Though fear gave way to hope late in 2023, the first months of 2024 have again led to talk of a coming recession and even rumors of further interest rate hikes.
While warnings have been coming from various sides and angles, recent months have seen Mike McGlone, a senior commodity analyst at Bloomberg, not only forecast a recession for 2024 but also paint it as a crucial catalyst that could see gold surge to unprecedented highs at $3,000.
Indeed, in an X post from Tuesday, April 9, McGlone pointed toward a myriad of factors including central banks’ worldwide tightening financial conditions and geopolitical instability – with a particular eye for Russia and China – when opining that the U.S. recession has been delayed rather than prevented.
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Gold beating the S&P 500 this year and since 2021 may suggest a US recession has been delayed, but is coming. The start of the most aggressive global central bank tightening period in history and Russia and China’s leaders citing their “unlimited friendship” established the potential paradigm shift significance of 2022.
In the same post, he traced the fomenting of the recession through the lens of both gold and the world’s premier cryptocurrency, Bitcoin (BTC), which outperformed the S&P 500 since 2021. The precious metal is a well-established store of value in turbulent times and BTC is posited as the digital version of gold and seen as such by many.
Is a recession really coming?
This year has seen numerous voices come into the chorus to warn about the looming crisis.
The CEO of JPMorgan (NYSE: JPM) recently expressed his belief that there is a 65% chance of recession and the bank itself warned that the ‘stocks could crack at any moment.’
Albert Edwards, an analyst with Societe Generale (EPA: GLE) known for correctly predicting the Dot-com crash, similarly hinted toward the coming crisis when he pointed out that the artificial intelligence (AI) sector has become a major bubble.
Warnings of a massive wipe and a crisis of a magnitude not seen – arguably – in nearly a century have also been coming from outside the financial mainstream. Perhaps the most vocal alarm-sounder has been the prominent investor and author of the best-selling personal finance book ‘Rich Dad Poor Dad,’ Robert Kiyosaki.
Additionally, Kiyosaki has himself been foreseeing the benefits of Bitcoin and gold and calling on his followers to invest in these assets as well as another precious metal – silver.
Fears beyond a recession
Fears have recently been going beyond a recession and toward high inflation with FED’s apparent inactivity and keeping of level interest rates seemingly displeasing everyone. Indeed, early 2024 has seen both a spike in inflation prints and certain experts warning that the crisis will both reignite and be worse than in 2022.
Still, some like ‘The Big Short’ investor Steve Eisman offer a contrary opinion and believe that a crash may come in the near future only if the FED attempts to intervene – particularly with rate cuts.
Ultimately though, the current Huxleyan landscape ensures that it is difficult to say how meritorious the warnings are given how boldly and frequently various analysts have been wrong in recent years – in terms of the impact of inflation and interest rates, in terms of when and if a recession will come, in terms of when the FED will turn dovish, and much more.
It remains to be seen whether stocks will indeed crack in 2024, or if something else will break first.
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