Precious Metal Forecast for This Year
From ancient Greece to modern-day America, precious metals have stood the test of time and economic pressures. Be it inflation or economic depression, they have survived countless financial crises and emerged unaffected. This is why metals such as gold and silver enjoy the unwavering trust of the investors.
As we move further into the 21st century, financial experts and economists debate the future of investment opportunities. Assets such as real estate and equities are losing credibility because their market value keeps fluctuating.
Individuals who are approaching retirement, in particular, need avenues where they can invest their retirement funds and savings. In order to ensure the protection of their wealth and guarantee greater returns, an assessment of the precious metal industry is imperative.
Financial Future and Financial Present
Individuals who support their families look at financial securities that preserve their wealth and hedge it against inflationary pressures. They envision themselves and their families to be in a financially stronger position several years down the line. This mandates the need to understand the current and future financial outlook.
It’s nearly impossible for a layman to predict an economic recession before it strikes hard and disrupts everyday business.
In fact, you may not even realize that you’re living in a recessionary period until several months have passed. While this means bad news for those depending on business or salaries alone, it offers protection to investors that hold precious metals. This covers gold, silver, platinum as well as palladium investments.
Inverted Yield Curve
While some people have the means to invest in precious metals now, not everyone enjoys the same financial luxuries. For instance, the concept is foreign for someone living a hand-to-mouth life. But channeling your savings funds in the right direction before a recession is a wise move. For that, you need to identify a recession first.
The current interest rate helps perform the recession test. You need to understand the graph of interest rate (yield) against different time periods. The graph is a curve, which becomes a sign of trouble when it inverts. This is called the yield curve inversion. An inverted curve that persists for 3 months or longer ends in a recession and so it has been observed since WWII.
Precious Metals During Recessions
While the value of other investment assets goes south during a recession, gold appreciated 8% during the recession of 2001 and 11% during the Great Recession. This is proof enough for the security that precious metals offer in times of need. You don’t want to put all your life savings in an asset that depreciates by several ranks during an economic recession.
However, there are certainly differences in how the graph of each precious metals behaves during a recession. If you have holdings of platinum and palladium, you need to be wary of the next recession because prices may dip. But silver and gold have remained steadfast in the face of financial uncertainty and recessions.
So don’t wait for the next recession; act now!