Written by Border Gold     October 30, 2017

This week could be an interesting one, as news hit over the weekend that the special counsel investigation, led by Robert Mueller, has filed the first charges in its investigation of possible Russian collusion in the 2016 U.S. Presidential election. The first indictments could come as early as Monday, and speculation over the weekend of who the target or targets may be has been rampant.

Anyone charged could be taken into custody as soon as Monday, and the initial charges could potentially be just the first wave of more to follow. Of particular note is the fact that the charges were approved by a grand jury, who felt there was sufficient evidence in the case to proceed. Prosecutors will typically only bring charges before a grand jury if they feel strongly about the case and the likelihood of a conviction. The initial charges have come much faster than many had expected, just five months into the special investigation.

It remains unclear how an indictment may affect financial markets. Of course, the target of the initial charges could be extremely important. Some analysts have suggested that the initial target or targets could be used to “flip” on others also possibly involved. Whatever the case may be, these could be the first dominos to fall and with any cooperation, the case could move ahead at an accelerated pace.

As the case moves forward, President Trump will either eventually be totally vindicated or shown to have been somehow complicit in the collusion. A complete vindication could potentially fuel further gains in stocks, as it would allow the President to move forward with his agenda of tax cuts and fiscal spending without the dark cloud of suspicion hanging over the administration.

If further investigation does point towards Mr. Trump or key members of his administration, appetite for risk could take a significant dive and stock markets could decline dramatically.

The gold market this week will also be on the lookout for President Trump’s announcement on who will be the next Fed chair. As it stands right now, Jerome Powell is said to be the favorite. Powell is considered to be someone who likely would not rock the boat and who would essentially stay on the current path that has been laid out regarding monetary policy.

Of course, any surprises could potentially have a significant impact on markets. Another possible choice, Stanford economist John Taylor, is viewed as being significantly more hawkish and would likely advocate strongly for tighter monetary policy and higher rates. A Taylor appointment could shake investor confidence, and potentially fuel selling in stocks and other assets.

Gold prices are approaching some significant support levels and buying activity may pick up on the current dip in price. This week could have major implications for investors, and perceived safe haven assets like gold could potentially see renewed interest. In addition to domestic issues, the global geopolitical backdrop remains supportive for gold as well, as issues from North Korea to Catalonia may keep a degree of risk aversion present in the marketplace.