Gold weakens marginally as we enter Fed Week
‘You might want to go into gold.’ – Nouriel Roubini
(USAGOLD – 10/31/2022) – Gold weakened marginally as we enter the stormy waters of Fed Week. It is down $3 this morning at $1644. Silver is down 7¢ at $19.26. There is a school of thought among investors that the Fed might be preparing for a future pivot on inflation and many will be looking for clues in Wednesday’s statement and press conference on its validity. Stocks and bonds have rallied on that presumption while precious metals have taken a more circumspect approach. Economist Nouriel Roubini is among the group that believes that the Fed is headed for an abrupt change of heart. The central bank, he says in a recent Bloomberg interview, is likely to “wimp out” on its inflation stance and push the economy, as a result, into the worst monetary crisis since the 1970s.
For years, Roubini shied away from gold despite his notoriously gloomy outlook, but now he recommends it. “You might want to go into gold,” he says. “It has not done very well in the last year but once inflation becomes unhinged when the central banks are going to blink, and until now central banks have played tough. That’s why gold has done poorly, because the real rates were going higher. Then gold is going to outperform like other precious metals, like probably many commodities. But the commodities are going to be hurt by the recession. So gold is actually less cyclical.”