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Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, sees a “long and ugly” recession in the US and globally occurring at the end of 2022 that could last all of 2023 and a sharp correction in the S&P 500.
“Even in a plain vanilla recession, the S&P 500 can fall by 30 per cent,” said Roubini, chairman and chief executive officer of Roubini Macro Associates, in an interview this week. In “a real hard landing”, which he expects, it could fall 40 per cent.
So its not a bad bet to expect there will be some downside adjustment coing inthe near futire to shares which will mean Gold will ....
best
the gnome
He gives logical reasons in the article.
The market has been injected with too much Botox is the way I see it.
We all will soon see.
Gnome, which means gold will….what?
And what about gold shares
So now Sotolo is trying and pretending to be thick.
Ha Ha.
Mizolgit I am not, I genuinely want to know what gnome thinks.
Most economists say that rising interest rates (tips have risen from -1% to +1.2%, an extraordinary rise of over 2% since the start of the year) mean falling stocks falling gold and faster falling gold mining stocks as hit by both. Last time this happened, though not quite such a big rise, gold fell from near $1800 to $1200 and Cey form around 100 to around 34p or three fold
But some believe in this time it is different and that in an economically challenged world investors may take the solace in gold and it will rise enough to even lift gold shares troubled by soaring costs and overall lower PE’s. Gnome leave his view enigmatically open, maybe because he thinks most possibilities equally likely, or because he is suggesting misery but is too sensitive to dot the i’s . Despite your snide remarks as usual I would like to know his wise opinion. And if I did know what he thought, Miz unlike you I wouldn’t have to pretend to ask for an answer
PS TIPS ( U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, Inflation-Indexed), probably the most important metric affecting gold and our share, could rise considerably more, they made over 3%, 3 times higher than now, in 2008. However built into the high price is an expectation that high rates, and the accompanying depression, will knock inflation right back, Gnome may think the market has got this wrong.
To ask a question such as you asked, who dishes out opinions all the time sounds ridiculous.
Toss a coin ,no one can be absoloutely sure about the future,especially now.
So it would be you who mjay be making a snide remark.
Enjoy your day Sotolo.
Gnome did you enigmatic end mean toss a coin, or that you thought it obvious? I thought it likelier you were suggesting gold would rise in this scenario, but if so what of Cey in a stock market that could quarter or halve from here, depending what happens with interest rates and inflation? Thanks for your wise words, as so many of teh knowledgable here, as ever
Hi Sotolo,
What some folks have done is to ensure broker portfolios have a high level of cash by taking monies out of the banks and to sit as an asset ready to deploy. The cash held in portfolios by managers is around 6% who are expected to be fully invested and do invest in TIPs as you suggest. Private investors may be sitting say at 40% ready to do a 100% average down if positions collapsed with their cash being deployed.
The issues many folks have is whether all the USA release of fuel from reserves will eventually lead to a rebound in oil prices. If it does the inflation rate will kick off higher again, and labour rates go higher to take it further. Interest rates are going high at a time when government debt is sky high. So can the FED and others break down inflation or will it continue higher, and the central banks create sovereign default risks. USD is an overcrowded trade, and we could have the yen, pound and euro collapse further. Gold in other currencies, take the pound, has moved up £1300 (a year ago) to £1560 at a peak and is currently at £1465 an ounce (up 12% against the existing inflation). It is therefore a runaway dollar that is lowering gold prices in USA terms, but hardly at all around the globe. If the dollar were to collapse than the currency devaluation from where overseas buyers bought the tips would need to be off set against those prices and the value of other currencies might recover from their lows against USD. It is a calculation that every bond buyer has to consider. Hope what I write has helped. Everybody is trying to hedge on what is an awful recession on the horizon. Tony
Thanks Torna
Its the exhorbitant privilege of the US and the US$ that is causing a lot of issues, elst call these distortions. Right now, the US$ being the most secure "asset" (I certainly do not think this) in many investors mind, there is a run towards it, which is now over pricing the US$. This causes other asset classes to be devalued. In Australia our currency has fallen to a low of 0.67, and trending down, despite a mining boom, and despite a $50 improvement in our budget.
So the short answer on gold is it is undervalued. The USD is hugely overvalued, which is not int he US best interest, so I cannot see this as lasting.
The FED continues to amaze me with their irrational solutions to problems they largely create. When they do not create the problems, then the sloppy US Bank system and Wall Street greed obliges. The trouble is that these insto's create mayhem in the global market, which is not what should happen in a well engineered financial system.
I think well run gold mining companies (not too many of these mind you), and or well run royalty companies are of great interest.
best
the gnome
The good thing with the oil price is that Russia is currently selling bucket loads of the stuff largely to China & India but quite a few others including Indonesia are lining up.
Russia is doing this at around $20 below the Brent price so everyone participating are happy, Russia gets steady revenue & the purchasers are saving billions a month!
This should serve to keep a lid on oil for the time being however come the European winter the doo doo may really hit the fan :)