Gold And The Fiscal Cliff

The Bear Case

Though fewer fall under this camp, there are still those who have a bearish outlook for the coming fiscal cliff scenario. Going over the cliff will likely send the U.S. into a recession, something that is widely agreed upon. Many feel that gold will be unable to hold onto its shine if markets turn south again, as everything would take a hit. Though it could outperform, it would be a game of how much gold lost in comparison to equities, as opposed to how much it gained by the same metric [see also 3 Metals Outshining Gold].

Not going over the cliff could renew bullish sentiment for markets, which would increase the appetite for riskier assets. This could mean that gold will face selling pressures as investors are more comfortable with equities and other holdings for their portfolios.

This article was originally written by Jared Cummans, and posted on CommodityHQ.