Some say we are in a roaring economy looking for continued growth, especially considering how low interest rates remain.
Then there’s Ron Paul, who says we’re once again in a big fat bubble that’s about to pop.
The retired congressman and one-time presidential contender is aggressively recommending that investors buy gold to protect themselves from a major correction in the equity market.
“The deficit is skyrocketing like never before,” Paul said in an interview. “The market is destined to go down.”
One major reason Paul believes the equity market will decline is due to the Federal Reserve’s quantitative easing (QE) program, which pumped massive liquidity into the markets.
All that cash has fueled significant bubbles, Paul believes. He thinks stocks could fall 50% from current levels.
Paul’s comments came as the Dow started the month of May in the red and started to look like a potential correction was on the horizon.
Stocks have been volatile since the start of 2018. The S&P 500 is slightly negative year-to-date through Friday’s close.
Even though stocks are under pressure, Paul argues that the stock market is still far too pricey.
“The fundamental reason is that we’ve had too much printing of money — especially since 1971, especially with the QE. So, everything is artificial.
“There are big bubbles, so stocks are basically higher,” he said.
A real mess
Paul argues that due to growing deficits the stock market isn’t actually getting stronger. Rather, prices are increasing artificially high, which is creating a “real mess.”
“Ultimately, when these corrections have to occur, they always go down a lot more than people expect. Just like they go up higher than people expect,” Paul said.
“A 50% correction with all the distortion that has existed for all these years — I think it’s very possible.”
Paul likes gold as a safe haven and he sees major potential to expand his exposure to the metal given these current market conditions.
Despite the fact that he already owns it, he plans on buying more.
How do you feel about Paul’s announcement? Are you bullish on equities or do you agree that it’s time to hop on the gold bandwagon? Let us know!