How Would Gold Perform In a Second Stock Market Crash?
Jeff Clark, Senior Analyst, GoldSilver.com
MAY 22, 2020
1929… the 1970s… 2000… 2008… and now 2020?
In the biggest stock bear markets over the past nine decades, there was an initial crash… followed by a big bounce… and then a more severe selloff, a “second leg down” if you will.
Could it happen again?
As Mark Twain said, “history doesn’t repeat itself but it often rhymes.”
And some of the world’s most successful hedge fund managers are convinced a second drop is coming…
> Billionaire David Tepper, considered one of the world’s most successful hedge fund managers, said last month that “stocks are the most overvalued I’ve seen in my career.”
> Stanley Druckenmiller, whose net worth is $4.7 billion, says “the risk-reward for equities is maybe as bad as I’ve seen it in my career.”
> So-called bond king Jeffrey Gundlach says, “I’m certainly in the camp that we are not out of the woods… I think a retest of the low is very plausible.” He said at the same time that he initiated a short position against the stock market.
> Billionaire Mark Cuban says “the stock market is overvalued… it’s almost impossible to predict where consumer and corporate demand is going to come from. And because of that, it’s hard to create a valuation for businesses.”
With trillions of stimulus flooding the market, I don’t know if we’re looking over the cliff at another crash in the stock market or not. Even Mike Maloney mentioned that stocks could just as easily melt up as they could melt down.
But if we do get another leg down, I wanted to know… what happens to gold in the “crash after the crash”?
Gold in Second-Leg Crashes