The economy is in recession, and gold is shrinking

At AXL Capital, we believe that gold will NOT steadily decline until the COVID-19 vaccine passes Phase 3 and is approving by the FDA, then, the aftermath of the pandemic will continue, and companies-and countries-will face the big issue of their high debts. In the words of investment guru Ray Dalio, the big challenge is to achieve beautiful deleveraging.

According to the data published today 08/30, the US economy accumulated to the second quarter a setback -32.9% due to the effects of the closing of businesses, lower speed of money, therefore, lower consumption per capita due to the Coronavirus pandemic.

For that reason, Wall Street is declining, with the Dow Jones index at -1.24%; Also, due to a request to postpone the US presidential elections beyond November 2020.

On the other hand, golds join the general decline and fall from its historical maximum yesterday, 29/07, to 1,980 US$/oz (after more than ten consecutive days of rising), currently standing at 1,947 US$/oz. Usually gold only in the short term retreats along with significant falls in the stock market, but recovers quickly if conditions of uncertainty remain.

The U.S. economy suffered its sharpest downturn since at least the 1940s in the second quarter, highlighting how the pandemic has ravaged businesses across the country and left millions of Americans out of work.

Gross domestic product shrank 9.5% in the second quarter from the first, a drop that equals an annualized pace of 32.9%, the Commerce Department’s initial estimate showed on Thursday. That’s the steepest annualized decline in quarterly records dating back to 1947 and compares with analyst estimates for a 34.5% contraction. Personal spending, which makes up about two-thirds of GDP, slumped an annualized 34.6%, also the most on record.