@kgtom dont disagree with that being one possible endgame. but...

@kgtom

dont disagree with that being one possible endgame. but you are conflating the GFC's housing specific collapse with the term recession - and thats not how most recessions go.

so its pretty silly when everyone starts saying world is ending/great depression coming - just cos US gdp growth is slow or might go neg.

gold tinfoil hat investors tend to call 10 out of every 1 world collapses

esp because one of the things people tend to do is view everything through the prism of the asset class they are most exposed to - rather than at true economic level. people get very black or white - all or nothing - gold going to 300 or 10,000 - both views are really quite extreme and intellectually lazy

the next fall in equities will likely be substantial given how high valuations are and how flat global growth make future earnings prospects.

same with property because where we sit on interest rate curve

but falls in stocks or property values are NOT always destructive to the real economy in the medium term

thats why people jumping up and down about US going neg growth is a bridge too far. same as people comparing oil, auto and student loan debt loads to housing subprime risks - the 2 are structurally completely different.

housing is the single biggest consumer asset base. decimation of the asset base has far more severe and systemic impacts to a national economy than specific sectors like HYD, oil, cars etc. cars are as widespread but the debt load is miniscule so the systemic risk far lower.

by itself - weak/negative US growth could just trigger some asset recalibration etc if the US pulls out of the recession

the real risks structurally now really lie in the quantum of debt and debt to gdp ratios of the sovereigns and their key banks - and in China specifically having an implosion just when the US is weak - because of what that would do to the new trade flows we've bult in past decade

the globe has basically weaned itself off the US and onto China. the big risk is if both contract hard at the same time

then global debt/gdp ratios will ramp much higher
but the US by itself is now largely self sufficient but not really an influential driver of most other key nation state economies - except China interestignly enough.

So a US recession by itself isnt a systemic risk.

If they dont get their budget in order and the recession is deep of course that changes the threat level

but thats why I mean its too early and too big a call. Sovereign debt is the great differentiator this cycle - because gov'ts have an infinite ability to repay debt through money printing.

As Japan has showed - its possible to have decades of debt/gdp ratios that would cause any company or individual to go bankrupt within a year

But whether its a slow bleed or a savage pop - gold really doesnt have many structural downside risks in any scenario i can think of