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What Gold Price Tells Us About Recession

Investing Macro

Gold has always been a hot topic of discussion when it comes to predicting market trends during a recession.

In a recent YouTube video, a Rebel Capitalist Pro member raised a question regarding the relationship between gold and recession, to which George Gammon responded with his base case based on probabilities.

The Pro member's question centered on the chart of gold and other assets during a recession and whether the current market situation indicated a recession. George pointed out that the definition of a recession is often questionable amongst experts and that the market indicators may not always provide a clear picture.

Rebel Capitalist Pro

He added that the big question is whether or not the market is at the start of a recession cycle.

George cited the relationship between gold and recession, stating that gold usually drops about two to three months before a recession.

However, after the official announcement of the recession, gold prices tend to rise significantly. This relationship has been observed historically and can be used as an indicator of market trends.

The pro member then asked if the market is currently in a recession, to which George responded that we are unofficially in a recession, but officially, it is all about probabilities when they will announce.

He cannot provide a precise time frame but stated that his base case is that the market is two to three months prior to an officially declared recession, based on his analysis of market indicators and algorithms used by the government to determine a recession.

He further explained that the government's algorithm has been used in the past to declare a recession after the Fed starts dropping rates.

George cautioned that there are no certainties, only probabilities and that if the market is currently two to three months prior to a recession, there may be some downside to the price of gold.

However, if the recession has already started, then gold prices are expected to rise significantly, indicating the beginning of a bull run.

In conclusion, while the current market situation may not provide a clear picture of whether or not a recession has started, the relationship between gold and recession can indicate market trends.

It is important to keep in mind that market predictions are based on probabilities and that there are no certainties.

Therefore, investors should consider their risk tolerance and investment goals before making any investment decisions.