Gold prices are down for seven consecutive months, the longest decline since 1869, according to Deutsche Bank.
Bullion slumped 1.6% in October and is down 11% from the start of the year.
The fall in gold prices is happening as real bond yields have turned sharply higher.
Michael Burry and Jeremy Grantham have warned an epic stock market crash is underway. Here’s what 5 doomsayers expect to happen next.
Michael Burry and Jeremy Grantham have both warned the stock-market crash is well underway.
Nouriel Roubini, Robert Kiyosaki, and Harry Dent also expect asset prices to plunge further.
Here’s a roundup of what five market doomsayers are predicting.
Michael Burry, Jeremy Grantham, and other market experts have warned the stock-market downturn this year is far from over.
Nouriel Roubini, Robert Kiyosaki, and Harry Dent are among those predicting asset prices will plunge further. They have cited excessive valuations, stubborn inflation, a potential recession, pandemic disruptions, and food and fuel crises as some of the reasons they expect a devastating crash.
Here’s what 5 doomsayers have said about the stock market:
Michael Burry
Michael Burry diagnosed last year an unprecedented bubble in asset prices, and warned it would culminate in the “mother of all crashes.” He hinted the meltdown is in full swing in a since-deleted tweet this week.
The investor of “The Big Short” fame shared a S&P 500 chart showing the stock-market index has plunged 18% from its December peak. “And yet I keep getting asked ‘wen crash?'” he wrote, implying the downturn is well underway.
Burry has suggested the S&P 500 could plummet by 53% to below 1,900 points over the next few years, based on the benchmark index’s bottom tick during previous crashes.
Jeremy Grantham
Jeremy Grantham cautioned an epic “superbubble” across stocks, bonds, and housing was about to collapse, writing in a research note this week.
The veteran investor and GMO cofounder dismissed the recent rebound in stocks as a brief reprieve, noting that previous superbubbles have always been followed by market declines of at least 50%.
Grantham outlined how a painful combination of pressures spell trouble for asset prices and global growth. He pointed to shrinking corporate margins, high inflation, interest-rate hikes, food and energy crises, pandemic disruptions, the Russia-Ukraine war, and longer-term issues such as ageing populations and labor shortages.
“Each cycle is different and unique — but every historical parallel suggests that the worst is yet to come,” he said.
Nouriel Roubini
Nouriel Roubini suggested during a recent webinar that the Federal Reserve might have to raise interest rates to 5% to rein in inflation. But he said a hike of that magnitude in the debt-ridden US economy could cause stocks, bonds, housing, credit, private equity, and other markets to crash.
The NYU Stern economist, whose nickname is “Dr. Doom,” argued the economy was poised to suffer a painful recession, which could drive stocks down by another 35%.
Roubini noted that stubborn inflation would likely weigh on stocks and bonds. He advised investors to hedge their portfolios with alternative assets such as gold, real estate, or bitcoin.
Robert Kiyosaki
Similar to Burry, Robert Kiyosaki sounded the alarm on the “biggest bubble in world history” last summer, and said it would end with an equally historic meltdown.
“THAT CRASH IS HERE,” he tweeted this week. “Millions will be wiped out.”
The “Rich Dad Poor Dad” author and personal-finance guru noted in another tweet that stocks, gold, silver, bitcoin, and real estate were all crashing. He said he expected the downturn to continue in the coming months.
However, Kiyosaki reassured investors that selloffs provide opportunities to scoop up bargains and ultimately get rich. He recalled borrowing millions of dollars to purchase cut-price real estate during the financial crisis.
Harry Dent
Harry Dent, a market historian and newsletter writer, warned investors that the recent bounce in stock prices would be followed by an even bigger decline.
“We had this first crash, a tepid bounce, and now we’ll have another one of the same magnitude,” the market historian and newsletter writer said in a recent radio interview.
Notably, Dent touted the expected downturn as a chance for young people to invest at reasonable prices, generate robust returns, and save for retirement. He recommended investing in multifamily real estate and long-dated Treasury bonds before asset prices crash.
6/6 SLIDES
Gold prices fell 1.6% in October and have dropped for seven consecutive months, marking the longest slump since 1869, according to Deutsche Bank note.
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Much of that time includes the era when the US dollar was fixed to gold, meaning the precious metal’s price didn’t move much.
But Deutsche Bank analysts also noted that such a losing streak hasn’t been seen in the half century that followed the US coming off the gold standard, ending the Bretton Woods currency exchange regime.
Bullion ticked up 1.21% Tuesday, changing hands at $1,643.56 per ounce but is down 11% from the start of the year. Meanwhile inflation-adjusted bond yields have turned sharply higher amid aggressive rate hikes from the Federal Reserve and other central banks.
Real yields went from -0.49% in March to 1.54% in October, and that has “diminished the appeal of a non-interest bearing asset, even as inflation has remained high,” the note said.
Gold, however, has still outperformed most other notable assets despite the sharp decline this year, according to Deutsche Bank research strategist Jim Reid. He wrote in a note Tuesday that outside of oil, gold is the asset nearest to parity so far in 2022.
“So on a relative basis, it’s performed better than virtually all other global assets,” he said.
