Investing in gold coins – the digital kind – in recessionary times

While major economic powers move towards more dovish monetary policies, it has been widely reported that central banks are amassing large physical gold reserves. Some commentators are saying the emerging trends in monetary policies across several jurisdictions could push the global economy towards another recession. This is already evident by monitoring the struggling economies of Zimbabwe, Venezuela and Argentina and how they are managing the varying states of hyperinflation with their national currencies. The growing coronavirus threat and this week’s stock market plunge are also deepening fears of a worldwide economic downturn.

The pressure on central banks to further lower their interest rates is mounting: an already weakened global economy is now in the grip of a global public health crisis. A looming pandemic spread of Covid-19, first seen in the Chinese city of Wuhan, has now affected business, factories, shops and public life throughout the world’s second largest economy. Economists are now forecasting a 6% or higher annualized drop in China’s first-quarter GDP. The ripple effects will likely reach far beyond the Chinese economy.

In complex global supply chain network, the steep fall in Chinese factory output will leave manufacturers around the globe without inventory and parts for their production. With the coronavirus spreading rapidly in countries like South Korea, Italy, Iran and now the United States, the crisis is no longer confined to China. The Global Preparedness Monitoring Board, co-convened by the World Bank and the World Health Organization, estimates that a moderate global pandemic could affect global GDP by 2.2%, or close to $1.5 trillion USD.

Amid such growing uncertainty in the global economy, gold may present a suitable hedge for investors looking to hold assets that can withstand any economic downturn. As a safe-haven asset, gold is up by more than 400% since 2000 as of this writing — further proof of the precious metal’s…

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