ORLA - The S&P 500 Probably Won't Crash By 50% But If It Does Gold Won't Protect You--Here's What Will. | Benzinga
The S&P 500 Probably Isn't Going To Crash 50% Anytime Soon
Raising the possibility of a 50% market crash always grabs attention, as does promoting the benefit of holding gold in a portfolio, as the title of Wealthion's recent Zero Hedge post does ("Will the S&P 500 Crash By 50%? How Gold Could Protect Your Portfolio"). I was all set to argue against the idea of a 50% market crash this year, but then I watched Wealthion's interview with market technician Chris Vermeulen, and it turns out he's not calling for that. I've set the video below to start at Vermeulen's global market prediction toward the end of the interview.
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It turns out Vermeulen isn't calling for a 50% drop in the market this year, which makes sense. The Fed not raising rates in spite of embedded inflation and the federal government running unprecedentedly large fiscal deficits are both inflationary, and stocks are inflating along with fast food worker salaries, Big Mac meals, and much else in our economy. Vermeulen sees the possibility of a 10% to 20% correction by the end of this year.
That seems possible in the following scenario. Let's say Trump wins the election in November, and then calls for major deficit reduction to rein in the inflation that got out of hand during Biden's tenure. That could send stocks down (and as far as Trump would be concerned, better to have stocks crash while he's still President-Elect than President).
Where Vermeulen sees the possibility of a stock market correction extending down to a 50% drop is in 2025. I guess it's possible, but I don't claim ...