King World News/Paul Wong/7-8-2022
“The multiple contraction phase driven by rate hikes has been dramatic, but we are still far away from a dovish Fed pivot and much closer to the approaching risk stage driven by recession dynamics. We believe there is a possible major re-allocation event towards safe haven, capital preservation assets in the second half of 2022.”
USAGOLD note: Wong, the chief investment strategist at Sprott Asset Management, quantifies the performance of various assets during the month of June – a month when gold stood out by simply holding its own while other assets cratered. While a good many gold commentators foresee a Fed pivot, Wong sees it staying the course. The threat of a “synchronized” global stagflation and accompanying systemic risks, he says, will increase “the attraction and need for gold bullion as a safe haven asset.” The scenario he foresees very much resembles what happened in 2008-2009 – a credit crisis, a string of Wall Street failures, and a financial system pushed to the brink, only this time around, you can add geopolitical risks to the mix.
