Marking A New Metric?
As Nixon's presidency deteriorated, the gold price on world markets tripled. Thus the Nixon era is the first case study that can be examined in response to the question posed by our reader. The second case study involves President George W. Bush, who also faced a period of deteriorating approval that correlated with a noticeable gold price change.
These are the only two case studies that have some statistical basis; they are a very limited data set.
We have boiled this exercise down into three slides with help of Cumberland's Tom Patterson.The first slide shows all the presidential approval ratings from Richard Nixon to present.
Note how most presidencies start off with higher approval ratings, which decline with time under most circumstances. Also note how Donald Trump's starting point is lower than others, and note how his decline has been persistent. The persistence of decline is not unusual in history, but the rapidity of Trump's decline is an outlier in history.
Trump's starting point is lower than for the other cases in this study. Of the nine presidents in the study, and at this point in time in his presidency, Trump is clearly the least approved. Note that the rate of change of deterioration is intense.
Readers may also note that the reasons for approval declines are not listed—we are going strictly on the numbers. The reasons may be the subject of discussion and debate, but for the purpose of this analysis, we ignored them.
Whether it was Jimmy Carter and Iran’s detention of Americans or Donald Trump's nasty tweets and belligerent behavior, the causal nature of approval decline was ignored. It isn’t why approval declined that matters; it’s the decline itself.
The approval numbers are sourced from the American Presidency Project and Gallup data. The gold price data is from Bloomberg.
Nixon & Gold’s Price Change
The second chart here shows the Nixon shock and the change in the gold price at that time.
The depiction of gold prices is scaled vertically so that readers can see the rates of change in the gold price as opposed to its absolute level. Thus a gold price move of $80 to $160 has the same visual impact and spacing in the chart as a price change from $160 to $320. The horizontal axis is approval ratings over time, falling from left to right.
In chart two, we observe that the approval rating of Richard Nixon worked its way down below 40% and then accelerated downward as the Watergate scandal unfolded. Concomitantly, the gold price doubled. After Nixon resigned, gold traded at a range-bound level throughout the Ford and Carter administrations and until the very end of the Carter period, when the gold price rise became pronounced and accelerated.
Range-Bound Post Nixon
The third chart here shows the approval ratings of Reagan, Bush Sr., and Clinton. Gold was again broadly range-bound while presidential approvals fluctuated above the 40% threshold. Only when Bush Jr. became unpopular did we see his falling approval coincide with a steeply rising gold price. Why this happened is a subject for political speculation, but the statistical events are clearly observable in the data.
Under Obama and Trump, gold has again been range-bound, and approval ratings have fluctuated in the same 40%-plus levels as in previous range-bound periods. But now President Trump's approval level is falling below the threshold that has previously marked a significant gold price rise. That trend raises the specter of another upward price shift in gold.