On Friday, the Dow Jones index rose about 400 points at the beginning of the day, but closed slightly more than 200 points. In the same time, gold there was a solid rally that held on. Yellow metal rose about $ 20 a day.
Could this be a sign of future events? In his weekend podcast, Peter said he thinks it’s possible.
I think that actions on the stock market and the gold market on Friday potentially speak of the future course of both markets.
Some argue that the late stock market sale was caused by a four-fold expiration of various options and futures contracts, which occurs every quarter.
But I think that beneath the surface, I think the market is actually telling you that we may have exhausted this bear market rally in the stock market. ”
Gold closed the day at about $ 1,744 an ounce. This is the highest weekly close of the entire bullish run of the stock market, which began after the March fall.
So, gold continues to look as if it is about to flare up. … Perhaps it was a significant day and week, indicating that the stock market is about to collapse, and gold and gold reserves are about to collapse. “
On the one hand, many of the first economic news related to the opening turned out to be better than expected. This has contributed to the rally in the stock market. People were preparing for the worst, but still have not received the worst.
But people forget that before the pandemic, the stock market was already valued for perfection. This has been extremely overrated.
The market has no reason to return to the level it occupied before the collapse, because it should never have occupied this territory in the first place. ”
The real problem will arise when people begin to realize that we are not recovering to where we were. We will recover from recession / depression.
Because the economy will fall, even if we never had COVID-19, even if we did not have these mandatory business stops. In any case, we have long expected a recession. We had the biggest expansion in history. The recession was about to begin. To think that this recession has already ended – that somehow the recession began worse than ever in the history of the USA, even worse than the Great Depression – that it has already ended, that it will be a phenomenon in one, two quarters, which is ridiculous . The recession began with a new reason, because it will last a very long time and will be much worse than anyone could have imagined. ”
At some point, this should be taken into account in stock prices. Peter said he thinks it will be connected with a breakthrough to gold and gold reserves.
There is another item that needs to be dropped – a breakdown of the US dollar. A few people in the mainstream have warned about this in recent weeks. Yale economist Stephen Roach warned which the “The era of the” exorbitant privilege “of the US dollar as the world’s main reserve currency is drawing to a close.” In the same time, Guggenheim Investments Investment Director Scott Minerd said that although “there is no indication that the world is now questioning the value of the US dollar,” It is clear that the dollar “is slowly losing market share as a world reserve currency.”
Peter agrees. He said he believes that the dollar is on the verge of a significant decline.
The largest player in all of this is the Federal Reserve. Jerome Powell testified in front of the Senate and House last week and promised that emergency monetary policy would remain in the game. As Peter pointed out in a podcast last week, Powell’s comments revealed a terrible truth. Fed policy is not about economics. It’s about supporting Wall Street.
At some point, the Fed’s policy failure will show up. Powell admitted that he did not plan to cut the balance. Remember, it was the expectation of normalization that made the dollar recover and gold sold after the 2008 crisis.
This whole bubble, this whole recovery was based on the ability of the Fed to reduce its balance sheet and normalize interest rates. Well, now that everyone needs to know, because the Fed told them that none of these things will ever happen, the bottoms will fall out of the dollar, and gold will go through the roof, and this whole house of cards is about to collapse.
Peter also talked about what he considers overly optimistic in the housing market and why a good Fed chair can never be popular in bad times.