Paul said in a weekend interview that he wouldn’t be surprised to see US markets fall 25 percent and gold rise 50 percent in the next several months.
The gold price closed Monday (July 3) at $1,219.70 per ounce, but according to libertarian pundit Ron Paul it could be significantly higher before the end of the year.
“If [US] markets are down 25 percent [by October] and gold is up 50 percent it wouldn’t be a total shock to me,” he told CNBC during an interview this past weekend. That would place the S&P 500 (INDEXSP:.INX) at 1,819 points and gold at $1,867.
Paul, who’s also a former Republican congressman and presidential candidate, said that the US economy is not as strong as many people think it is, and emphasized that uncertainty is a major issue. In particular, he mentioned that the NASDAQ Composite (INDEXNASDAQ:.IXIC), the US dollar and bonds look “a little shaky,” and questioned whether Trump will be able to pass reform measures.
“There’s a lot of subjectivity in the markets, reassurances,” Paul also noted. “People have been convinced that everything is wonderful right now and that stocks are going to go up forever, it’s a new era. I don’t happen to buy this. I think the old rules always exist, and there’s too much debt and too much mal-investment — the adjustment will have to come.”
While US Federal Reserve Chair Janet Yellen recently expressed confidence in the US economy, saying another financial crisis will likely “not happen soon,” other market watchers have views that that are more in line with Paul’s.
For example, Marc Faber, a noted Thailand-based Swiss investor known as “Dr. Doom,” is calling for a drop in the US stock market. In conversation with CNBC he said, “we have a bubble in everything.” Peter Schiff of Euro Pacific Capital also recently described the US economy as a bubble.
Do you think the US economy is headed for a crash? Let us know in the comments below. You can also watch CNBC’s interview with Paul below:
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Photo by Gage Skidmore via Wikimedia Commons.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.