George Gammon: The Gold Experts Are Totally Wrong (Here’s Proof)
Gold prices have moved back to $2,000 per ounce. That’s near the highs set in mid-2020. And expects are starting to predict that gold may trend higher in the months ahead.
That’s based on the view that gold serves as a hedge against inflation. And inflation has certainly remained sticky, which could help keep gold prices high. However, it’s also possible that the gold experts are wrong.
That’s because we may be entering a recession as rising interest rates have slowed the economy. Going into a recession, gold prices tend to move down at first. The trend tends to start at 90 days out.
It’s only a few weeks after the start of a recession that gold prices tend to move higher. The big move higher tends to peak out about 116 days after the start of a recession on average.
Typically, central bankers look at data that’s several months old. That’s why a recession isn’t announced until we’re well in it. Looking at gold data can provide a closer clue to real-time as to the start of a recession.
It doesn’t have to be an exact science, but doing so could help avoid a selloff in assets. Fortunately, history also shows the Fed stops raising interest rates and even pivots to rate cuts before the start of a recession. So investors likely have time to plan ahead now.