Slumping consumption and gold prices
The GDP decrease in the US is more than just a statistical number. Behind it there are real people who are losing jobs. And even those who haven't been laid off are losing confidence about the future.
Consumer confidence in major countries is at record lows. The Russia-Ukraine conflict has produced anxiety worldwide, coupled with high inflation. These two factors are putting both positive and negative pressure on the price of gold, though so far neither dominates.
Why could weak consumption be good for gold? If bonds, stocks, and cryptocurrencies continue to fall, investors will remember that gold is the best hedge and safe haven during the times of crisis. The negative correlation between gold and stocks, USD, and interest rates, will become especially evident.
For many years, we have witnessed the same trend in the stock markets: whenever prices began to slump, investors would sell off the riskier assets and buy hedging assets, such as gold.
The fact that gold is a low-risk asset is demonstrated by its volatility, which is considered a strong indicator of risk. Gold's volatility index (GVZ) is now 16.4%.
However, falling incomes can affect the demand for gold, especially if we see a slump in the GDPs of China and India, which account for a big share of the demand for gold jewelry. By the end of 2022, we should see which trend wins out. Gold has been trading in a narrow range for too long and has to break out of it — either up or down.
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You're going to find this very hard to believe, but I think Common U.S. Coinage will "out-perform" Silver, Gold and all the Cryptocurrencies, put together... Yes, that includes Bitcoin...