the letter K symbolizing the k-shaped recovery meaning that different communities experience different rates of recovery after a recession.

What the K-Shaped Recovery Means for Gold

1 minute read
Oct 5, 2020

You probably noticed certain industries and communities aren’t bouncing back as quickly as others during times of recession or economic crisis. That’s what the K-shaped recovery is all about.

For the last couple of months, we've seen a new letter popping up in the financial jargon, the letter K.

After V-shaped, W-shaped, U-shaped, and L-shaped recoveries... the K-shaped recovery.

The main idea behind the K-shaped recovery is that those with the most assets and income will see their wealth increase, while those without assets or with low incomes will increasingly struggle.

The chart below clearly shows the staggering difference in the employment rate between low-wage jobs and high-wage jobs in the U.S.

the graph showing the difference in the employment rate between low-wage jobs and high-wage jobs in the US.

In the U.S., the employment rate for wages above $60K is back to pre-COVID numbers, while wages under $27K are still suffering.

Could such a recovery end up impacting gold demand?

In short, not really.

Simply because usual gold buyers tend to earn wages above $60K.

And with gold buyers getting out largely untouched, demand for gold seems unlikely to drop from the effects of a K-shape recovery.