Adrian Day: Recession, Stagflation, Crash? Where We’re Going, What it Means for Gold
The US Federal Reserve hiked interest rates by 75 basis points last week in its ongoing fight against inflation, amping up its efforts to tame prices and leaving market watchers wondering what’s next.
Speaking just ahead of the central bank’s meeting, Adrian Day, president of Adrian Day Asset Management, said usually the Fed starts out hawkish and then backs off. But this time around the opposite is happening.
This is due to various factors, but US President Joe Biden’s recent meeting with Fed Chair Jerome Powell is among them — in their discussion, Biden expressed that inflation is the Fed’s responsibility.
“If you’ve just had a meeting with the president where he has told you — and then announced to the world — that inflation is your number one priority and you’re responsible, you continue to be hawkish. And I think that’s got the market really nervous,” Day said at the Prospectors & Developers Association of Canada (PDAC) convention.
Day doesn’t think the Fed will be able to bring inflation down to a reasonable level without provoking a recession, and noted that if the market isn’t already in one now, it will get there by the end of the year.
A recession combined with high prices results in stagflation, and Day said that looking at stagflationary periods from 1960 to now shows that energy and gold are top performers during these times.
“The number one performing asset has been energy, and the number two performing asset has been gold,” he explained on the sidelines of the show. “Gold and gold stocks have done well in every single stagflationary period, so I think gold is really where you want to be positioned if you see stagflation coming.”
Watch the interview above for more from Day on gold and the outlook for the US economy. You can also click here for our recap of PDAC, and here for our full PDAC playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.