The Crisis Will Sink Stocks And Propel Gold

There are no safe assets. In 2002 we recommended our investors to hold up to 50% of their financial assets in physical gold. Today in 2020, I consider that up to 100% is the right figure since there are no safe assets except for physical precious metals.

We are now at the end of the only truly global asset bubble in history, fuelled by a debt explosion of epic proportions. Never before have all major economies peaked together, powered by quadrillions of credit creation, money printing, and derivatives.

UBER-OPTIMISTIC INVESTORS WILL BE SHOCKED

Although the magnitude of this bull market is greater than anything seen before, the psychology of the current market is similar to previous speculative bubbles whether we take 1929, 1973, 1987, 1999 or 2007. At the stock market peak of these periods, psychology reached uber-optimism. In 1929 for example, the Yale economist Irving Fisher stated in the New York Times: “Stock prices have reached what looks like a permanently high plateau”. Three years later the Dow had lost 90%.

Whether markets peak now or climb slightly higher is irrelevant. Euphoric investors and computers might push the Dow to the psychological level of 30,000 or it might peak here. What is clear is that the turn is imminent whether it happens today or in a few weeks’ time. And once the turn is in, we are likely to see a 90% decline in real terms.

WILL CORONAVIRUS BE THE TRIGGER

The catalyst for the coming market and debt collapse could be a number of events. If the Coronavirus doesn’t miraculously stop spreading soon, it could very likely be the trigger for the world economy coming to a halt.

A Lancet study by the University of Hong Kong has estimated that the Chinese authorities have understated the Coronavirus epidemic tenfold. The study calculates a spread rate of 2.68 per case and a doubling in total numbers every 6.4 days.

Instead of the official figures of around 1,100 fatalities, there are other numbers stating 25,000 dead in total or even as high as 10,000 per day. During the 1918 Spanish Flu, 2.5% of the victims died or an estimated 50 million. The Wuhan figures indicate a death rate of 5% which would be extremely serious if correct. But that is very low compared to the Black Death which killed half of Europe’s population in the mid 14th century.

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