The recent comments by money manager Adrian Day show how serious the impending recession may be. Day envisions a hard landing rather than a soft landing, meaning the economic downturn will be abrupt and severe. As investors look for safe-haven alternatives, Day suggests they look to shine their sights on gold.
Day believes that gold will be desirable in a recessionary market, because it is widely recognized and relatively scarce. It is also non-governmental and does not correlate with most stock markets, which will likely sink during a downturn. Gold, by contrast, typically sees its value go up when other markets are declining.
Additionally, gold is seen as a safe-haven investment due to its historical repeatability. Investors know that gold has long been used as a form of currency throughout the world and in the last 40 year it has been a viable investment option. One important aspect to remember is that the price of gold can fluctuate drastically in a short time span.
Day also suggests investors look for other safe haven investments that are less volatile such as certain commodities. Commodities such as energy, agricultural and industrial metals have all been historically strong in an economic downturn because of their underlying value. These commodities also remain relatively stable in price during a recession, while still offering investors the potential for significant returns.
One final tip from Day is to be aware of geographical investment opportunities. Diversifying across geographies can help reduce overall risk. Also, look for alternative investments such as precious metals and cryptocurrencies, and investigate the use of debt financing to increase short-term gains.
Overall, Day believes that gold will be a safe-haven asset during the coming recession. Investors looking to increase their portfolio returns during an economic downturn should look to gold and other alternative investments for potential profits. It is important for investors to weigh the risks associated with such investments, but if done properly, the rewards could be significant.