 "'Stocks to crash and gold to reach $10,000'")
This might look scary but this is what Albert Edwards , global strategist at Societe Generale, predicts in his recent note.
Edwards says the US leading index, S&P, which is currently hovering around 1,600, may correct to the 450 levels.
There are reasons to these scary predictions.
There are reasons to these scary predictions.
Edwards says: "My working experience of the last 30 years has convinced me that policymakers’ efforts to manage the economic cycle have actually made things far more volatile. Their repeated interventions have, much to their surprise, blown up in their faces a few years later. The current round of QE will be no different. We have written previously, quoting Marc Faber, that “The Fed Will Destroy the World” through their money printing. Rapid inflation surely beckons. But that will not occur without firstly a Japanese-style loss of confidence in policymakers as we dive back into recession and produce dislocative market moves"
In his views reasons for owning gold have not changed. He expect imminent recession to be more likely than imminent takeoff and hence the real yield (a key gold driver) should remain low.
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He further said in his note that "Gold corrected 47% from 1974-1976 before rising more than 8 times to $887 in 1980. A steep correction is normal before the parabolic move. As Dylan said in his note of September 2011 holding gold is a bet against central banks competency and given their track record that is certainly a bet I would be happy to still take."