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Another crash is coming; gold to hedge against 100% inflation

Kitco News

Stock market crashes are usually followed by a “w” wave, and right now we’re only seeing a “v”, this according to Clem Chambers of

Chambers, who previously had not supported the idea of gold as the ideal hedge asset, said that an inflationary environment is likely to change the situation for the yellow metal completely.

“The economic numbers are absolutely catastrophic, and yet, we’re back at all-time highs,” Chambers told Kitco News. “The only possible explanation for stocks being so high is that inflation is coming, and when you think about it, if inflation is coming, where do you put your money?”

While gold would be the obviously solution to hedge against inflation for retail investors, larger institutional investors would likely only put their money into equities in this situation, which is one of the reasons why stocks have been driven up to erase most of March’s losses.

On the economy, although data is pointing to a recovery, unemployment still remains high, Chambers noted.

Additionally, a second wave of COVID-19 is likely to slow down any economic growth.

“The second wave is already upon the U.S. The numbers have gone from 18,000 a day to 20,000 day in new cases. America is relatively unlocked now,” he said.

However, it is unlikely that governments will implement another lockdown of businesses for risk of sending us back “into the stone age,” Chambers said.

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