Gold & Silver - Best Investment Options in a RecessionWhen the stock market takes a nosedive, people tend to flock to safe investment options such as gold and silver. As a result, these precious metals tend to see an increase in demand during economic downturn, as well as following them. This makes sense because there are many advantages that come from investing in gold and silver during turbulent times. They’re non-correlated assets with low correlation to other asset classes, which makes them ideal for those who want to diversify their portfolio. Moreover, both of these commodities have inherent value. Even if the economy tanks and stock prices plummet, gold and silver will always be worth something – which isn’t true for stocks or most other financial assets.
Gold is a safe haven in times of recession
Gold’s role as a safe haven in times of recession can be seen in both the 2001 and 2008 global financial crises. When the US and many other countries were experiencing recessions, gold’s price increased. This is because many investors use gold as a defensive investment. In fact, many financial advisers recommend that one should own at least 10% of their portfolio in gold during economic downturns. When other investments such as the stock market aren’t doing well, it’s nice to have a backup that will still hold its value. Contrary to popular belief, gold’s performance isn’t tied to the health of the US economy. In fact, gold tends to do better during times of economic instability. This is because the precious metal is seen as a safe haven when the rest of the economy struggles.
Performance of Gold during 01 & 08
Gold pays dividends
Yes, We know what you’re thinking. But in a literal sense, gold pays dividends. If you own physical gold (not just certificates), you can actually sell it to a gold refiner and receive cash. While doing this won’t earn you a passive income, it will allow you to turn your gold into money. Because gold has a relatively low interest rate, it’s not a good idea to invest in a gold-backed financial instrument. However, some companies mine gold, and you can buy shares in these companies. Essentially, you will be receiving dividends from these companies, some of which are large global firms. While there are a few gold stocks worth investing in, most aren’t worth the risk. This is because many companies that mine gold are risky, unstable investments. That said, some gold stocks pay large dividends, making them a good choice for investors who want to earn passive income from their investments.
Our projections for Gold Minning ETFs
Barrick Gold (NYSE:GOLD)
Gold is a hedge against inflation
As we mentioned earlier, gold is a hedge against inflation. What this means is that when inflation rises, gold’s value tends to increase. In the United States, consumers have experienced inflation in the past. In fact, inflation rates have been steadily rising since 2009, and they show no signs of slowing down. As the Federal Reserve continues to increase interest rates, consumers can expect to see more inflation in the near future. As a result, it’s a good idea to hedge against inflation by investing in gold. While inflation makes it difficult to pay off debts, it’s actually a good thing for gold investors. That’s because a little bit of inflation is actually good for gold prices.
Silver is also worth considering during recessions
Like gold, silver is a precious metal. During recessions, silver tends to increase in price, and it’s often a good investment choice for people who want to diversify their portfolio. Silver has several advantages over gold, making it ideal for some investors. For one thing, silver is less expensive than gold. That makes it cheaper to buy and sell. Silver is also more plentiful than gold, making it easier to find and mine. While both gold and silver are great investment options, silver also tends to do better in times of economic instability.
DXY
Conclusion
All in all, there are a number of reasons that gold and silver are the best investment options during a recession. Both of these commodities have inherent value, unlike stocks and many other financial assets. Furthermore, they’re non-correlated assets that are less likely to be affected by economic downturns than most other assets. During times of economic instability, demand for gold and silver increases, causing their prices to rise. This makes them ideal for investors who want to diversify their portfolio without incurring too much risk.
