Experts Predict Massive Decline In Global Equity Markets
Los Angeles CA, (Tangible Investments) - by James O’Dell - U.S. markets will remain closed on Monday in observance of the Labor Day holiday. "The focus this week will be on the U.S. August nonfarm payrolls due on Friday, while remaining sensitive to headlines relating to geopolitical risks," said UBS, on Monday, in a note. "Price action is likely to be choppy heading into the key data release." Gold and Silver prices ended mixed on Friday with Gold gaining $2.30 or 0.18 percent to finish the week at $1,291.75 an ounce as the dollar eased and safe-haven Gold buying accelerated. Silver dipped 0.05 or 0.26 percent to end the week at $19.49 an ounce while the Gold/Silver ratio rose to 66.28.
The week began with growing tensions between Russia and Ukraine after a group of Russian soldiers were captured in eastern Ukraine, having crossed the border purportedly "by accident," according to Russian military sources. That incursion came as Ukraine's Petro Poroshenko and Russia's Vladimir Putin were meeting at a summit in Minsk in Belarus on Tuesday.
Ukrainian President Poroshenko has since warned that "full-scale war" was imminent if Russian troops continue to advance into Ukraine territory in support of pro-Moscow insurgents. Europe stood strong with the United States in threatening additional sanctions if Russia fails to back off its support for separatists in Ukraine.
Meanwhile, experts are now calling for as much as a 60 percent plunge in global equity markets. Markets will face a "period of extreme turmoil," says David Tice, president of Tice Capital, on CNBC's "Power Lunch," on Wednesday. A jolt to international confidence in central banks will precipitate the correction that could see a 30 to 60 percent stock market decline.
The crash will be triggered by disappointment with the Fed's so-called "confidence game," which will, in turn, spark a rise in inflation and a scramble by the Fed to raise rates. At that point, adds Tice, "the Fed starts to lose control." Technical analyst Abigail Doolittle agrees adding that "Unfortunately, I think it could come on a crash similar to what happened in 2007."
Doolittle, founder of Peak Theories Research, said on "Squawk Box," just a day after the S&P 500 closed above 2,000 for the first time ever, "It's tough to know what the exact catalyst will be, but that's the very nature of that kind of selloff. They start slowly and then happen very suddenly."
Doolittle says that the bull market trend over the past five years has begun to reverse and "When you see that kind of gyration around the trend, typically it suggests you're going to see some severe volatility." Doolittle added that "As scary as it is, I think that we could see possibly a 50 percent or 60 percent correction—an equal and opposite reaction to all these unusual policy moves."
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