A Biden victory might cause troubles for gold stocks

A full democratic cleanse would enforce legislation that would make it difficult and less profitable for mining companies, said Ryan Giannotto, director of research at GraniteShares. "It's going to be a very, very tough event for the mining industry as a whole, whether it's precious metals or diversified basic mining, when there is a full democratic cleansing. They are going to try to effectively stifle this type of economic activity," Giannotto said opposite Kitco News.

"The playbook here is what happened to the coal industry from 2008 to 2016. We saw massive job losses, production cuts, and several of the biggest coal miners, Peabody, Patriot and Arch, all filed for bankruptcy and had to start all over again. Giannotto said the Democrats were pursuing some sort of "Dodd-Frank-style environmental regulation" that, while not outlawing the industry, made it prohibitively expensive to operate. “Total bankruptcy is not necessary to drive these companies into bankruptcy. In reality, it is just a matter of barring them from access to capital, access to investors, that is one hand, the second is the direct regulation of them Activities to make them economically unprofitable, "he said, adding that restricting consumers would hurt producers too.

A Trump re-election would be more beneficial for the mining and extractive industries, said Giannotto. "It won't even be a matter of maintaining value, it will just try to survive until some kind of split government comes back," he said, should there not be a Trump re-election or a split government. However, the gold bar should still do well regardless of which party takes control of the White House, as gold has historically seen a boom for both Democrats and Republicans in the years following an election.

Over the past 50 years, gold has rallied an average of 30.7% in the 24 months following a GOP victory and 20.8% following a Democratic victory. Those returns range from 37.2% after 36 months and 34.1% after 48 months for GOP wins to 56.0% after 36 months and 98.1% after 48 months for Democrats wins. The reason gold outperforms GOP wins in its first 24 months is because it takes time for political expectations to take hold in the marketplace.