Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Market Bubbles Galore

Stock-Markets / Liquidity Bubble Jun 27, 2021 - 04:15 PM GMT

By: MoneyMetals

Stock-Markets

Is the entire financial system currently in a massive bubble? That is the question that astute investors may now be asking.

According to Nouriel Roubini, CEO of Roubini Macro Associates and professor at NYU Stern School of Business, now is the time to be overweight gold as more bubbles pop up.

Stocks, bonds, crypto, tech, real estate, whatever sector you want to focus on – these all appear to now be building into or rapidly falling from bubble territory.

The higher these markets do ascend, the greater the eventual fall may be.


That fall could be arriving sooner rather than later and may catch many unsuspecting investors off-guard.

Stocks are now valued at levels that have not been seen in some time, if ever before. Real estate is booming, with price advances well into double digits in many regions. The risk of a major correction across many asset classes continues to rise.

Based on the total stock market capitalization to GDP ratio, the market is now 100% overvalued on a historical basis. To put that figure into perspective, the height of the tech bubble saw stocks become overvalued by some 49%.

The adjusted price/earnings ratio known as CAPE was developed by Yale economist Robert Schiller. This metric is favored by many of the sharpest minds in the market as a gauge on whether stocks are under or overvalued.

As recently as early April, the CAPE registered a reading of 36.8. The measure has only risen that high once before in the 139 years it has been tracked… immediately before the 1929 crash, the CAPE reading peaked at 33.

When CAPE reached extreme levels in the past, the market tumbled rapidly and lost a significant portion of its value – well into double digit declines. Do current readings suggest a similar outcome?

It is impossible to say when the freefall may get going. Stocks have shown a strong tendency to become overbought and eventually become wildly overbought in a process that can take weeks, months, and even years.

The day of reckoning will come, at some point, however, and those who are unprepared will get bloodied.

Of course, it’s not only stocks that have become severely overbought.

Numerous asset classes from housing to cryptocurrencies have zoomed to unprecedented heights in recent months.

Although speculative investments may provide investors with significant upside potential in the near-term, too much exposure to assets in bubble territory carries tremendous risks.

For example, Dogecoin exploded in price this spring on social media hype and Elon Musk cheerleading. But it has since crashed by more than 65%.

Careful, disciplined investors keep their focus on long-term value rather than short-term upside. Gold and silver bullion offer intrinsic value and – now in particular – relative value compared to most asset classes.

Once a bubble pops, the implosion can occur swiftly and there may be few places for investors to hide.

Against the current backdrop of low interest rates, massive quantitative easing, and rising sovereign debt levels, there may be no better place for investors to turn to than physical precious metals.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2021 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in