Big Tech Bracing for Upcoming Recession

Where are we currently in our economy? As we wait on the November jobs report and the Federal Reserve's reaction to it, we invited a special guest from Birch Gold Group to talk about his take on things and how you can protect yourself. Joining me now is Philip Patrick. He is a precious metal specialist at Birch Gold Group, which is also our sponsor. Good morning, Philip. Good morning, Evelyn. Well, so you were also working as a wealth manager at Citibank a while ago. So first, I want to know what you think about where we are in the economy for context, because people look at the big tech layoffs, for instance, and many are wondering what it is signaling in terms of economy. What do you think? I think what they're doing is they're bracing for upcoming recession. Holiday demand now has fallen significantly, not just for tech and retail companies, but many companies are discussing now tightening their belts. In fact, Bezos came out recently and told people to hold off on major purchases. And to quote him directly, he said, look, if you're an individual thinking about buying a large screen TV, maybe slow that down, keep the cash, see what happens. And I think he's absolutely right. We've got tough times ahead, and it's time to tighten the belts a little bit. We're seeing a clear pattern. Prices on discretionary spending categories, clothing, jewelry, electronics, mostly lower, while prices on essentials, food, fuel, housing are higher. These are things people will buy regardless of price. In economics, we call it inelastic demand. So what we've seen with prices coming down is more a sign of recession. People's changing their spending behaviors more so than getting a handle on inflation. So I think the Fed has a lot of work to do heading into next year, and that means much higher interest rates. That's an interesting take on that. And so with that, keeping that in mind, how should we protect our savings? And what should we do to weather a recession? Look, it's a tough climate that we're in. Look at the markets right now. There's a lot of risk out there. Price to earning ratios in the equity market still show today a bubble. I think we've got a lot of air to come out of that market. Bonds today, losing to inflation, most bonds. We've still got low interest rates with high levels of inflation. So bonds are losing buying power. That's where I think precious metals come in. In climates like this, they're very conducive. Inflation drives them up. Market corrections drive them up. So I think everybody needs to hedging their exposure, heading into next year. And I think precious metals are one of the only and certainly the most effective ways to do it in today's climate. Because gold prices have been declining since March. And then there is the opportunity costs that people are talking about when it comes to non-yielding assets. So please go into a little bit more detail as of why now is a time to invest. I mean, you're right. We saw a decline in gold prices for about five months of this year since March. We've seen recently that backtracking gold prices have been shooting up over the last couple of weeks. What this spells to me is an opportunity. So the reason we saw gold prices decline is because of gold's relationship with the dollar. Gold and the dollar have an inverse relationship. So when the dollar goes down, of course, gold goes up. By that same token, when the dollar strengthens, gold goes down. So we've seen a short-term strengthening in the dollar. That's a very consistent pattern. After 2008, when the markets came down, the dollar strengthened temporarily, and then it dropped. Same thing happened in 2000. Now, the reason for that strengthening, you know, twofold. Number one, we're seeing currency markets across the globe getting hit, and the dollar's being strengthened by proxy. The other side of things is big downturns in the market, right? What that leads to short-term, a lot of people move to treasuries or dollars to hedge. That strengthens the currency. It's typically very short-lived. In 2008, gold dropped initially 30% with the markets. Then it went on to more than double in value. So for me, very similar opportunity to that. I think heading into next year, it's going to be a tough ride for the markets, a good opportunity for gold. And as they always say, you buy the dips. And I think we have the opportunity to do that today. I see. Thank you so much, Philip Patrick with Birch Gold Group. I appreciate it. Thank you so much. Thank you.