HOW DOES GOLD PERFORM DURING A RECESSION?

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Gold acts in a unique way. Gold typically appreciates in value during economic downturns. That’s why many individuals look to gold as a “secure” investment choice as a result of the economic instability brought on by a recession.

Additionally, its history of autonomous performance makes it the wise choice for wealth preservation in a fragile environment. In order to safeguard themselves against inflation and the possibility of an economic collapse, investors buy gold.

During a recession, a spike in gold prices is not unusual. In fact, gold prices are a reliable indicator of the status of the American economy. When the economy is strong, alternatives like stocks, real estate, and bonds are seen as better investments, keeping gold at a low price.

GOLD PRICES DURING THE GREAT DEPRESSION

An ounce of gold cost $35 in 1934 during the Great Depression, up from $20.67 in 1929. The Federal Reserve fought to keep the gold standard in place as the economy became worse. Technically, this action—along with several bank failures and the 1929 stock market crash—contributed to the Great Depression.

More individuals began to accumulate gold because they saw it as a safety net. America continued to use the gold standard even after Europe did so.

The Gold Reserve Act, which outlawed the ownership of gold in most forms, was required for President Roosevelt to sign. People were compelled to surrender their gold coins, certificates, and bullion for $20.67 per ounce of paper money. The federal government’s gold reserves were increased because to this arrangement.

The price of an ounce of gold was then raised by the government to $35. The government was able to issue more paper money thanks to this rise, which allowed the economy to resume expanding.

GOLD HIT NEW HIGH IN SEPTEMBER 2011

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