Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

A “Looming” Recession Is a Gold Golden Opportunity

Commodities / Gold & Silver 2019 Sep 13, 2019 - 02:33 PM GMT

By: MoneyMetals

Commodities

It’s the most widely anticipated recession in history. The recession hasn’t arrived yet – and may not do so anytime soon – but the mainstream media still can’t stop talking about it.

Consider this strange article from NBC News. It purports to show that young adults are posting dark, ironic memes to social media in reaction to a “possible recession looming.” It’s a possible, undated, undefined downturn of unknown severity that millennials are supposedly now coping with in advance!

CNN, meanwhile, sees “signs of a potential looming recession” – more severe in scope, presumably, than the network’s actual viewer ratings recession.



The free-flowing recession talk in the media can create something of a self-fulfilling prophecy.

If consumers and business owners begin to fear an oncoming recession, they may pare back spending and put capital investments on hold – which in turn will cause GDP to weaken.

“The snowball of a recession has begun to roll,” writes former U.S. Senator Judd Gregg (R). “When the mindset of American business shifts from expansion to defensive restructuring, a recession cannot be far behind. It becomes a self-fulfilling event.”

Trump Economy Slows… But Hasn’t Yet Slid

Some key indicators are pointing toward an economic slowdown:

  • Despite low official unemployment numbers across the board, jobs growth has slowed to its weakest pace since 2011.

  • Despite getting a boost from the Trump tax cuts, corporate earnings growth is now decelerating.

  • Copper and other economically sensitive industrial metals are showing relative weakness.

  • The Treasury yield curve recently inverted.

  • And, likely as a result of trade disputes between the U.S. and China, manufacturing activity has slumped to a multi-year low.

GDP itself its slowing. U.S. gross domestic product in the in the second quarter came in at 2% growth (down from 3% earlier in the year) – its second worst showing since President Donald Trump took office.

Still, it’s not an actual recession. Yet.

If a recession does hit between now and November 2020, President Donald Trump’s chances of getting re-elected will be slim.

That political reality isn’t lost on Democrats. They are practically begging for a recession! Some in the media are trying to engineer one through their propaganda campaigns aimed at manipulating mass psychology.

There is even a possibility that the Federal Reserve will sabotage the economy to hurt President Trump. Former New York Fed President William Dudley is explicitly urging Fed policymakers to withhold economic stimulus as a way of rebuking Trumponomics and tilting the election in favor of his opponent.

The Fed appears to be back in stimulus mode at the moment, however. The question is whether the so far tepid rate-cutting campaign will be enough to extend an already overextended economic expansion (officially the longest in history) through 2020.

Perhaps a few more injections of “monetary methadone” (as trends forecaster Gerald Celente dubs it) will send the stock market back to new highs and forestall the inevitable recession for another year or two.

If monetary planners take interest rates down to zero to prevent a recession, they will then have few conventional tools left in their toolbox.

They can potentially take rates below zero or invoke other emergency measures, but there will be strong institutional resistance to doing so until the economy and financial markets actually do begin to collapse.

The longer the Fed staves off the recession by inflating the economy with debt, the worse the eventual collapse will be. Investors should therefore be preparing for hard times ahead.

Which Hard Assets Hold Up Best During Tough Times?

Diversifying out of conventional financial assets is an obvious and necessary step. Hard assets can offer protection both from economic turmoil and inflation.

However, not all hard assets are created equal.

Some tend to correlate strongly with the business cycle and may therefore perform poorly during a recession. Others are more counter-cyclical and can benefit from a bad economy accompanied by safe-haven flight out of the stock market.

The premier safe-haven hard asset is gold. Prices for the money metal have gained during five of the past seven recessions that have occurred since 1970. In 2008, gold was one of the only alternative investment assets to show a gain for the year.

Silver is less reliable during economic downturns. It performed fantastically during the stagflationary 1970s. But in general silver tends to fare poorly when a bad economy causes demand from industrial users to weaken.

Rising investment demand can make up some of that decline. Silver is historically and foundationally a form of money. During a financial panic or currency crisis, the masses may rediscover its monetary utility. That makes silver more promising to hold during hard times than a straight-up industrial metal.

The other precious metals, platinum and palladium, have no real history of being used as money. Investment buying amounts to less than 3% of their total demand profiles (with the bulk of demand for platinum group metals coming from the highly cyclical automotive industry).

Not surprisingly, platinum and palladium face long odds during recessions. In fact, platinum prices have declined through the duration of six out of the last seven recessions.

One reason why things might be different this time: platinum just recently traded off a historically large discount versus gold. It could steadily close that gap until it regains a price premium over gold (which it last held in 2014).

If you are optimistic about the U.S. economy averting recession in the months ahead, then the white metals (platinum, palladium, and silver) will likely be your presently preferred precious metals holdings.

If you are less optimistic, or simply more risk averse, then you may find greater comfort in holding the time-tested universal hedge of gold.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules