We are on the verge of recession. The Fed tightens and in the past it has never ended well. The yield curve is almost flat. When it inverses, it will be the end. All the bubbles will burst, pushing the global economy into another crisis. It will be more serious than all the previous cases, especially given that Trump will trigger a trade war or maybe even a conventional one.

Have you heard these gloomy prophecies? We have. Many times, probably too many times. But what if they are wrong? Let’s run our imagination wild and think what if this time is really different. We know, we know: it isn’t. But, as a counterweight for all these pessimistic narratives, let’s see what is the rosiest scenario for the world – and what does it imply for the gold market.

In our ultra optimistic story, the global economy grows steadily for another several year, marking the longest economic expansion in the modern history. The scars after the Great Recession have healed completely. As the confidence returns, entrepreneurs increase real investments. Inflation is under control and real wages rise, gradually lifting the standard of living. The public is satisfied and chooses Trump for another term. The president continues implementing a pro-business agenda but abandons trade protectionism. He removes regulations restricting the economic activity. After easy fiscal policy during the first four years, he gradually reduces deficits, balancing the budget at the end of the second term. It reduces the uncertainty and frees more resources for the private sector. And monetary policy is not too easy, not too tight. The Fed gradually raises interest rates to their natural level, keeping the economy on an even keel avoiding any abrupt actions which could trigger another financial crisis; but at the same time it does not allow for building up of dangerous asset price bubbles.

Sounds like a dream? And rightly so, because it’s really unlikely that everything goes well (although Trump may really withdraw some of its most radical trade ideas). In such a world, there is no particular reason to buy any safe-haven assets, including gold. But in a real world, in which we live, something always goes wrong. You know, people do not possess perfect knowledge, so some plans and forecasts fail. Because of that inherent, irreducible uncertainty, there will always be reasons for buying gold.