Gold will lead to a stock market rebound once the next recession is over – Chen Lin

Chen Lin, founder of Lin Asset Management, said the US economy may already be in a recession, and the GDP release in the second quarter will be one of the most important indicators.

“It’s possible that we’re already in a recession… and we’re likely to see a really deep recession next year,” he said.

Speaking with David Lane, Anchor and Producer at Kitco News, at the PDAC 2022 conference in Toronto, Lane said the price of gold has historically driven the economic recovery and stock market recovery, and this time it shouldn’t be any different.

“When are we going out? [the recession]? I think, one day, the Fed will finally blink. They’ll say, “We can’t tighten like this anymore.” Then the gold will rise strongly … and then we will begin to emerge from the slump,” he said.

The Federal Reserve, Inflation and Markets

Lane said the Fed lacks the ability to raise interest rates to a level that adequately addresses inflation. He pointed to Paul Volcker, Chairman of the Federal Reserve from 1979 to 1987, who raised the federal funds rate to 20 percent in 1981, in order to tackle double-digit inflation.

He said, “People talk about Paul Volcker…but that was back then, and this is now.” The United States has a debt of 30 trillion dollars. If interest rates go up, even if they go up to 4 percent, think about how many trillions we’re going to pay each year to the interest rate…there’s going to be a buzz about that. So, I don’t think the US will do that, or the interest rate can go up too much [levels] necessary to crush inflation.”

He added that the Fed may feel compelled to engage in more quantitative easing.

Gold is stagnating

Although gold does not perform well during a recession, it can be a leading indicator that the recession is nearing its end.

“In every recession, in every stock market downturn, gold is always the first to come out,” he explained. “Even for investors who are not interested in gold, watching the price of gold can give you a direction for what the market will be like in the next few weeks or next few months…Gold goes up first, then the economy recovers.”

To see Lane’s thoughts on silver, gold and uranium mining stocks, watch the video above.

Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV)

Follow Kitco News on Twitter: @KitcoNewsNOW (https://twitter.com/KitcoNewsNOW)

Disclaimer: The opinions expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.

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