WOW! GOLD Prices Will Soar But SILVER Will Outperform after Recession - Mike Maloney & Jeff Clark
In a recent show featuring Mike Maloney and Jeff Clark, the discussion centered around the notably positive implications for gold investors in the current economic landscape. With a mounting volume of data signaling a looming recession, or possibly one already, how should one invest during these uncertain periods? What asset has a proven track record of shielding against economic downturns?
Reflecting on historical economic downturns, the conversation highlighted significant events and the performance of precious metals. The 1980 recession in the UK, where the economy slumped for five quarters, exhibited a considerable spike in silver prices during "Silver Thursday," followed by a subsequent price climb in the next year.
Examining the impact of the global pandemic, which induced substantial economic disruption globally, the conversation spotlighted silver's trajectory. Although the initial response saw a decline in silver prices, the rebound was attributed to significant investor demand coupled with increased industrial use as various sectors reopened. Over the past fifty years, silver has outperformed the S and P 500 in only three of the eight recessions: 1973, 1981, and 2007.
Conversely, gold has historically proven to be a robust performer during economic downturns. For instance, during the stock market collapse 2007, demand for gold investments surged and continued to rise. The value of gold doubled between 2007 and 2011. Similarly, amid the unprecedented fear and uncertainty sparked by the Covid-19 pandemic, the price of gold surged to record highs, along with substantial inflows into gold-backed exchange-traded funds.
Both Mike and Jeff convey their shared sentiment in the discussion, leaning towards viewing gold as a more stable and reliable investment during periods of economic recession. However, they noted that silver could offer higher returns once the economic situation shows improvement.
In a historical analysis, it's been observed that the S and P 500 tends to reach its lowest point approximately four months before the conclusion of a recession. On the contrary, the index typically peaks about seven months before a recession starts, marking a cyclical pattern closely tied to economic contractions.
According to data from CFRA Research, in the last four recessions dating back to 1990, the S and P 500 experienced an average decline of 8.8%. Notably, during the recent recession triggered by the pandemic-related lockdowns between February 2020 and April 2020, stocks fell by 1.4%. However, by the year's end, the S ad P 500 rebounded, closing more than 16% higher.
The prevailing sentiment shared in discussions emphasizes the historical performance of stocks, notably the S and P 500, during recessions. Mike and Jeff involved in the discussions have underscored the importance of maintaining a significant portion of one's investment portfolio in gold as a hedge against economic uncertainty, particularly in anticipation of an impending recession. This strategy aims to mitigate risk and provide stability during periods of market turmoil, considering the historical patterns and behavior of stocks during economic contractions.
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