A painful correction is coming and there's little that can be done to prevent it, according to former Republican congressman and libertarian firebrand Ron Paul.
Speaking to CNBC last week, the former GOP presidential contender argued the economy is not as strong as Wall Street consensus believes, and the situation could turn ugly as soon as October.
"If our markets are down 25 percent and gold is up 50 percent it wouldn't be a total shock to me," said Paul recently on "Futures Now."
That scenario would drag the S&P 500 Index as low as 1,819, and gold as high as $1,867 an ounce from current levels.
Paul, who's also a medical doctor and former U.S. Representative from Texas, is a well- known bear who has been sharply critical of Trump administration. He has also been putting a lot of blame on the Federal Reserve for keeping interest rates historically low for so long.
Although the Fed is undertaking a rate hike campaign after nearly a decade of ultra- accomodative monetary policy, some believe asset prices—and the economy—could still react badly.
"I think it's a very precarious market, and the Fed better be very careful. Since they are incapable of knowing what to do, I don't expect much good to come out of anything they do," said Paul. "There are so many mistakes made out there that the correction is almost unlimited."
This is not the first time Paul has called for a pullback on "Futures Now."
He made a similar prediction almost exactly a year ago on June 28, 2016, almost exactly a year ago. Since then, the S&P 500 has ripped by 21 percent and the Dow is up 24 percent, breaking several records along the way. The tech heavy Nasdaq bounced into record territory over that time period, and soared 34 percent.
However, Paul still makes the case that the rally is on borrowed time.
"People have been convinced that everything is wonderful right now and that stocks are going to go up forever," Paul said.
"I don't happen to buy this. The old rules always exist, and there's too much debt and too much mal-investment. The adjustment will have to come," he added.
#1: Hank Rearden To: Gatlin (#0)
Hank Rearden posted on 2017-07-03 10:24:42 Reply Private Reply
#2: Anthem To: Gatlin (#0)
I like Paul, especially that he publicized what the Fed was doing, buying up debt by the trillions, after the '09 debt scam crash. But these reasons for a market correction are too general. This is nothing but an arm waving shot in the dark -- mebbe, mebbe not.
On the other hand I have suggested to my friends that gold and silver is good insurance and stock selection based on fundamentals is a time tested recipe for success. Bonds may get oversold at lightning speed, but the only way they can raise interest rates back to normal while the fedgov is running YUGE deficits is if real economic growth is also YUGE, so there is a floor under bonds that may cause a rapid bounce from oversold lows.
Anthem posted on 2017-07-03 12:09:05 Reply Private Reply
#3: Stoner To: Gatlin (#0)
THIS !!!
Stoner posted on 2017-07-04 22:12:23 Reply Private Reply
#4: Tooconservative To: Gatlin (#0)
Not a total shock for Ron Paul to continue hawking gold, just as he's done since Nixon took us off the gold standard.
RP has old contacts in the mining and coin business. He's on the inside and being their spokesmodel is pretty lucrative for him, I think.
OTOH, he is one of the very few congresscritters who refused to participate in the cushy congressional pension system so I don't hold it against him.
Tooconservative posted on 2017-07-04 23:24:49 Reply Private Reply