Should you invest in gold before a recession?

Although there is no certain way to predict the future, it is likely that the United States will enter a recession as we approach 2023. At least, that’s what experts say.

actually, According to the Conference Board of Business think tanks, There is a 99% chance of a recession within the next 12 months. The Federal Reserve has also predicted a recession later this yearAlthough a “gentle one.”

With this data in mind, it may be a good time to reevaluate your investments and focus on protecting your assets. Gold, for example, has long been known as a Safe haven investment. It happens A smart hedge against inflationAnd many experts recommend Bought it before the recessionvery

Should you follow that advice? Below, we’ll break down what you should know about investing in gold ahead of a potential downturn. Start exploring your gold options by requesting a free Investor Kit now

Why you might want to invest in gold before a recession

Many experts say just before the recession Best time to invest in gold. There are several reasons for this. for one, Its value remains constant Or, often, even increases during these down periods. Because investors flock to the safety of gold, which drives up its price — and your income.

“When economic uncertainty arises, gold can provide stability and hold value because it typically correlates inversely to traditional assets like stocks and bonds,” said Andrew Latham, a certified financial planner and editor at Super Money. “This means that when markets struggle, gold prices often rise.”

Gold is also a good way Your portfolio is diversified And spread your exposure across many asset classes. Think of it like an insurance policy: if your investment in the stock market falls but gold prices remain flat or rise in value, it can mitigate or even completely offset your losses. Case in point: According to the global asset management firm SchrodersGold has outperformed the S&P 500 by 37% during recessions.

“If we crunch the historical data for gold and silver movements, we find that gold and silver always converge before a recession begins,” said Shankar Sharma, an investment academic and founder of Risk Reward Returns. “Gold starts the rally, and silver follows.”

Finally, gold is essentially considered A liquid investment. It is always in demand and is a scarce resource, so it is usually easy to sell when needed. This can be helpful if you lose your job or suffer a sudden, unplanned expense.

Learn more about your gold investment options with a free information kit.

Why you might not want to invest in gold before a recession

Gold can outperform other investments during a downturn, but over the long term, it typically doesn’t provide as many returns as higher-risk assets. So if you want to maximize your earnings and be really aggressive with your investment portfolio, gold may not be the right choice.

As Latham explains, “Gold does not generate income or dividends, so its returns depend only on price appreciation.”

Another downside is that you have to manage storage – at least if you want to buy physical gold. An option when storing it at home (as long as you don’t buy it in a Gold IRA), this can make you vulnerable to theft.

And if you are Using a gold IRA To purchase metal? You can only choose an IRA-approved depository for storage — plus, you must only purchase IRS-approved coins and bars.

Other Ways to Prepare for a Recession

buy gold A way to prepare for a possible impending recession. You should work the build up Your emergency savings Funds if you lose income or face other financial struggles.

Sharma recommends Paying off or consolidating any variable rate debt, too, because they can be difficult to budget for — especially during volatile periods. You can consider using a long-term, fixed-rate loan to consolidate them, which will give you a consistent monthly payment that you can always be prepared for.

Finally, if you’re not ready to buy gold, take other steps to diversify your portfolio.

“Preparing your finances for a potential recession involves building an emergency fund, paying off high-interest debt and diversifying your investment portfolio,” says Latham. “A well-balanced portfolio can help protect your assets during economic downturns and ensure you’re well-positioned for the recovery.”

Find out more with a free investment guide if you think gold could help.