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What do you feel will be the “tipping point” to trigger the next economic downturn – and how will this affect gold investors?

Robert Wiedemer
May 6, 2014
Video Transcript

Well, a lot of people talk about interest rates as being one of the kind of kick offs to a bigger problem down the road, maybe the after shock or maybe something less, but the focus off on the bond market interest rates. Interestingly, as we did discuss in both of our most recent additions of After Shock and After Shock Investor, the market cliff actually begins with the stock market. We call it the "market cliff" because that's kind of what we expect; we expect the market to take a dive. It really happens when the market has a downturn, which yes they do happen... like we've forgotten that they happen after 2008, but markets do have big downturns, but what happens the Feds not able to save it or save it very well, or the enormous efforts the Fed has to put into saving the market starts to scare people even more because you know we are five, six years, seven years into this and the Fed is out there pumping up the market again and it worries people. Ultimately, you have that stock market going down and they can't really stop it.

People start to... well they don't panic from the market, but they just say, "This isn't where I want my money to be right now. I'm going to put a little money off to the side. I've made some good money. I'm going to protect some of my gains. Retirement is coming, I've got to protect some gains." So they're not necessarily negative on the market, but enough people pull out that you've got a problem. Remember, what makes a market go down isn't just sellers, but lack of buyers. You could have a market collapse just based on a lack of buyers, even if you don't have a lot of sellers.

So we really think the stock market will actually be what kicks off problems in the bond market and further. That's where gold does come in is gold can be one of those reasons some people decide to move out of the stock market and into gold. Gold is having a nice run up and the stock markets have had kind of a rocky period for a year or two, it might be a real good reason for some of those people to move into gold. So gold could be going up quite substantially and that plays a role in that market cliff and in the stock market going down.

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