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TheSilverSurfer

What are the effects of a recession on precious metals?

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Hi everyone,

Back in 08 the bubble collapsed and an economic crisis started.

Banks needed cash so they sold all their PM's which made the price of PM's drop.

According to a youtuber (link down below (not linked to the channel, except that I am a subscriber)) the 2020 recesion will be a slow one instead of a bubble that bursts.

Because its a slow recession instead of a bubble I think prices of PM's will rise. Because stock investors start looking for other options.

But most importantly what do you think? 

 

 

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Nobody can foretell how things will play out. 

I don't subscribe to this "slow crash" theory at all. When things reach a tipping point they always snowball downhill faster than anyone can anticipate. There is more leverage in the system than at previous peaks. It will blow up just as spectacularly.

https://www.advisorperspectives.com/dshort/updates/2019/07/22/margin-debt-and-the-market-up-4-8-in-june

da1e9b258ef832e9eb8b8db18d1b2d87.png

Edited by vand

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25 minutes ago, vand said:

There is more leverage in the system than at previous peaks.

YUP! - - just checkout the OTC derivatives! and then go dig into the Amount of "UNDER THE COUNTER"

IMHO - -"ITS TERRIFYING"

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1 hour ago, TheSilverSurfer said:

Because its a slow recession instead of a bubble I think prices of PM's will rise. Because stock investors start looking for other options.

 

this doesn't make sense.

a stock market retracement(recession) is almost

never slow and grindy on the way down unless

maybe if it's a particularly large wave.

the likely scenario would be something similar to

the spring 2018 retracement(to start it off).

 

HH

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Forecasting the market has always been a long shot, most get it wrong due to listening to the populous information.

Sometimes it is just a simple plain vanilla move, at other times it is a complex task like finding out which chemicals made the food taste so good. If we don’t know and think we know, do we really know? 

I don’t know the future, but if I happen to awaken and see an opportunity, I will try to seize the opportunity and live the outcome 🙂

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There is the stock market and the real economy. The price of a stock can halve - the company keeps plodding along - it does not suddenly halve. The stock market is not the real economy. i remember in the early 1980's i think it was - there would be annoucements on the News about closures and layoffs. There was something pretty much every night to demolarise the people. Night after night. It went on and on for months and months. If the FTSE dropped 25% in a week, 25% of the economy has not disappeared in a week like some sort of magic trick.

So the paper markets may well crash over a few sessions - what is important and is possible is if there is a currency/banking crisis leading to massive devaluation of currency and bank bail in's. The so called reset. This was not seen in the recent bursting stock and derivative bubbles over previous decades - they were trivial ripples compared to what could and will happen at some point. This is when your £100 bought your week's shopping last week but this week it buys a loaf of bread. This is when gold could go from £1250 to £50 000. This is when you would really see gold preserving purchasing power.

The guy is right about debt. This is what the banks are waiting for. To steal real assets because of defaults on the currency loans they created out of thin air with no work. Get rid of all the debt you can. i would also say get rid of trivial, frivolous expenses - even if you don't get rid of all of them, have them earmarked. Buy gold with the money you saved not having the expenses you can live without, it will be much easier to give them up that way.

Definitely have emergency 'cash' - liquid gold coins could be part of that cash - actual broken promissory notes from the banking system are devaluing on their journey to zero, so if emergency cash can be in something tangible and very liquid this is much better. Personally i will be saving in gold and silver (through Kinesis) - gold and silver i can spend as cash and get a yield on.

A decline could take many years - it could for some economies be a decline to Third World status. i am reminded of the http://www.deagel.com/country    http://www.deagel.com/country/forecast.aspx website pages - it shows the UK by 2025 falling off a cliff. i have quite often looked out the window and looked around whilst i am travelling and asked what are people doing? Industries have been murdered - what are people doing? Where is the value coming from? When a currency collapses, if the financial sector goes up in smoke, there would be serious issues - issues even of feeding people especially when food prices ramp up in cost multiple times. We live in interesting times if we manage to survive.

Edited by sixgun

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10 hours ago, vand said:

There is more leverage in the system than at previous peaks.” 

Does that mean that the relative impact on our economic well-being will be bigger than in other times? 

 

10 hours ago, vand said:

da1e9b258ef832e9eb8b8db18d1b2d87.png

 

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