How did Gold perform during recessions?

A recession in US seems likely, but will Gold be a good asset to own if a recession hits? 

Recession is defined as a significant, widespread and prolonged downturn in economic activity. Usually many will term that a country is in recession if there are 2 consecutive quarters of decline in GDP.

Currently, US is not in a recession yet, but many analysts have mentioned that a recession is a very likely scenario if the Fed continues their aggressive stance of raising interest rates to combat inflation. Higher interest rates will increase the cost of borrowing, businesses and consumers will likely cut back on their spending and hiring which will in turn lead to less economic activities.

If US goes into a recession, the popular investment portfolio of holding majority equities might be greatly challenged and many would look at diversifying into other asset classes to tide through this period.

Gold during past recessions

From the above past recessions after the Bretton Woods system collapsed (USD no longer pegged to Gold after 1973), Gold has held up well during recessions except during the Iran & Volcker recession.

Gold seems to have put up a good case for investor to consider especially if the US economy goes into a recession. Will you be looking to add some Gold into your portfolio this period as a safe haven asset?

If I wish to, how much of my portfolio should I then look to allocate to precious metals? This might be the question that you would like to ask. Fret not, we will touch on this in one of our articles, so stay tuned or alternatively, email us at [email protected] or speak to us at +65 62229703 and we will be more than happy to work on this together!

Always remember that periodic management of an investor’s portfolio is important as this will ensure you keep track of your investments and allocate your funds to the asset class that might provide you with a higher return during that period! Also, never put all your eggs in one basket, especially during periods of uncertainty in the economy.

 

 

Disclaimer

Please note that past performance is not indicative of the future or likely performance of Gold. This is merely for information and data contained in this article has been obtained from sources believed to be reliable, but GSC makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose. Please note that none of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell Gold.

Any expression of opinion (which may be subject to change without notice) is personal to the author and the author makes no guarantee of any sort regarding accuracy or completeness of any information or analysis supplied.

 

 

Brian