Can Investing In Gold Really Protect You From The Next Recession?

When our economy starts skidding into recession, many investors who invest in stocks face big losses and investment portfolios start declining in value. History indicates gold can save your investment portfolio during the next recession. Here's how:

Gold is historically inversely proportional to the stock market.

During recession almost all assets lose their value. In such situation, you can minimize the dip in your portfolio by investing in assets that are uncorrelated to stocks. For instance, few bonds perform well and dividends can also help, but these will not be able to cover for the substantial fall experienced by the markets.

Gold is one of the investment options that is uncorrelated to stocks and during economic collapse this negative correlation grows further. From 1965, we have been through 7 recessions and 5 out of these 7 recessions, gold price rose. Moreover, in three recessions gold prices soared into double digits.

Why invest in gold before the next recession?

A Hard Asset | A Scarce Resource | A Short-selling Option

There are several reasons why gold is touted as a recession-proof investment option.

A Hard Asset

Gold is one of the hard assets which does well when there is a downturn. Gold does not generate any earnings or offer dividends, yet it is a type of commodity that gets traded. As economic conditions deteriorate, hard assets such as gold become more valuable.

A Scarce Resource

Overtime gold has proved that it is a form of long-term commodity investment that is capable of preserving wealth. Irrespective of how much the value of dollar inflates, gold will be able to surpass inflation since it is a limited and scarce resource. Thus, it is a stable asset that investors can invest in.

Moreover, even when gold is not able to match-up with inflation, the scarcity it has offers it a footing, proving gold to be less risky compared to index funds or stocks. As we can see in the below chart which shows historical data, since 1970s gold prices have always been on the rise, making gold the right option to investment in.

A Short-selling Option

Investors can also buy gold when its price is low at the time of economic expansions and afterwards sell it off when recession starts. Gold short-selling is not as common as it is for bonds or stocks. This fact proves to be beneficial for investors since there is far less competition that they have to face in gold trading market.

If you have not done so yet, you can start investing in Gold IRAs and recession-proof your future. Get in touch with us today to know how to invest in Gold IRAs by rolling-over your existing IRA and 401(k) into Gold IRA.


Current spot prices

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  • How to get the most gold for your money
  • How to protect against a stock market collapse
  • What gold investments are the most profitable and what to avoid
  • How to save money on taxes when investing in gold
  • The top Gold Company of 2019