Recession Cometh: Its Impact on Precious Metals

Our expectation has been that the U.S. economy will slip into a recession in 2025 and that this development will have an impact on the precious metals. The year is now 25% complete, and that recession certainly seems to be on the doorstep.

This year's "macrocast", written back in late December, was titled "Inversion Reversion". Why? Because history has shown that an inverted yield curve is the precursor of an economic recession. However, the recession actually begins when that curve reverts to a positive slope, as happened in late 2024. For a refresher or if you missed our annual forecast, here's a link to 2025 Gold & Silver Price Forecast.

Two charts of note here. First, an image taken from that 2025 macrocast, and then below it, a current Q1 GDP forecast from the Atlanta Fed:

Buy Gold As Recession Indicators Multiply

The standard definition of a recession includes two consecutive quarters of economic contraction, and as you can see above, the Atlanta Fed model currently forecasts Q1 GDP to come in at something less than 0.0%. However, deciphering whether or not official data suggests recession is always a challenge as it's often politically dangerous to state the truth. As such, let's not only consider the Atlanta Fed model. Let's look around for some other indicators. Let's start with this. Yes, it's just one data point, but the percentage of Americans who are over 60 days late on their car payment is at an all-time high:

Here's another single data point. The ISM service sector numbers are falling off rapidly:

And all this wishy-washy, undecided tariff policy stuff isn't helping either. It's creating an environment of confusion and doubt, which makes it very difficult to plan for your business. Recessions are one of the few things on earth that can literally be talked into existence, and you can see hints of this process in the tweet below from Charlie Gasparino of Fox Business:

Ray Dalio And Breakdown Of The Monetary Order

One more. Here's famed investor and hedge fund manager Ray Dalio laying out the case that a simple recession, defined by a brief period of economic contraction, may be the least of our worries and, actually, a best-case scenario. Yikes!

NEW: RAY DALIO SAYS “I’M WORRIED ABOUT SOMETHING WORSE THAN A RECESSION… WE HAVE SOMETHING THAT IS MUCH MORE PROFOUND, WE HAVE A BREAKING DOWN OF THE MONETARY ORDER” — DEGEN NEWS (@DegenerateNews) April 13, 2025

Buy Silver As Fed Policy Signals Weaker Dollar Ahead

So, what does this mean for all of us who are precious metal enthusiasts? Most likely, even higher prices ahead. Why? Because you know that the U.S. central bank will respond with the same easing/printing tactics they've deployed at every hint of economic weakness since 2009. The markets are already sniffing this out with an expectation of up to 125 basis points of fed funds rate cuts before the end of this year! The current thought is that the cuts begin in June, but there's a chance that we could see one at the next meeting in May too.

Lower interest rates, more Quantitative Easing, and yield curve "management" will lead to a weaker dollar too. While not moving with a perfect correlation, the long term suggests that periods of dollar weakness correspond with periods of precious metal strength. Could the U.S. Dollar Index be headed back to 90 or even lower? Yes, it could.

Precious Metals Investment Strategy During Economic Uncertainty

So the point this week is this. Yes, we've had quite a rally in gold and silver prices to begin the year. However, the year is far from over, and economic fundamentals suggest that there are more price gains to come. Personally I prefer gold, and seeing the price at all-time highs does not give me pause. To the contrary, the all-time high prices embolden me to stack even more.
But maybe it's finally silver's time to shine too? In the recent past, any time the gold:silver ratio has moved past 100:1, the pendulum has swung toward an outperformance in silver. Most recently, we saw this in March of 2024, just before the silver price rallied about $10 or nearly 40% in six weeks. With the current gold:silver ratio again greater than 100:1, maybe it's time to stack some silver too?

Since 2010, we've warned at TF Metals Report that "the end of The Great Keynesian experiment is upon us" and that we should all "prepare accordingly". If you watched that clip of Ray Dalio posted above, you likely noticed that he was saying much the same thing. With the U.S. economy slipping into recession, the end of that "great experiment" begins to draw even closer.

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Now is the time to secure your investment in precious metals. Buy gold, buy silver, and protect your wealth today!