Although forecasts of an imminent global recession, expected as early as 2022, have yet to be realised, sooner or later the inevitable economic cycle will be complete. Jeffrey Christian, a respected financial analyst at CPM Group, explains how we can reduce risky investments and protect our savings with safer assets.

Half of Europe is in economic stagnation or contraction, with eurozone countries’ GDP falling by 0.1% in the third quarter of the year, leaving them on the brink of recession. Rising interest rates to try to contain inflationary pressures may not be enough if oil prices continue to rise due to geopolitical instability in the Middle East.

On the other hand, robust third-quarter economic activity in the United States has been sustained by growth in consumer spending, despite prevailing high-interest rates. This spending has been supported by an increase in consumer credit borrowing, especially in the use of credit cards, which have seen an increase in defaults, raising concerns that this situation could spread to other debt instruments.

In Spain, inflation rose by 3.5%, below the 3.8% expected, according to data published last week by the National Statistics Institute (INE). Inflation did not align with forecasts because the rise in energy prices was offset by lower domestic demand. Even so, the Spanish economy is cooling, with growth of 0.3%, down from 0.4% in the previous month, although it is holding up better than many economies in the rest of the European Union.

It remains to be seen whether the resilience of these economies is such that the predictions of a recession expected since 2022 increasingly fade and a soft economic landing is achieved, or whether it simply prolongs what is inevitable for another year or two. Be that as it may, and leaving aside the reliability of the more immediate doomsday predictions, there are some steps we can take to protect our investments and savings in front of the current economic uncertainty.

Reduce debt, get rid of sketchy investments and buy gold

Jeffrey Christian is a renowned analyst and advisor on the precious metals and commodities markets. He has provided advisory services to the World Bank, the United Nations, the International Monetary Fund and numerous governments. Likewise, through his company, CPM Group, he regularly makes presentations to investors on financial market forecasts, especially on the evolution of the value of precious metals.

The financial guru clarifies that “although we are not in a recession now and the world is not sinking, there will be recessions in the future and one of them could come soon”. Such is the nature of the business cycle. To deal with it, he says it is essential to reduce or eliminate debt. He also stresses the importance of accumulating cash, since crises and recessions can also be business opportunities thanks to the general decline of prices in different sectors of the economy.

Christian advises to “keep a significant portion of our assets, perhaps 20-25% in gold, or gold and silver”. Gold can reduce the overall volatility of our portfolio, which is often synonymous with reduced investment risk, and is traditionally considered the best asset for inflation protection. Furthermore, purchases of gold over the last three years have had a stellar performance with record highs for investors and have seen a 40% rise in value.

In the same context, he wants us to understand that although we can hold shares in stocks that, on the face of it, may seem immune to a recession, “when the tide goes out, all boats sink with it”. When cleaning up our investment portfolio, remember that “in the past, gold has recovered faster than equities”, the analyst points out. Most importantly, this is the same advice he gave in 2006, which proved effective against the 2008 financial crisis.

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