Gold News

Gold Investment: What's the Impact of a Deep Recession?

How would those who've made a Gold Investment fare if things got really bad...?

ASIDE from Mayan prophecies, many of the senior Casey Research staff believe that economic, monetary, and fiscal pressures could come to a head this year, writes Casey's Big Gold editor Jeff Clark.

The massive buildup of global debt, continued reckless deficit spending, and the lack of sound political leadership to reverse either trend point to a potentially ugly tipping point. What happens to our investments if we enter another recession or – gulp – a depression?

Here's an updated snapshot of the Gold Price during each recession since 1955.

Clearly, one should not assume that gold will perform poorly during a recession. Even in the crash of 2008, gold still ended the year with a 5% gain. And with the amount of currency dilution we've undergone since that time, it seems more likely gold will rise in any economic contraction than fall. 

Indeed, if the response of government to a recession is more money printing, precious metals will be a critical asset to have in your possession.

Even if the Gold Price ends up flat or down this year, the CPI won't. Gold's enduring purchasing power is why we hold the metal.

How about gold stocks?

In spite of the debilitating 1970s that suffered from stagflation, price controls, three recessions, and the Vietnam war, gold producers rose over 600% while the S&P was basically flat. And that includes a roughly 65% fire-sale correction, much like we saw in 2008. 

To be clear, gold and silver stocks won't be immune to selloffs if a recession or worse temporarily clobbers our industry. But in the end, we at Casey are convinced they will prevail.

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JEFF CLARK is editor and lead writer of BIG GOLD, the monthly gold-investment newsletter from Doug Casey's Casey Research. Having worked on his family's gold claims in California and Arizona, and analyzing the big trends in gold's bull market, Jeff and his team aim to highlight safe and profitable ways for the prudent investor to capitalize on today's long-term rise.

See full archive of Jeff Clark.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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