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Investment demand for gold should push prices to all time-highs above US$2 000 in 2023 as the US economy falls into a recession, according to David Rosenberg, founder and chief economist at Rosenberg Research.

In an exclusive interview with Kitco News, Rosenberg said that when it comes to the health of the economy, the only questions investors should be asking themselves this year are: how bad will the impending recession be and how should they be protecting their wealth?

In his 2023 outlook report, Rosenberg said he is using a barbell investment strategy and is bullish on gold and bonds as he sees a peak in the US dollar and the Federal Reserve’s monetary policy.

Rosenberg’s pessimistic outlook comes as the S&P 500 has rallied nearly 4 percent since the start of the new year. Sentiment on Wall Street has improved as positive employment data and falling inflation are reviving hopes that the US economy will see a soft landing.

“I see this outlook as a hope and a prayer,” he said. “A recession is as close to a sure thing as anything can ever be.”

Although inflation has dropped sharply from its 2022 summer highs, it remains persistently high. Rosenberg said that the Federal Reserve’s fixation on bringing inflation back down its 2 percent target means it will be slow to react to growing economic weakness. He added that the Fed won’t be quick to cut interest rates because it doesn’t want to see a renewed threat of inflation.

“What happens in a recession is they ultimately end,” he said. “The mild and brief affairs we’ve seen in the past were predicated on the Fed cutting rates early and aggressively. But there’s not going to be a get-at-out-of-jail-free card this time around”. — Kitco News.