Recession Warning and the Role of Precious Metals as a Hedge Protection

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Oct 13, 2023, 11:00 ET

LOS ANGELES, Oct. 13, 2023 /PRNewswire/ -- Government officials, central bankers, and mainstream financial media pundits all claim that the US economy has dodged a recession but there are still recession warning signs flashing reports Orion Metal Exchange.

In a recent report, Deutsche Bank a major financial institution has issued a stark warning about the looming possibility of a recession in the United States, based on a comprehensive analysis of historical data. The bank's research, conducted by its head of global economics and thematic research, Jim Reid, identified four key macroeconomic triggers that have historically preceded economic downturns. These triggers are as follows;

Inflation Spike: The report reveals that price inflation reached a four-decade high during the summer of 2022 and, while it has moderated somewhat, it has started to rise again in recent months. Historically, a 3% increase in price inflation over a 24-month period has led to a recession within three years in 77% of cases.

Inverted Yield Curve: The US Treasury yield curve has been inverted since July 2022, a phenomenon that has preceded a recession in 74% of cases since 1854. When considering data from 1953 onwards, the hit rate increases to nearly 80%.

Rapid Rise in Interest Rates: To combat inflation, the Federal Reserve has increased interest rates by more than 5% in just 18 months. Historically, a 2.5% increase in short-term interest rates over a 24-month period has led to a recession in 69% of cases. The report emphasizes that the US economy is particularly sensitive to interest rate hikes due to its reliance on borrowing and spending.

Oil Price Shock: The price of Brent crude has risen by about 33% since June, contradicting the narrative of disinflation. Historical data reveals that when oil prices spike by 25% over a 12-month period, the US has entered a recession in 45.9% of cases.

Amidst these concerning economic indicators, it is essential for investors to consider safe-haven assets that provide a hedge against economic uncertainty. Precious metals, such as gold and silver, have long been recognized as reliable stores of value during turbulent times. They tend to retain their worth and often appreciate when traditional markets falter.

As the global economic landscape remains uncertain, many investors are turning to precious metals to safeguard their wealth. It's crucial to have a diversified portfolio that includes assets like gold and silver to mitigate potential risks associated with economic downturns.

Orion Metal Exchange offers a variety of self-directed individual retirement account programs that enable investors to own physical gold, silver, platinum, and palladium. Tangible precious metal IRA accounts are easy to set up, cost-effective to maintain and offer a way to own tangible precious metals in an IRS-compliant accredited retirement account.

To learn more about Orion Metal Exchange and its gold IRAs, please visit www.orionmetalexchange.com.

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SOURCE Orion Metal Exchange