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Potential 2024/2025 US Recession - Impact on Precious Metals Explained
August 2024 – CPM Group discusses their prediction of a recession in 2024/2025 and its potential affects on gold and silver prices.
Historical Patterns of Precious Metals in Recessions
Looking back, gold and silver have exhibited distinct behaviors during recessions. In the 1970s, prices rose as investors anticipated economic decline, only to fall once the recession commenced, and then rise again as central banks injected liquidity into the market. A similar pattern was observed in subsequent recessions, including those in 1991 and the early 2000s. During the Great Recession of 2007-2009, gold prices began climbing in 2002 and silver in 2005, reflecting widespread economic anxieties and geopolitical tensions.
Current Economic and Political Climate
Today’s landscape is marked by multifaceted concerns extending beyond mere economic activity. Issues such as political instability, financial uncertainty, and social upheaval are contributing to an environment ripe for recession. Unlike past recessions driven predominantly by economic factors, the current scenario involves a complex web of global and domestic challenges, making it harder to predict and manage.
The Fed’s Role and the Inevitability of Recessions
Historically, there have been attempts to mitigate or even prevent recessions, such as the Commerce Department’s optimistic renaming of their report in the 1960s or the late 1990s’ belief in a new economic paradigm. However, Christian emphasizes that despite technological advancements and improved economic models, recessions are an inevitable part of economic cycles, occurring approximately every ten years.
