Gold and Silver Enter Supercycle Phase as Recession Fears Deepen
LONDON (October 15) It’s estimated that more than 10,000 federal employees will be unemployed, potentially confirming that the U.S. economy has already entered a recessionary phase. The surge in unemployment data will be skewed and exacerbated by the government shutdown, creating temporary but significant distortions in headline jobless numbers. While many of these layoffs may be reversed once federal operations resume, the psychological and financial ripple effects can dampen consumer spending, business confidence, and overall economic output.
At the macro level, GDP growth will likely contract as reduced federal spending and wages pull consumption lower. Even a brief shutdown can shave 0.1%–0.2% off quarterly GDP, pushing an already fragile economy toward contraction. These developments are placing severe pressure on the Federal Reserve to pivot faster and lower interest rates more aggressively than previously anticipated. With inflation still elevated and growth faltering, the Fed faces a tightening vice between sustaining credibility and preventing a deeper downturn.
This dynamic sets the stage for a powerful shift in capital flows toward safe-haven assets, particularly gold and silver. Historically, when the Fed transitions from restrictive to accommodative policy amid economic distress, precious metals enter the third and most explosive phase of their bullish supercycle. Gold and silver, which have already moved through accumulation and breakout phases, now appear poised for a hyperbolic advance, discounting the potential economic damage and the possibility of a deeper recession than anticipated.
In this third phase, gold could challenge all-time highs as real yields decline and liquidity floods back into the system. Silver, traditionally more volatile, could outperform gold as industrial demand and speculative buying converge. The narrowing futures inversion — from a $3 premium to near parity — signals tightening physical supply, even as paper markets struggle to absorb the shock.
Investing.com
