Recession looms - good for the gold price
The debt ceiling is an issue in the U.S. right now, but the likelihood of recession is also rising.
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According to Fed estimates based on Treasury bond yields, the probability of a recession in the next 12 months is now 68 percent, and it could rise further. The estimate has not been this high since 1983. We know from history that 75 percent of the time a pause in interest rate increases is followed by an economic recession; that's been the case for the past 70 years. An investment in gold and gold mining shares therefore appears to be an extremely sensible investment. Central banks and investors also consider gold to be very attractive again, and rightly so. The danger of recession was partly caused by the Fed by countering rising inflation with a rapid tightening of monetary policy.
The banking crisis could also be worse than it first appears. Three regional banks have failed in the USA. And bank customers are still shifting their cash to banks they consider safe. Smaller banks have to save themselves by selling interest-sensitive securities at a loss. This is negative for the bottom line. Also, compared to Europe, for example, U.S. banks have the lowest percentage of cash holdings relative to assets. Incidentally, the failure of the three U.S. banks has wiped out significantly more assets than the 25 U.S. banks that went bust in 2008. As bank stocks show, they have declined significantly in value since the beginning of 2023. No country has more banks than the US. Given this development, gold mining stocks should also hedge a portfolio, for example, from Revival Gold or Fury Gold Mines.
Revival Gold - https://www.commodity-tv.com/ondemand/companies/profil/revival-gold-inc/ - has just raised fresh money to continue exploration and development of its Beartrack-Arnett gold property in Idaho. This has previously produced gold.
Fury Gold Mines - https://www.commodity-tv.com/ondemand/companies/profil/fury-gold-mines-ltd/ - is working to expand the large gold resources at its properties, these are located in Nunavut and Quebec.
Latest corporate information and press releases from Fury Gold Mines (https://www.resource-capital.ch/de/unternehmen/fury-gold-mines-ltd/).
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