Many times in the past, I have talked about the “tale of two markets”, in which I explain that there is a market for those on Wall Street, and then there is a market for the everyday man, woman and child.
The markets are supposed to be a reflection of our state of the economy. If the markets are booming, then politicians point to this as a fact that everything is hunky dory and A-OK. Forget the fact that millions are without jobs and stagflation continues to eat away at the core of our financial systems.
Which is exactly where we stand at the moment. Stock markets continue to remain at artificially high levels and a change in leadership in the United States has renewed business confidence, despite the incredible uncertainty now erupting within and outside their borders.
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Adding fuel to the fire is Bloomberg’s recent “Consumer Comfort Index”, which has surged higher and now rests at its highest level since April 2015. In addition to this, and more importantly, is their “State of the Economy” survey, which has reached unexplained heights.
Sitting at a nine-year high, this survey rests at 42.8, the highest level since July 2007!
This number should be ringing the alarm bells in any contrarian investor’s head out there and is most certainly flashing a bright red light for myself.
As we know, the previous high marked one of the greatest collapses in the markets since the Great Depression and almost brought the entire system to its knees.
What I am fearful of now is what I was fearful of back in 2007 – and that is the fact that people are completely and utterly unaware of just how precarious these markets are.
A market collapse could be brought on at any moment, and as we are seeing, global uncertainty and geopolitical relations are now incredibly unstable. This is going to once again wipe out the savings of countless people, from which many may never recover.
Will the markets be able to survive another collapse like we saw in the 2008 crisis? Unlikely, as the system is more rotten than ever, and the problems experienced in the past have never been resolved – simply papered over with copious amounts of fiat money.
Prepare yourself, take action and ignore the MOPE. Don’t be the one left holding the bag. Be on your toes and ready to act at the slightest whiff of trouble.
Article by Nathan McDonald, Sprott Money