It may be that 2023 could be a worse year economically than 2022.
One-third of the world economy may be going into recession, at least that's according to Kristalina Georgieva, the head of the IMF.
From MarketWatch:
This year is going to be tougher on the global economy than 2022, the International Monetary Fund’s chief, Kristalina Georgieva, has warned.
“Why? Because the three big economies, U.S., EU, China, are all slowing down simultaneously,” she said in an interview that on the CBS Sunday morning news program “Face the Nation.”
“We expect one-third of the world economy to be in recession,” she said, adding that even for countries that are not in recession, it “would feel like recession for hundreds of millions of people.”
The U.S. may end up avoiding a recession, but the situation looks more bleak in Europe, which has been hit hard by the war in Ukraine, she said. “Half of the European Union will be in recession,” Georgieva added.
To read more, go here.
One may ask, What Happens to Precious Metals During a Recession?
According to the United States Gold Bureau:
There have been some serious economic disasters in the past decade and a half. 2008 saw the subprime mortgage crisis, where predatory lending resulted in mass foreclosures with ramifications across broader markets.
2020 brought the COVID Crash. Economies around the world ground to a halt. People were laid off or started working from home. The stock market quickly fell 34% but managed to recover quickly. Massive amounts of money were printed, leading to serious inflation.
During these economic downturns, savvy investors were able to use the precious metals market to either protect their money or even turn a profit.
Is Investing in Gold During a Recession a Good Idea?
The short answer is yes. Gold typically moves inversely to the value of the dollar and also the stock market. If the dollar is strong, gold prices tend to dip. Commodities like gold are also the first to start rebounding during an economic downturn.
Is Silver a Better Investment Than Gold During a Recession?
As mentioned above, gold will initially be pulled down with everything else during a recession. But it will be one of the first things to bounce back and increase in value throughout the recession.
Silver, on the other hand, doesn’t have the same track record. Silver rarely increases in value during market selloffs. This might be due to silver having a higher industrial usage than gold. During a recession, industrial production slows down. As a result, the demand for silver decreases.
While silver does have a low correlation to stocks, it is thinly traded and volatile. It’s certainly not a bad investment, but in the context of precious metals to invest in during a recession, silver loses out to gold.
To read more, go here.
Unfortunately, gold is too expensive (currently around $1,834 an ounce) for the average person to buy. At least silver is affordable (currently around $24.23 an ounce) for the average person.
From Yahoo! Finance:
When it comes to alternative currencies, gold is usually the tender of choice. David Morgan, publisher of The Morgan Report and creator of Silver-Investor.com, disagrees. Morgan says that when it comes to precious metals as legal tender, silver is the best bet.
Silver is less expensive than gold, which makes it easier to transport and use. “In an absolute crisis, silver would be would be the monetary metal of choice. Its value per unit is a lot less than gold,” Morgan says.
The lustrous metal has been synonymous with money throughout history. “Silver has been used as money in more places and more times than gold ever has,” Morgan tells The Daily Ticker.
To read more, go here.
