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  • Poor Economy = Low Gold Price?



    By caseyresearch.com

    Despite some positive data, the global economy is showing signs of slowing, a remarkable development in itself when you consider all the money printing and deficit spending that’s transpired over the past few years. According to the IMF’s overview, global growth was less than expected in the first quarter of 2013, at just over 3%, which is roughly the same as 2012. The lower-than-expected figures were driven by significantly weaker domestic demand and slower growth in emerging-market economies, a deeper recession in the euro area, and a slower US expansion than anticipated. The report concludes that the prospects for the world economy remain subdued.

    Many investors consider a weak economy to be a bearish environment for commodities, including gold. Doug Casey says we have entered into what will become known as the Greater Depression. That’s as bearish as it gets, so should we expect gold to decline if the bears are right?

    One of the most rocky economic periods in modern times was the late 1970s. For those who don’t remember, the period was characterized by:

    Unexpected jumps in oil prices, leading to soaring gasoline prices and rationing
    A falling dollar
    High and accelerating inflation
    Record interest rates
    Bank failures
    Wars, including the Iranian Revolution (1978), the Iran-Iraq war (1979), the Russian invasion of Afghanistan (1979), and the Iranian hostage crisis (November 4, 1979 to January 20, 1981).
    Outside of the Great Depression, it’s hard to identify more trying economic circumstances.

    Here’s a closer look at the three-year period from 1977 through 1979. In the following chart, we looked at the economic indicators that affected citizens and investors the most, showing which were getting better and which, worse. These factors would all have affected market sentiment and the appetite to invest in gold at the time…


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