What a Recession Could Mean for Gold Prices

through running Federal interest rate hikes And inflated prices for everyday goods, many Americans have worried about Chances of recession.

They’re not the only ones — the Federal Reserve itself has hinted in recent months that a recession could be on the near horizon. in Federal Open Market Committee Meeting Minutes From March, Fed staff wrote: “Given their assessment of the potential economic impact of recent banking-sector developments, staff projections at the March meeting included a mild recession beginning later this year, with a recovery over the next two years.”

And while the minutes of the Fed’s latest meeting last week have not yet been released, Fed Chair Jerome Powell made predictions press conference The latest rate hike announcement follows that this month’s forecast is likely to be “broadly similar”.

If an impending recession (even a “mild”) one has you worried about your finances, there are ways to protect yourself now. As an investor, diverse A portion of your portfolio is a good way to spread your risk so that you are not affected by market volatility. What’s more, investment “Safe haven” assets Like gold can add stability and even growth during periods of uncertainty.

Learn more about gold investment options today with a free information kit

What a Recession Could Mean for Gold Prices

Historically, gold price Stable during periods of recession – or even experiencing an upswing

Gold and gold equities have outperformed in five of the past seven recessions going back to the early 1970s, according to data from global investment manager Schroders.

“Looking at returns from the six months before the recession started to the six months after the recession ended, we see that gold returned an average of 28% and outperformed the S&P 500 by 37%,” a Recent reports to read

Given the historical data, it’s easy to see how the coming recession could be good for gold prices. What’s more, those who Prices are already rising. This year amid a decline in the value of the dollar due to stubborn inflation and a loss of confidence in the banking sector Bank failureMany investors are already flocking to gold, driving its price to all-time highs.

Use the map below to explore ways you can invest in gold now

Why gold is a good investment during a recession

While gold prices may rise through the coming recession, there are a few different reasons why gold does Good choice for investors during economic downturn.

For one, it’s a great way diversity. Because gold prices have an inverse relationship with the stock market, gold is a good way to hedge your portfolio weather market volatility that usually accompanies recessions. While you might not want to put all your money in gold — it doesn’t offer the same long-term growth potential as you might with traditional stocks and bonds — a Small allocation Can help you recover from the loss.

Another reason you might want to consider investing in gold is when the economy is uncertain Liquidity. Lenders often tighten their lending standards when times are tough, which can make it tough for everyone but them Highest credit score To borrow money or access credit. Since gold is a highly liquid asset, it can be an asset if you need cash flow. Unless you have a fully stocked one emergency fund To use when financial difficulties strike, cashing out your gold investment can help you get the money you need without relying on high-interest loans or even predatory lenders.

Learn more about gold investment options that may suit your investment goals with a free investor kit.

Bottom line

Gold is one Safe investment Many people see that as a Hedge against inflation And a good variety for Long term investment. But in times of recession, gold investors can benefit from rising gold prices as well as the safety that gold can provide. We can’t predict the future, but long-term investors know that periods of recession are an inevitable part of growing wealth over time.

If you’re looking for a way to add some security to your portfolio, consider whether investing in gold might be a good fit for your goals and investment plan. You can learn more about your options today with a free investment guide