.

The World Gold Council discovered that "gold did well during both Trump and (so far) Biden presidencies through a combination of policy decisions and broader global macroeconomic drivers."

In fact, "gold rose by 60% during Trump’s presidency - increasing by nearly 30% pre-COVID and slightly over 30% during the pandemic. Under Biden, gold moved sideways initially, but has gained more than 30% during the term so far, primarily due to broader macro factors and central bank buying," the WGC said.

While we don't know what lies ahead, we can be certain that there will be some unexpected events that captivate Americans in the months ahead.

Beyond politics, geopolitical risks remain high and could also serve as a trigger for a fresh move higher in gold.

Blackrock, one of the world's largest asset management firms, pointed to potential risks this year which include a major cyber-attack, a major terror attack, and U.S.-China strategic competition.

Any one of those events, if they were to occur, would encourage investors to turn to the safety of gold. Diversification into precious metals offers you the ability to protect and grow your wealth during both the ups and downs of our economic, political and market cycles.

One of the major reasons people buy gold is to protect themselves and their wealth against the unknown and the unexpected.

Gold and silver historically climb in value when other markets like stocks crash. Owning a percentage of your portfolio in precious metals helps offset the losses that can occur in stock, bond and even real estate markets during economic shocks.

How much should you own? New research from the well-respected CPM Group stated that over the past 50 years, the best return of a portfolio including stocks, bonds, and gold was for portfolios that had around 25% – 30% of their value in gold.

The presidential election is heating up fast, and the stock market is already starting to melt down. Before stocks dive even more, it's worth considering if the time is right to increase your allocation to precious metals. If a stock market collapse begins in earnest, it will be too late to get your money out of the market and protect it with gold.