Gold hits highest in over a month as rise in virus cases bolsters appeal

Gold BarsGold prices hit their highest level in more than a month on Monday as a resurgence of coronavirus infections in some countries raised doubts about a swift global economic recovery.

Spot gold was up 0.3% at $1,748.05 per ounce, after rising to as high as $1758.35 earlier in the session, its highest level since May 18. U.S. gold futures was also 0.3% higher, at $1,758.10.

Spot prices are now $17 shy of a 7-1/2 year high of $1,764.55, hit last month.

Gold is seen as a safe haven during times of economic turmoil and benefited as global investors were unnerved after the World Health Organization reported a record jump in global infections of the coronavirus on Sunday, with the biggest increases seen in North and South America.

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Marketwatch/ Shawn Langlois
‘La la land?’ The stock market is ‘insanely disconnected’ and due for a ‘reckoning,’ Warren Buffett warns

The Stock Market is in La La LandThose betting against this “absurdly overvalued” stock market are about to get paid, if Kevin Smith, Crescat Capital’s chief investment officer, has it right in his gloomy assessment.

“Speculation is rampant and being championed by a bold new breed of millennial day traders,” he said. “The mania is based on a widespread hope in Fed money printing. The catalysts for reckoning are numerous as a major cyclical economic downturn has only just begun.”

Smith, who recently talked about learning the ropes from a stack of Berkshire Hathaway BRK.A, -0.51% BRK.B, -0.55% shareholders letters his dad gave him long ago, said, in a very un–Warren Buffett fashion, that shorting stocks “is worthy of a significant allocation today.”

Smith used this chart of plunging S&P 500 SPX, -0.56% profit margins to show “how insanely disconnected equity prices are from their underlying fundamentals.” He warned that buy-the-dip investors are “not paying attention and have simply been too eager to call the bottom.”

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The stock market is running out of steam with reopening trades fading and economic data ‘uneven’

Rocky Recovery for the Stock MarketThe stock market, so eager to put the entire blow from the pandemic behind it, is now coming to terms that a “V-shaped” recovery might be too rosy a scenario.

With recent spikes in coronavirus cases and fluctuations in the economic data, the market seems to be stuck in a range amid elevated volatility. Market analysts said investors should expect more turbulence ahead because the economic recovery is most likely to be bumpy.

“The market was priced for a continuation of improvement and I think that’s overstating what’s going to happen,” said Brian Levitt, Invesco’s global market strategist. “We are going to have episodes of cases rising. We are going to have a very slow and uneven improvement in the jobs market.”

After soaring more than 40% from the March lows, the S&P 500 turned sideways in the past two weeks, trading at similar levels to early June. The market, which used to turn a blind eye to disastrous news on the thinking that the economy had already bottomed, has become more vulnerable to negative economic headlines as the data begins to give a read on the shape of the recovery.

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Reuters/Yoruk Bahceli
Inflation Dog May Finally Bark, Investors Bet

Gold, forests, property stocks, inflation-linked bonds – these are just some of the assets investors are pouring money into on the view that the recent explosion of government spending and central bank stimulus may finally rouse inflation from its decade-long slumber.
With the world economy forecast to shrink 6% this year, it may seem like a strange time to fret about inflation.

And sure enough, market-based gauges suggest an uptrend in prices may not trouble investors for years. U.S. and euro zone inflation gauges indicate that annual price growth will be running at barely over 1% even a decade from now.

So if inflation really is, as the IMF put it in 2013, “the dog that didn’t bark”, failing to respond to all the central bank money-printing unleashed in the wake of the 2008-9 crisis, why should investors prepare for it now, especially as demographics and technology are also conspiring to tamp down inflation across the developed world?

The answer is that some think the dog really will bark this time, partly because – unlike in the post-2008 years – governments around the world have also been rolling out massive spending packages, in a bid to limit the impact of the coronavirus pandemic.

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