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RECESSION WATCH: SEEK SHELTER

30
Apr

RECESSION WATCH: SEEK SHELTER

It looks like we are heading at high speed into recession. Compared to the 2.4% GDP growth in Q4 2024, the GDP in Q1 2025, according to the Atlanta Federal Reserve Bank’s preliminary data, fell by 2.5%.

Moreover, the data does not take into account the tariff issues unleashed on April 2nd.

The growth rate of real gross domestic product (GDP) is a key indicator of economic activity, but the official figures are released with a delay. The Atlanta Fed’s GDP Now forecasting model provides a “nowcast” of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the US Bureau of Economic Analysis.

These figures are best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model.

The GDP Now model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.5 percent as of April 24.

This steep decline in GDP even before the trade tensions that have emerged in April (Q2) is significant for investors and may have played a role in the stock market volatility and the sharp appreciation in the price of gold.

It’s important to remember that gold has outperformed stocks by an average of 37% in 8 out of the last 10 recessions…

In the last three recessions since 2000, gold has outperformed US stocks by an average of 23%, justifying its position as a hedge against various forms of financial turmoil, and not just inflation.

It is also significant that during Q1, while the economy was evidently contracting, the rare coin market continued to show strength.

For example, some significant auction results appeared during the quarter:

  • A 1796 Quarter Dollar graded Mint State 61 crossed the auction block at $168,000.
  • A 1915 Indian $10 Eagle graded Proof (PF) 66 sold for $117,000.
  • Similarly, a 1912 Indian $10 Eagle graded Proof (PF) 66 traded at $111,000.
  • A 1856-O Liberty $20 Double Eagle graded AU58 sold for a record $690,000.
  • An 1836 Gobrecht Dollar Judd-63 Restrike graded Proof (PR) 63 Cameo set a new record at $192,000.
  • A 1896-S Liberty $10 Eagle graded Mint State (MS) 67 set an astonishing new record of $156,000. (The previous record set in 2021 was just $31,200.)
  • An 1870-CC Liberty $20 Double Eagle graded AU53 crossed the auction block at a record $588,000.
  • Another 1870-CC Liberty $20 Double Eagle graded XF40 brought $348,000 at auction.
  • A magnificent 1851 Humbert Fifty Dollar gold piece graded Mint State (MS) 62 drew a winning bid of $456,000.

Clearly, American investors are seeking alternatives to paper investments and tangible assets are providing the shelter needed in the developing economic environment.

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