CNBC/Fred Imbert and Yun Li

Dow plunges more than 800 points on worries of second coronavirus wave, airlines and retailers fall

stock market volatility“Concerns about a second wave of coronavirus cases have risen as U.S. states push deeper into reopening. Texas has reported three consecutive days of record-breaking Covid-19 hospitalizations. Nine California counties are reporting a spike in new coronavirus cases or hospitalizations of confirmed cases, AP reported Wednesday.

Friendly monetary policy from the Federal Reserve cannot “offset a severe COVID second wave,” said Dennis DeBusschere, macro research analyst with Evercore ISI, in a note. “With TX, AZ, CA new cases and hospitalizations increasing and investors concerned that recent protest will fuel a wave of infections, the risk of persistently weak economic and earnings growth has increased. S&P fair value estimates are falling as a result.”

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KITCO/Video

Another crash is coming; gold to hedge against 100% inflation

value of money destroyed“’The economic numbers are absolutely catastrophic, and yet, we’re back at all-time highs,’ Chambers told Kitco News. ‘The only possible explanation for stocks being so high is that inflation is coming, and when you think about it, if inflation is coming, where do you put your money?’

While gold would be the obviously solution to hedge against inflation for retail investors, larger institutional investors would likely only put their money into equities in this situation, which is one of the reasons why stocks have been driven up to erase most of March’s losses.

Additionally, a second wave of COVID-19 is likely to slow down any economic growth.

‘The second wave is already upon the U.S. The numbers have gone from 18,000 a day to 20,000 day in new cases. America is relatively unlocked now,’ he said.

However, it is unlikely that governments will implement another lockdown of businesses for risk of sending us back ‘into the stone age,’ Chambers said..”

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BLOOMBERG/Ranjeetha Pakiam and Elena Mazneva

Gold Futures Rally as Powell’s Fed Delivers for Bullion Bulls

“Gold futures rallied as the Federal Reserve vowed to hold interest rates lower for longer and investors tracked signs of a resurgence in infections in some U.S. states.

The haven pushed higher after Chairman Jerome Powell said Wednesday the Fed is committed to “do whatever we can, for as long as it takes.” Almost all officials forecast keeping rates near zero through 2022, and the central bank also said it will at least maintain the current rate of bond purchases.

“The conditions are here for gold still going to $1,800,” Dominic Schnider, head of commodities & Asia Pacific currencies at UBS Group AG, told Bloomberg Television. The metal has support “with rates staying where they are for longer, and real rates expectations potentially shifting more negative,” he said.”

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