Investing.com — Both the and the are expected to benefit from Donald Trump's second presidency, according to strategists at JPMorgan (NYSE:).
Despite an initial negative reaction to the US election result, these assets are expected to thrive due to the continued “debasement trade”, according to strategists. This strategy should be supported by tariffs, geopolitical tensions and an expansionary fiscal policy.
“We do not view the gold market's initial negative reaction as a rejection of the 'debasement trade' in the event of a Trump victory,” wrote the strategists led by Nikolaos Panigirtzoglou.
“After all, bitcoin, the other component of the 'debasement trade,' rallied after Trump's victory. Rather, we believe this is a continuation of recent profit-taking.” , they added.
After a three-month surge from August to October, gold saw significant profit-taking this month, not only on Election Day, November 6, but also over the previous four days. .
According to JPMorgan, central bank activity is expected to be a significant driver of the gold price through 2025.
The Wall Street firm points out that central banks increased their gold reserves in 2022 after the outbreak of war in Ukraine and subsequent sanctions against Russia.
Although China's central bank halted gold purchases in April, JPMorgan expects tariffs and geopolitical issues to prompt central banks, including China's central bank, to shift away from U.S. dollar reserves to turn to gold.
Retail investors are also expected to continue supporting gold, as evidenced by increased purchases of bitcoin and gold ETFs since last summer. Strategists believe this trend is likely to continue through 2025, with retail investment patterns in October indicating strong embrace of the debasement trade.
“This has been seen in the upward trend in gold ETFs and spot bitcoin ETF flows since last summer, a trend that is expected to continue into 2025,” the strategists said.
Additionally, they pointed to MicroStrategy's aggressive acquisition program, known as the “21/21 plan,” as another likely tailwind for BTC, in addition to Trump's policies.
MicroStrategy Incorporated (NASDAQ:), the largest public company holding , plans to invest $42 billion in cryptocurrency over the next three years, with a $10 billion investment planned for 2025 alone.
