Pacific Investment Management Co.’s Mohamed El-Erian called the recent declines in purchasing manager indexes in Europe and Asia “frightening” and said the world economy is suffering its severest slowdown since the global recession ended in 2009, reports Bloomberg.
“This is a serious, synchronized slowdown,” El-Erian said in an interview today.
El-Erian is correct. He may not know what is behind it, but he sees the economic data.
For the record, there is slowed, little or no monetary growth in the eurozone, China and the United States. Because of this, a global stock market and economic crash is very likely, probably before the US elections.
There is a small chance the downturn can be reversed if the Big Three central banks begin a huge money printing campaign, pronto, but there is no indication at this time that any of them are going to open the monetary spigots.
Watch out below.
So, buy gold now? or hold until crash happens?
ReplyDeleteWhen there's a crash, people are desperate for money, and will sell things at a loss. Like their gold. That could depress the price. If you are lucky, you will be able to buy some cheaper than it would cost you now.
DeleteThe Fed has an inflation TARGET, and is petrified of deflation. The only thing I take at face value from the Fed is that they will inflate to prop up the economy. So a crash in nominal terms is a long way away. And when the real crash happens, the dollar will be worthless. So you say that prices will depress, but only when measured by the units of dollars. An ounce of gold will still buy you a nice suit. Gold bugs hold their gold and would not trade it for dollars, likely something of greater value.
DeleteI don't think that anyone will be that lucky. The same day that bond prices start dropping suddenly, gold will go up at least ten percent, and not come back down. It will be too late. But, when will that happen? So, you should be ready now.
DeleteThe problem is not a lack of monetary growth but malinvestment prompted by government intervention in money markets, government diversion of capital through taxation, uncertainty about what outlandish mistake government will make next, and so on.
ReplyDeleteAnd that's The question of the day, eh, Anonymous @ 5:55 PM?
ReplyDeleteI think the answer is: some now, some later if possible.
- clark
Big call to predict a major crash by the years end. Quite a scary thought actually.
ReplyDeletePimlico is the finest horse racetrack I have ever been to. I don't understand how you can implicate a 'slowdown' having anything to do with horse races. Monetary growth is not bothered with such imbecile concepts. The more money you pour into the machine the better off the whole system is. Think about it.
ReplyDeleteP-I-M-C-O spells what? I hope you were joking. But that's not as bad as you economic theory. Scary.
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