A recession is coming this summer and lasting until mid-2024, according to Evercore chairman Ed Hyman. “I’ve never forecast a recession this far in advance,” said Hyman, pointing to the contraction in the money supply following the recent bank failures as well as the inversion of the 2-10 Treasury yield curve. If Congress fails to raise the debt ceiling within a matter of weeks and instead defaults on its debt, interest rates will spike, demand for Treasuries will drop, and borrowing costs may increase, rapidly inducing a self-inflicted recession. As these risks rise, investors have turned to gold, which is set to outperform other commodities, including silver, platinum, and palladium, this year. “As the U.S. leans into a recession, the [gold-silver] ratio is more likely to head toward the all-time high and may be forming a foundation around 80,” said Bloomberg Intelligence’s Mike McGlone. With gold’s performance up around 9% during the last 12 months, the yellow metal’s outlook remains bullish.
Markets Insider/Jennifer Sor
A recession will unfold this summer and last through the middle of 2024, Evercore chairman says
Signs of trouble brewing in the economy suggest a recession will unfold this summer and last through mid-next year, according to Evercore chairman Ed Hyman.
“The economy now is very strong. It’s amazing. But I’m patient, and I think that by the summer, we’ll start to see a recession unfold,” the market veteran said in an interview with Bloomberg on Tuesday, adding that he didn’t foresee a severe recession, like in 2008.
A downturn will be brought on due to the Fed’s aggressive monetary tightening policy, Hyman said, especially since other central banks around the world, such as the European Central Bank, are tightening policy at the same time.
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Kitco News/Anna Golubova
Gold to outperform silver this year as recession risks build, says Bloomberg Intelligence
Gold is looking to outperform other commodities, including silver, platinum and palladium this year as U.S. recession risks rise, said Bloomberg Intelligence in its May outlook.
The yellow metal will accelerate its rally in the second half of this year, taking the gold-silver ratio higher. Currently, the gold-silver ratio is around 80, which means it takes 80 ounces of silver to buy one ounce of gold. At its peak in March 2020, the gold-silver ratio was around 124. The higher the ratio, the more expensive gold is compared to silver.
“The price of gold has had a propensity to outpace silver since Isaac Newton adopted the gold standard in 1717 as master of Great Britain’s Royal Mint, and may accelerate in 2H. At about 80 ounces of silver per gold, the cross rate is roughly the same as the financial crisis high and well below the 124-ounce peak from March 2020,” said Bloomberg Intelligence senior macro strategist Mike McGlone.
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Fox Business/Megan Henney
Debt ceiling showdown risks triggering ‘self-inflicted’ recession
The U.S. government is on a collision course for a potentially catastrophic default on its financial obligation if Congress fails to raise the debt ceiling within a matter of weeks.
Treasury Secretary Janet Yellen warned last week the country could run out of money as early as June 1 if legislators do not raise or suspend the nation’s borrowing limit.
“This would be a huge hit to the economy and really an economic catastrophe,” Yellen told CNBC Monday.
“If Congress doesn’t raise the debt ceiling, the president will have to make some decisions about what to do with the resources we do have, and there are a variety of different options, but there are no good options. Every option is a bad option.”
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