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Here’s another thing almost everyone got wrong about the election...gold

One of the biggest consensus buys on a Donald Trump win is tanking, leaving many investors puzzled.

Given the unknowns of a Trump victory, analysts forecasted gold to rise as it did following the British vote to leave the United Kingdom in late June, out of sheer fear and uncertainty. But it sank to its lowest level in five months.

What happened? Well, investors may in fact feel more confident, rather than skittish, in these first few days following Election Day, abandoning bullion for equities. The Dow Jones industrial average hit an all-time high on Monday. So the key may be to sell gold, at least for now, according to some strategists.

"I look at gold and say, from a trade, near term, maybe you get a little bounce. Stay away from it. Rates are going higher. We are clearly in a risk-on environment right now. We're seeing that rotation occur," David Seaburg, head of sales trading at Cowen & Co., said Friday on CNBC's "Trading Nation."

"You can't really paint a picture to own gold for the long term here."

Indeed, Stanley Druckenmiller, billionaire investor and chief executive officer of Duquesne Family Office, told CNBC last week that he sold all of his gold "on the night of the election." Back in May, gold was his firm's "largest currency allocation," and at the time he urged investors to get out of equities.

Following Trump's win, the hedge fund titan, who said he did not support Trump or Hillary Clinton in the race, told CNBC's he feels "optimistic" about the U.S. economy.

For Stacey Gilbert at Susquehanna, gold remains a holding in some personal accounts, as a hedge. She said she liked Direxion's gold miners ETF (NUGT).

"But a lot of that was heading into the 'Trump trade' here, if you will. The thought was, he could be very inflationary. We could have some concerns that the real rates are actually going to go negative, that everything is going to get crazier," Gilbert said Friday on CNBC's "Trading Nation."

Gilbert noted that the likelihood of both the Brexit vote and the Trump win was vastly underestimated by the marketplace, and that gold was sought after as a protective hedge, though neither case was a real "boogeyman, or at least that we've seen thus far."

The Gold Miners ETF (GDX) fell over 16 percent last week, for its worst week in eight years.

In the longer term, Gilbert said, "we don't know enough to figure out if we really do need to be concerned about negative real rates, and if we really do need it for an inflationary perspective."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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