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For all the buzz about promising vaccines and treatments, there currently is no end in sight to the COVID-19 pandemic. New infection numbers continue to grow at what seems like an exponential rate.And the economic fallout from the pandemic is every bit as significant as the widespread health consequences.

The U.S. gross domestic product (GDP) fell at an annualized rate of 32.9% in the second quarter. That’s the worst drop ever in America’s recorded history – including the Great Depression. “Neither the Great Depression nor the Great Recession nor any of the more than three dozen economic slumps over the past two centuries have ever caused such a sharp drain over so short a period of time,” writes CNBC.

Job loss across the country remains a profound problem as businesses both large and small are in tremendous jeopardy. According to the Chicago Tribune, large companies are declaring bankruptcy at record speed, and small companies – which employ nearly half of working Americans – are most vulnerable. The Tribune points to a recent survey from the U.S. Chamber of Commerce that found 58% of the nation’s small business owners are afraid they’ll go out of business.

Then there’s the fact that the entire nation is receiving welfare this year. Americans taxpayers already have received $1,200 a piece from the government in 2020,and it appears more of the same is coming.

Without question, the economic skies above our heads are extra-gloomy. Could it be that we’re in a depressionright now? What seemed a laughable consideration just a few months ago is today being taken very seriously by economists around the world.And if we are in a depression, what does that mean for precious metals’ prospects going forward?

What Is a Depression?

There are, in fact, economists and other experts who believe we are in a depression presently or will be in one relatively soon. I’ll detail what some of them have to say in just a bit. Before I do, however, it’s worth examining just what a depression actually is.

When people want to emphasize dire economic circumstances, they often will invoke the Great Depression of 1929 as the quintessential example of economic misery. That’s understandable, given the size of the footprintleft by the Great Depression on the economic history of the world. But it’s important to note that conditions do not have to be reflective of the worst globaldownturn in modern history to be depressionary.

One reason people can struggle with recognizing a depression is that there is no specific and universally accepted definition for one.

The definition of a recession is two consecutive quarters of decline in economic activity. Simple enough. But no such straightforward definition exists for depressions. You could say that depressions are “really, really bad” recessions, but that’s hardly a useful definition.

Here’s how Investopedia defines a depression:

A depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product (GDP) of at least 10% in a given year. Depressions are relatively less frequent than milder recessions, and tend to be accompanied by high unemployment and low inflation.

That definition is in substance the same one you’ll find if you scour the Internet looking for depression definitions. But there are variations, to be sure. For example, The Balance says that economic contraction in a depression lasts for two years, not three. says a depression is “a deep and long-lasting period of negative economic growth, with output falling for at least 12 months and GDP falling by over 10%.”

Given that there’s no complete agreement as to what specifically characterizes a depression, you might not be surprised to learn there are experts who believe we’re in a depression right now.

Economists Say We’re Living Through a “Pandemic Depression” Right Now

It remains to be seen if what’s going on right now will one day be termed the “Depression of 2020.” But according to two economists, Carmen Reinhart and Vincent Reinhart, it could certainly be called the “pandemic depression.”

The married economists readily admit that the current downturn does not rival the Great Depression in severity. However, they clarify, the historical record is “filled with depressions.” And according to them, we’re living through another one right now.

Since the onset of the pandemic, many experts have worked to find parallels between the current economic tumult and the 2008 Great Recession. Not so fast, say the Reinharts, who believe there’s an important distinction between what happened 12 years ago and what’s going on today.

Referring to the world’s economies, the Reinharts note that key global growth drivers – namely, emerging markets, including China – continued to thrive as the 2008 financial crisis played out.  “Not this time,” say the Reinharts. “The last time all engines failed was in the Great Depression; the collapse this time will be similarly abrupt and steep.”

For his part, Mark Zandi, chief economist at Moody’s Analytics, says he believes a depression exists where there’s at least 12 months of double-digit unemployment. As far as that goes, a recent Bankrate survey of economists found they expect double-digit unemployment to persist well into 2021. As a matter of fact, 13% of those surveyed by Bankrate say we’re in a depression right now.

Depression or Not, Gold and Silver Expected to Continue Surging

So are we really in a depression presently? Or are we instead in a curious environment that reflects select features of a depression but which may not (yet) be a full-blown depression?

It depends on whom you ask. Clearly, there are expert minds that think we’re in a depression right now. Others will disagree. What is not up for debate is that the economic consequences of the COVID-19 pandemic have left the U.S. – and the world – in some of the direst circumstances in recorded history. And with that being the case, the continued support of both the Federal Reserve and government through record levels of quantitative easing and deficit spending means that safe-haven assets such as physical gold and silver still have plenty of room to run.

The performance of both metals has moderated somewhat in August. That’s not a surprise, in light of how far and fast each has jumped over the past several months. Gold remains 25% above where it was at the beginning of the second quarter, and silver has risen nearly 100% over the same period. Neither metal has shown any signs of a broad reversal in price trend. And with the Congressional Budget Office declaring the economy will continue to suffer the effects of the pandemic for the next ten years, it’s reasonable to expect the principal sources of energy for precious metals– such as massive amounts of Fed QE and government deficit spending – to remain in place.


In light of the expectation that favorable conditions for both gold and silver will persist for the foreseeable future, analysts are looking for the metals to continue surging much higher from here. For example, Dan Oliver of Myrmikan Capital recently said he’s looking for $10,000-per-ounce gold on the strength of Fed asset-buying.To Oliver and others who share a robust outlook for gold and silver, it matters less how one specifically refers to the current economic environment and more whether pro-metals conditions will remain in place. And as long as they do, these observers believe gold and silver will push much higher over the near term – at least.

Tim Schmidt

A Florida-based Entrepreneur, Author, and Life Hacker, Tim Schmidt decided to take control of his retirement portfolio several years ago by setting up a self-directed IRA. This website shares his thoughts and opinions on retirement, investing, and managing credit. You can follow his career and travels on his Official Website as well as on his Instagram page.