According to Investment Opportunity – Gold & Silver Outlook by the fund house, “Gold is the only commodity that had a positive average return during recessions.” Investors looking for a hedge against recession may consider diversifying into gold and we may see flows in gold funds globally, it added.
The stagnating global economic growth, inflation is falling but is expected to remain above long-term historical averages, well baked equity markets and elevated currency volatility appear conducive for gold demand from investors and consumers, the report said.
The World Bank and the IMF (International Monetary Fund) also foresee the world edging into a recession and a string of financial crises in the emerging market and developing economies. If this turns out to be the case, gold may perform better, said the report. A WGC (World Gold Council) historic study reveals that gold has been a better asset class in times when the U.S. slips into a recession and when many major economies (developed and emerging) may not be insulated or decoupled.