How Gold Behaves in A Recession

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I said at the start of this year that 2020 could be a fantastic year for gold. Looks like I was right even if it was for a reason I wasn’t expecting, namely a global pandemic and a massively incompetent response by most governments all over the planet. 

-By Caleb Jones

As of now the price for an ounce of gold is at around $1700. It's been as high as $1,750 per ounce several times over the last week or so. If you don’t follow gold, to give you an idea of how fantastic this is, its all-time historic high was $1,895, and even then it was only there for a day or two.  

As I’ve been talking about for many years, I have been quietly buying as much gold as I could while getting ready for this recession. On top of that, as I’ve been recommending to my readers for a very long time, everyone with any cash savings should have 30-50% of those savings in gold to insure your cash against inflation. As always, I follow my own advice. 

Most of the gold I’ve purchased I got for under $1,100 per ounce. Now that gold is $1,700 I’m a very, very happy boy, exactly as I planned would happen in a recession just like this. 

And I expect gold to go even higher. I shall explain. 

A lot of guys were surprised when gold dropped a few weeks ago along with the stock market and everything else. I wasn’t. This is normal. Gold dropped in the crash of 2008 also. It dropped 31% when everything else dropped. But then, while the stock market was still down 10%, gold skyrocketed to 163% to its all time high.

That’s what happens with gold in a recession, at least usually. It suddenly drops like everything else, but while everything stays low, gold quickly spikes upwards. So far this year, gold is up 17% but the S&P is still down 13%, even with the government’s trillions bailing it out. (Now do you see why I don’t own any stocks?) 

Gold drops initially mostly because of margin traders who have to sell their gold to cover their margin calls. But as more people lose money in stocks and as the government floods the market with more dollars conjured out of thin air, bailing out cruise lines, tourist industries, airlines, shale oil, and sending everyone in the land checks for $1,000, the price of gold quickly starts going up again, and it doesn’t stop going up for quite a while. 

The only reason gold isn’t higher is that the elites, mostly in politics and in banking, utterly hate gold because it’s difficult to track, manipulate, and tax. As Ron Paul once said, “Gold is honest money disliked by dishonest men.” The elites have done their damnedest to suppress the price of gold for a long time. Over the years there have been stories about how big banks will load entire caravans of trucks full of gold and just have them drive around in circles for a few days in order to manipulate the price when needed.

The good news is that now and over the next few months the following things are likely to occur: 

  1. Our ridiculous and incompetent governments will bail out more big companies, rich people, and normal people, in that order, and do so without raising any taxes (and perhaps even cutting taxes), meaning they will print or loan more money, causing an increase in the money supply which will cause a rise in gold prices.
  2. Irrational, panicking, end-of-the-world type guys (many of whom like to post on my blogs) will try to buy as much gold as they can, further putting upward pressure on gold prices.
  3. Likely, very few people are going to sell their gold. Those who need cash and have a lot of gold usually have other assets they’re willing to sell first and faster (like cash and stocks).
  4. Gold mining companies are and will likely take a hit due to the coronavirus, meaning less mining, meaning less gold to be mined out of the ground.
  5. Big nations directly competing against the Collapsing USA, namely Russia, China, and India will likely increase their already insane amount of gold buying and hoarding, likely creating more gold shortages.
It will be increasingly difficult for the elites to keep suppressing the price of gold as they have in the past for all of these reasons.

Gold’s at $1,700 now, but I’ve heard some experts say it can easily go to $5,000. It’s possible. Hell, even if they’re only half right, and it “only” goes to $2,500 an ounce, I’m going to be throwing a very big party. 

I was talking to Pink Firefly the other day; I said that if three things happen by the end of 2020 it could very well be the best financial year of my entire life: 

  1. I make the same amount of money I normally make or more.
  2. The price of gold spikes upwards.
  3. The price of real estate crashes.

It’s only early May, but so far it actually looks like all three of those things are going to happen. The coronavirus could indeed be one of the biggest blessings of my adult life. What a wonderful thing to happen in my final year living in the Collapsing USA. 

As always, just because something is terrible for society doesn’t mean it’s bad for the Alpha Male 2.0. Often, the very things that terrify others are those things we Alpha 2.0s can profit from the most.  

Here’s to hoping that I’ll be happily posting about $2,000, $3,000, or $5,000 gold prices at this blog in December. We’ll see…

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