Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Metals Rebound As Government Officials Redefine Recession

By Stefan GleasonMarket OverviewJul 29, 2022 04:27PM ET
Metals Rebound As Government Officials Redefine Recession
By Stefan Gleason   |  Jul 29, 2022 04:27PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

As the economy heads into what looks like a recession, gold and silver markets are coming back.

Metals markets responded positively to the latest rate hike by the Federal Reserve. On Wednesday, the central bank raised its benchmark interest rate by another 75 basis points as expected.

Chairman Jerome Powell said the Fed could hike again at its next meeting depending on the economic data. Powell admitted that the economy is slowing but continued to insist it isn’t in recession.

In recent days, Treasury Secretary Janet Yellen and President Joe Biden have issued similar official denials.

But the latest GDP report suggests we have entered a recession. On Thursday, the first estimate of Q2 GDP came in at -0.9%. That was worse than the consensus forecast and represented the second consecutive quarter of declining GDP.

Two straight quarters of negative GDP is the textbook definition of a recession. But Biden administration officials are now trying to redefine the term.

Jerome Powell: "I do not think the US is currently in a recession."

President Biden: "Both Chairman Powell and many of the significant banking personnel and economists say we're not in a recession."

Janet Yellen: "A common definition of recession is two negative quarters of GDP growth or at least that's something that's been true in past recessions when we've seen that. What a recession means is a broad-based contraction in the economy. And even if that number is negative, we are not in a recession now."

President Biden: "That doesn't sound like a recession to me."

Joe Biden and his economic handlers claim that because job numbers remain relatively strong, they can wave away the fact that the overall economy is shrinking.

But the employment data is likely to deteriorate as businesses across the country announce hiring freezes due to rising costs, weakening sales, and recession fears.

Consumers are rapidly retrenching. After being artificially boosted by stimulus payments and low-interest financing, consumer discretionary spending is being crimped by higher costs for food and other necessities plus higher interest rates.

The sharpest pace of interest rate increases in 40 years risks inducing a negative wealth effect for millions of households. Another real estate crash could be around the corner amid higher mortgage rates and record housing affordability.

The Fed seems oblivious to what it has gotten itself into. It blundered by waiting too long to hike short-term rates under the false belief that inflation pressures would be transitory. It feels compelled to hike in much bigger increments than normal under the false belief that the economy remains strong enough to handle sharply higher rates.

Longer-term rates have already stopped rising, with short rates now the same or even higher than longer-term rates, another sign of economic trouble.

The mainstream financial media has finally picked up on the growing risks of a recession. Politicians, bureaucrats, and central bankers can try to change the definition of a recession to fit their agenda. But they can’t change the realities.

Lying about the economy will ultimately prove to be another failed strategy. Public trust in the Washington establishment is already at a low point. The American people will see through the officials' lies as their real-world experiences confirm what’s happening in the economy.

Investors brace for recession and should consider investing in what’s real. During an economic downturn, counterparty risks rise, and assets backed only by promises can implode.

Hard assets such as precious metals carry no counterparty risk when held in physical form outside the financial system.

Over time, gold and silver markets reflect the underlying realities of currency depreciation. Gold and silver prices tend to rise as the U.S. dollar loses value.

When Fed officials are forced to admit the economy isn’t strong enough to take any more rate hikes, the dollar can be expected to start sinking against other fiat currencies and sink even more rapidly against tangible goods.

The perception of a hawkish Fed had helped push the dollar up on foreign exchange markets through most of the year. But currency traders know central bankers can’t keep tightening through a recession. It’s only a matter of time before Jerome Powell and company begin pursuing monetary easing again.

The U.S. Dollar Index peaked two weeks ago. It may have a long way to fall as the economic downturn deepens. And precious metals markets may finally have a long-lasting rally.

Metals Rebound As Government Officials Redefine Recession

Related Articles

Al Brooks
S&P 500: Bull Leg In Trading Range? By Al Brooks - Aug 15, 2022

S&P 500 E-mini futures continues the strong rally up, with fourth consecutive bull bar, and likely to test the May 4 high and bear trend line. The move up is strong enough for...

Metals Rebound As Government Officials Redefine Recession

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email