Democrats Take Congress? What Happens to Stocks, Bonds, Gold and Silver Next
Robbert van Batenburg, market strategist at The Bear Traps Report, tells Michelle Makori of Miles Franklin Media that investors are underestimating the market risks tied to the 2026 U.S. midterm elections. With less than four weeks remaining, he places the odds of Democrats taking the House of Representatives between 90 and 95 percent.
The Senate looks increasingly vulnerable as well. His baseline sees Democrats reaching 52 seats. Losses in farm belt states such as Kansas, Nebraska, and Iowa could push that number higher.
“As for the House of Representatives, the probability is between 90 and 95 percent that the Democrats will take control. As for the Senate, it also appears to be slipping increasingly from the hands of the Republicans,” van Batenburg said. He points to early voting data showing stronger Democratic enthusiasm, betting markets, and historical patterns. The president’s party has lost House seats in 20 of the last 22 midterms since 1938.
Trump is already reacting to farm belt pressure. High diesel prices have angered farmers after the elimination of the red diesel tax break. Van Batenburg notes that Trump reached an agreement with Putin for Russia to supply several million gallons of diesel over the coming weeks and pressed China to buy more U.S. crops. “The reason is simple: he is now worried about the farm belts.” Refining margins have been wide because oil can still exit the Strait of Hormuz while refined products face restrictions. A successful push to lower diesel prices would pressure refining stocks that have attracted momentum investors.
Pharmaceuticals have been strong this year but could face renewed price pressure if Democrats gain leverage and affordability remains the top voter concern. Housing stocks have been weak under high mortgage rates. Van Batenburg sees possible relief if Trump finds common ground with Democrats on homeownership measures after the midterms. His firm has been accumulating shares in Lennar, a Buffett favorite.
Immediate market reaction to a Democratic House and Senate may be muted. Markets often favor gridlock because less government action is usually better for asset prices. “I think the market generally likes political stalemate. They don’t want the government to do all these things. Less action from the government is usually beneficial to the markets.”
A surprise military strike on Iran remains a risk that could disrupt refined product supplies ahead of the holiday season. Trump could still act during a lame duck period or later, as veto power limits immediate congressional restraints.
Gridlock would likely cool interest rates. Divided government typically restrains spending growth. A debt ceiling showdown expected around January would force the Treasury to rely on extraordinary measures for months, limiting net new issuance. “If there is no new offering of Treasury bonds within a six month period, this is generally positive for interest rates.” Lower yields would support gold. “Gold loves low bond yields.” Van Batenburg also notes that the Federal Reserve has room to ease if oil pressures ease, and that foreign unease over repeated brinkmanship would further aid gold. He has cited a fair value estimate near $7,000.
Silver benefits from solar demand and data center construction. Lower bond yields and policy shifts that favor renewable projects could provide additional tailwinds even as political risks rise.
The larger threat lies beyond November. If affordability issues persist and Democratic Socialist candidates win statewide races in places such as Michigan, Minnesota, and Maine, the path to 2028 becomes clearer. Alexandria Ocasio Cortez has raised more money than any other House candidate this cycle and leads early Democratic nomination odds.
A 2028 victory by such a candidate could trigger massive new spending financed by higher corporate, wealth, and individual taxes, alongside efforts to restrict data centers and alter constitutional arrangements. “What these people want is to spend between 150 and 200 trillion dollars in the next ten years on redistributing social welfare.”
Markets would begin pricing that risk by late 2027, ending the wealth effect and creating a negative spiral of reduced investment and higher unemployment. “The biggest existential threat to a bull market is if we remain in this kind of environment where affordability remains a hot issue without a solution.”
Van Batenburg views the U.S. institutional premium, deep markets, property rights, and entrepreneurial culture as central to capital inflows. A successful Democratic Socialist agenda would challenge that premium. For now he sees near term stability under gridlock, opportunities in housing and silver, and pressure on refiners and possibly pharmaceuticals. The longer horizon is more uncertain if current trends continue.
