With the recent FBI investigation, the tides in this presidential election have once again shifted. While it still may be a long shot, Donald Trump has a good chance to be sworn into office in January.

Just how much of a shot does The Donald have at winning the election? That varies widely depending on where you look.

Hillary’s Narrowing Lead in the Polls

Polling averages from Real Clear Politics show that the odds favor Clinton only slightly over Trump. The margin has narrowed since the FBI reopened its investigation into Hillary’s emails.

Hedge Your Portfolio Against A Trump Surprise Victory

Trump vs Clinton

Of course, the sentiment of the popular vote that polling captures isn’t the deciding factor in a presidential election.

In three US presidential elections—the latest being Bush/Gore in 2000—the candidate who won the popular vote did not become president.

In two other elections, a tie led to the president being selected in the House of Representatives. In other words, in 5 out of 43 (or roughly 12%) of US presidential elections, the victors arrived in office in some fashion other than winning the popular vote.

The Deciding Votes

It’s the race to a majority of 270 Electoral College votes that decides the election. If you factor in Trump’s chances of taking key swing states like Florida with 29 electoral votes or Pennsylvania with 20 electoral votes, it looks like more of a long shot.

Nate Silver’s latest projections on fivethirtyeight.com give Trump only a 35.2% chance of winning enough Electoral College votes.

Hedge Your Portfolio Against A Trump Surprise Victory

Don’t Be Fooled by the “Wisdom of the Crowds”

Then there’s the betting market odds that supposedly convey the “wisdom of the crowds,” taking into account more than the whims of a snapshot poll. According to the PredictWise model that factors in betting odds, Clinton still has an 84% chance of winning the election.

Hedge Your Portfolio Against A Trump Surprise Victory

The betting markets are confident that Hillary will win, even with the current FBI investigation. But before you side with the “smart money” bets on Hillary, perhaps you should recall how wrong the bookmakers got it with the Brexit vote in June.

Some bookies had odds that Britain would vote to leave the European Union at less than 10%. Yet the unthinkable happened.

Bookmakers aren’t in the business of predicting outcomes. The goal of the bookie is to make money no matter the outcome. A bookie shifts odds based on how people are betting in order to balance their risk. Therefore a few big bets can easily skew the odds as they did with the Brexit vote.

And it appears that a few high-rolling Hillary backers may be skewing the betting odds in her favor as well.

Markets Fear Uncertainty

There has been a lot of violence surrounding Trump rallies over the course of the campaign, which could have created a pool of supporters willing to pull the Trump handle in the voting booth but not admit it to the pollsters.

Trump is an outsider who brings change and uncertainty. It doesn’t matter what model you look at, his chances according to polling, forecasting, and betting odds have all improved since the FBI reopened its investigation.

So I wouldn’t totally discount Trump living in the White House next year.

The markets have made their distaste for Trump abundantly clear. The CBOE Volatility Index (VIX), the so-called “fear index,” has jumped over 30% since the news broke.

The S&P 500 is down 1.4%, and gold is back above $1,300 per ounce for a 2.4% gain in a matter of a few days.

How to Hedge

Regardless of your political beliefs, it would seem prudent to at least hedge your portfolio against a surprise Trump victory—and gold is the obvious choice.

Gold has long been a hedge against political uncertainty, and if there’s one thing we’ve learned from the campaign trail, it’s that Donald Trump is unpredictable.

In the first debate, Trump attacked the Federal Reserve for intervening in politics and keeping interest rates too low. But he also said, “When they raise interest rates, you’re going to see some very bad things happen, because they’re not doing their job.”

Trump wouldn’t be able to replace Yellen as the Fed Chair until 2018, but he could still shake things up if he continued to be outspoken about Fed policy while in office.

It’s unclear what Trump thinks the Fed should do. Regardless, a president meddling in the affairs of Federal Reserve monetary policy should be supportive of gold.

There is also a lot of uncertainty about Trump’s policies. Both candidates have expressed protectionist trade policies that could damage economic growth.

Trump has maintained a harsher tone against trade agreements and has even pledged to build a wall on the Mexican border. If he somehow is able to follow through on the plan, something tells me he won’t get Mexico to pay for it.

He has also pledged to spend $1 trillion on infrastructure, more than double Hillary’s plan and without raising taxes. The plan calls for private funding to cover $167 billion of the spending, with the government offering a tax credit on the equity investment.

The remaining balance would be fronted by the government and almost certainly cause the budget deficit to soar. Another positive for gold.

Fear not, if the “smart money” turns out to be right with their bets on Hillary, then there’s $50 trillion in cash on the sidelines that could also support gold prices.

No matter who wins the election, gold is a smart place to invest.

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Article By Jake Weber, Garrland Research