|
Mayan prophecies aside, many of the senior Casey
Research staff believe that economic, monetary, and fiscal pressures could come
to a head this year. The massive buildup of global debt, continued reckless
deficit spending, and the lack of sound political
leadership to reverse either trend point to a potentially ugly tipping point.
What happens to our investments if we enter another recession or – gulp
– a depression?
Here's an updated snapshot of the gold price during
each recession since 1955.
 
Clearly, one should not assume that gold will perform
poorly during a recession. Even in the crash of 2008, gold still ended the
year with a 5% gain. And with the amount of currency dilution we've undergone
since that time, it seems more likely gold will rise in any economic
contraction than fall. Indeed, if the response of government to a recession
is more money printing, precious metals will be a critical asset to have in
your possession.
Even if the gold price ends up flat or down this year, the CPI won't. Gold's enduring purchasing power
is why we hold the metal.
How about gold stocks?
In spite of the debilitating 1970s that suffered from
stagflation, price controls, three recessions, and the Vietnam war, gold
producers rose over 600% while the S&P was basically flat. And that
includes a roughly 65% fire-sale correction, much like we saw in 2008. To be
clear, gold and silver stocks won't be immune to selloffs if a recession or
worse temporarily clobbers our industry. But in the end, we're convinced they
will prevail.
Don't lose patience with, or confidence in, your gold
holdings. What happens to the price over any short period of time is only one
chapter in the book of this bull market, and we think you'll be happy by the
time that last chapter is written.
[If you have questions on how to invest in gold in the
current market conditions you aren't alone. If you act fast, you can be among
those who get to hear Jeff Clark discuss his thoughts and answer selected audience
questions. The Gold Investing in 2012 and Beyond: Your Questions
Answered! call is absolutely free –
but you must sign up by midnight EDT on April 6.]
|
