The drumbeat of stagflation is growing louder on Wall Street. Torsten Sløk, chief economist at Apollo Global Management, cautions that the United States is approaching “a critical inflection point” where economic growth decelerates even as inflation stays stubbornly high. In a mid-year white paper, Sløk argues that the wave of tariffs unveiled this spring has injected a stagflationary shock into the economy—an environment that historically proves hostile to stocks and bonds alike but remarkably friendly to gold and other precious metals.

Below, we unpack Sløk’s four headline forecasts and explore why safe-haven assets such as physical gold, silver, and Gold IRA holdings could shine if his roadmap plays out.

1. Growth Slows, But Gold’s Allure Strengthens

Sløk projects real GDP growth to sink to roughly 1.2 percent in 2025—less than half last year’s 3.1 percent pace. First-quarter output has already turned negative, breaking a three-year expansion streak. When growth grinds down, investors historically rotate toward uncorrelated assets with intrinsic value. Over the past five U.S. recessions, gold prices advanced in four, underscoring bullion’s role as a portfolio stabilizer when conventional assets stumble.

2. Inflation Sticks Around—A Classic Setup for an Inflation Hedge

Apollo now pegs year-end CPI at about 3 percent versus a 2.4 percent pre-tariff forecast. Elevated inflation constrains the Federal Reserve’s ability to cut rates, but it simultaneously lifts the appeal of hard assets. Unlike paper currencies that erode under sustained inflation, precious metals retain purchasing power. Gold’s purchasing-power parity has held remarkably steady for centuries, a fact that appeals to family offices and retirees alike seeking to lock in real wealth preservation.

3. Jobless Rate Creeps Up, Liquidity Tightens

Unemployment could rise from 4.2 percent today to 5 percent by 2026, according to Sløk. Higher joblessness typically weighs on consumer spending and, by extension, corporate earnings. Broader risk aversion often follows—fueling demand for safe-haven assets. In the stagflation era of the late 1970s, gold prices quadrupled while equity returns lagged. Although history never repeats perfectly, the correlation between labor-market softness and rising demand for bullion remains intact.

4. Recession Odds Remain Uncomfortably High

Apollo assigns a 1-in-4 probability to a downturn within the next 12 months, citing what Sløk calls a potential “voluntary trade reset recession.” If shipping volumes contract and inventories shrink, corporate margins could compress quickly. Silver and platinum—with their dual roles as industrial inputs and monetary metals—often benefit in late-cycle periods when supply chains tighten.

Beyond the Forecast: Structural Tailwinds for Precious-Metals Investing

Central-Bank Buying Hits Record Levels

According to the World Gold Council, net official-sector purchases reached multi-decade highs in 2024, led by emerging-market central banks diversifying away from the U.S. dollar. Persistent reserve accumulation places a durable floor under prices and underscores bullion’s strategic importance on the global stage.

Physical Supply Remains Constrained

Large-scale mine projects face permitting delays and rising capex, while grades at existing operations continue to decline. Constricted supply meets relentless demand from ETFs, jewelry consumers, and sovereign buyers—a recipe that supports higher long-term price trajectories for physical gold and silver bullion alike.

Weak Dollar, Strong Metals

The tariff-driven trade deficit and a potentially shallower rate-hiking cycle could weigh on the greenback. A softer dollar typically amplifies metal returns for U.S. investors, as gold is priced globally in dollars. That currency kicker can materially boost real returns when other asset classes struggle.

Portfolio Implications: Building Resilience With Gold IRAs and Physical Holdings

1. Allocate to Tangible Assets
   A 5-10 percent allocation to physical precious metals has historically lowered overall portfolio volatility without sacrificing long-term returns.

2. Consider a Gold IRA Structure
   Rolling eligible retirement funds into a self-directed Gold IRA allows investors to capture tax-advantaged growth while holding IRS-approved bullion and coins. Custodianship and insured depository storage ensure compliance and security.

3. Blend Gold With Strategic Silver Exposure
   Silver’s greater price elasticity can amplify upside in inflationary booms, while gold anchors defensive positioning. A blended basket may capture both stability and growth.

4. Stay Liquid With Allocated Storage
   Ensure metals are held in fully allocated accounts, granting direct title to specific bars or coins—essential for liquidity during stressed markets.

Bottom Line

Torsten Sløk’s stagflation thesis is a sobering reminder that traditional 60/40 portfolios may face renewed headwinds. Elevated inflation, cooling growth, and tariff-induced supply-chain friction create a backdrop where precious metals investing can reclaim center stage. Gold’s centuries-long track record as a store of value and silver’s compelling industrial dynamics present investors with a rare blend of defensive shielding and upside potential.

Ready to explore how gold, silver, and other bullion could fortify your portfolio against stagflation? Contact a specialist at GoldenCrest Metals today to discuss strategic allocation options, including Gold IRAs and direct delivery programs designed to help you diversify your investment portfolio with confidence.

Source:

https://news.yahoo.com/news/finance/news/us-staring-down-fate-worse-170001260.html