The stock market has been running hot for a while now but rising interest rates and the march of September – which is historically tough on markets – mean that the stimulus advantage could be lost many top banks have warned.
Urging their investors to reduce stock exposure, financial heavyweight including Credit Suisse, Bank of America, Morgan Stanley and Citi Bank have all expressed concern that an imminent price crash is on the way. Their concerns stem from worries that the tide of cheap cash flooding markets due to economic stimulus measures is about to dry up, meaning the current soaring valuations are on course for momentous losses.
Matt King, the global market strategist for Citi Bank said that as the economic recovery falters, and stimulus measures stem the influx of cash into the markets, markets would soon be reliant on central banks for liquidity. He said, “”It typically takes a positive delta (difference) to keep markets rallying — and immediate prospects for both the credit and the Covid deltas seem overwhelmingly negative,” he said.
“We cannot find any occasion when all the major components of the global credit impulse turned negative and there wasn’t a major sell-off somewhere.”
With a price crash seeming certain to correct over valuations, there is a compelling reason to increase gold holdings and invest in the robust and resilient precious metal. With analysts across the board calling for gold prices to move beyond current record highs in the very near future, now is the moment to move fast.