Stagflation is Now the Consensus Expectation of Asset Managers for 2023
“Bridgewater Associates is the world’s largest hedge fund. Bridgewater’s chief investment strategist, Rebecca Patterson, is another of the voices saying that stagflation will be the economy’s base case through at least the near term. That’s not all she’s been saying, however. Patterson also has been vocal in her opinion that one of the best ways to diminish the impact of stagflation is with gold. (In economics, stagflation or recession- inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high.)
As Patterson and her team started to consider the likelihood that stagflation could prevail for the foreseeable future, they researched which assets were the most beneficial in economic circumstances characterized by low growth and higher inflation. Going back 100 years. in their examination, Bridgewater determined that gold has been a particularly “solid” asset (pun intended) throughout periods of stagflation.[2]
It’s valuable information, to be sure. But even if we didn’t have it, we still would have the historical record of gold’s performance during what is perhaps the most infamous period of stagflation in American economic history.
From 1973 through 1982, inflation proved to be a tremendous challenge, rising to double digits on multiple occasions while never dropping much below 6%.[3] The country fell into recession three separate times in those years.[4] And monthly unemployment climbed as high as 11% and never dropped below 4.6%.[5]
During that tumultuous stretch, gold strengthened considerably, appreciating nearly 600%. As a matter of fact, silver acquitted itself very nicely, as well, rising 435%.[6]
Let me be clear: Gold may or may not be an appropriate choice for you as a way to try to hedge your savings against a potential stagflationary environment. Only you can decide that for yourself. But given stagflation’s capacity to significantly impede the growth of IRAs and 401(k)s for years at a time – as well as the likelihood we’ll see stagflation reappear in 2023 – I’m hoping you’ll seriously consider a meaningful strategy of some kind that’s designed to lessen its impact.”
Sited from & Credited info: APM posted 12/2/2022 Redacted shorter to keep to important points and bullet points added by HGG. https://www.augustapreciousmetals.com/market-news/stagflation-is-now-the-consensus
[2] Jennifer Ablan, Pensions & Investments, “Bridgewater’s Rebecca Patterson: Fed risks credibility in inflation fight” (August 25, 2022, accessed 12/1/22). [3] U.S. Inflation Calculator, “Historical Inflation Rates: 1914-2022” (accessed 12/1/22).
[4] National Bureau of Economic Research, “US Business Cycle Expansions and Contractions” (accessed 12/1/22).
[5] Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey” (accessed 12/1/22).Sited from & Credited info:
[6] London Bullion Market Association, “Precious Metal Prices” (accessed 12/1/22).
