Marketwatch/Shawn Langlois
The stock market could be facing ‘multiple decades’ of ‘deleterious’ economic after-effects, analyst warns

VaccineThe stock market’s ability to shrug off the economic destruction and gloomy coronavirus headlines continues to enrich emboldened bulls and baffle even some of the savviest Wall Street pros.

A big dose of reality, however, looms large, if Andrew Lapthorne, the global head of quantitative research at Societe Generale, has it right with his recent outlook.

“With questions on the effectiveness and wide availability of vaccines remaining, as well as the potential impacts of the pandemic’s damage to the economy, there may be more downside risk from markets overshooting,” Lapthorne wrote in a note to clients cited by Business Insider on Sunday.

And if investors are hoping a vaccine keeps the fire under this market lit, well, Lapthorne has plenty of doubts as to whether that will be a catalyst in the short term — or long term, for that matter.

There are 200 vaccines under development, and none is guaranteed to be effective on a global scale. HIV, for instance, still no vaccine. Even if there is one, he said, anti-vaxxers and others who decline the vaccine will slow down the necessary steps toward herd immunity.

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Yahoo Finance/Bloomberg/Ranjeetha Pakiam
Gold Surges to Record as Week Opens With Spot Price Near $2,000

Gold Price SurgesGold’s spot and futures prices opened the week by hitting records, with metal for immediate delivery closing in on $2,000 an ounce as the search for haven assets continued amid the coronavirus pandemic.

Spot bullion surged 11% in July, the biggest monthly gain since 2012, as investors weighed a weaker dollar and record low U.S. real yields. Strategists are now considering alternatives to government debt, such as cash, credit, dividend shares and gold.

The health crisis has prompted unprecedented amounts of stimulus being unleashed to shore up economies including lower rates, which are a boon for non-interest-yielding gold. Simmering geopolitical tensions are also boosting demand — U.S. Secretary of State Michael Pompeo said the Trump administration will announce measures shortly against “a broad array” of Chinese-owned software deemed to pose national-security risks.

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Bloomberg/Olivia Konotey-Ahulu and Susanne Barton
Dollar’s 10% Slide Is a Warning That U.S. Has Lost Grip on Virus

Dollar Price Going DownThe dollar is flashing a warning sign to U.S. policy makers — get a grip on the virus.

After hitting an all-time high in March, a gauge of the greenback has lost 10% of its value, with declines accelerating in recent weeks as infections spread seemingly unchecked across the nation. Much of the sell-off has come during New York trading hours, suggesting domestic investors are closing out bets on U.S. strength and spurring renewed questions about the supremacy of the dollar. Meanwhile, a popular model that’s guided dollar traders for the past two decades has warped.

It’s a rapid reversal in fortune. Early on in the pandemic, the dollar soared after investors sought safety in U.S. assets like Treasuries while the virus stormed through Europe. But with cases now exploding at home, the ineffectual American response to the disease has become a millstone for the currency, spurring concern about lasting damage to the U.S. economy that could keep interest rates and growth low for years.

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Marketwatch/Myra P. Saefong
Silver: poor man’s gold no more?

Silver Bar 080320Investors have focused on a rise in record prices for gold, but silver’s up about 25% in July—the metal’s second-biggest monthly gain on record—and it’s still undervalued compared with the yellow metal.

“Silver is often called the ‘poor man’s gold’ because some of the same factors that cause gold prices to rise do the same thing to silver prices,” says Ed Moy, chief market strategist at gold retailer Valaurum. “And what is driving gold prices now are mainly the fear of inflation due to the magnitude of the monetary and fiscal stimulus worldwide, and the flight to safety due to the uncertainty around how and when the global economy will recover.”

Silver, however, is “cheaper per ounce” than gold, and its prices are much more volatile, he says. It has also been “lagging behind gold’s rise” and the ratio of the number of ounces of silver to buy one ounce of gold is historically high, implying that either “gold is overpriced or silver is underpriced.”

If silver is underpriced, “there is a lot of money to be made,” says Moy, who was director of the U.S. Mint from 2006 to 2011.

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