Global recession predicted to hit as early as second half of 2019
A highly respected chief economist and strategist David Rosenberg has predicted that a global economic slowdown could become a reality as early as the second half of this year as corporate debt balloons to a figure in excess of $9 trillion. Rosenberg predicted the financial crisis of a decade ago and points to elevated debt-to-GDP levels as a precursor to a recession.
Each of the recessions taking place from the 1980s onwards has occurred at a time when corporate debt was surging – this is true of the last financial crisis in 2007, the dotcom boom and bust of the early 2000s and that of the early 1990s. Historically, this signifies that a slowdown is on the way. According to data from the Institute of International Finance (IIF), corporate debt is growing faster than the economy, with $4.88 trillion debt coming to maturity in the next four years and higher interest rates placing debtors in a position where they can’t meet repayment obligations.
Rosenberg points to a number of other factors to back up his assertion, including Federal tightening coinciding with soaring corporate debt and President Trump’s tax reform measures, which bucked the trend for reform coming in times of recession rather than growth. Rosenberg says these measures leave little room for fiscal manoeuvring and no “fiscal ammunition”.
To this backdrop of economic turmoil and the looming prospect of a slowdown, gold is set to come into its own once again as a reliable, solid and trustworthy store of value.
Gold price corrections welcomed by expert as a buy opportunity
A highly respected gold investment expert has gone on record as saying the current gold price corrections strongly signal a buy opportunity for investors.
In recent days, Venezuela has sold off $400 million of its gold holdings – a move which comes in the midst of political turmoil for the country and an expected change of government. Around eight tonnes of gold were removed from the country’s central bank earlier this month, a move which was thought to be in response to US sanctions which have left incumbent president Nicolas Maduro with a need to liquidate assets in order to access foreign currency.
According to respected investment advisor Frank Holmes this is a strong indicator that investors should buy now saying, “”On a daily basis, in the past couple of days, it’s a very attractive buy, you’ve got to buy when these countries are finally liquidating their assets before there’s a change in government, and that’s positive for the gold market.”