Investors are rushing into gold to maximize returns during the pandemic, but analysts urge investors to “take a breather”

“Reflecting the enthusiasm for gold, Paul Singer’s New-York based Elliott Management, which manages about $40 billion in assets, believes that it was “one of the most undervalued” assets available. In a letter to clients last month, he said its fair value is “multiples of its current price.”

But analysts told Markets Insider that markets are too optimistic about the precious metal and the outlook remains uncertain.

Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said gold prices took “investors on a wild ride”‘ during the great financial crisis.

“Leading up to and during the Financial Crisis, from 2007 to 2009, the price of gold took investors on a wild ride – running up some 30% from mid-2007 to early 2008, only to fall back down around 25% throughout the spring and summer of 2008, and finally to regroup and hit all-time highs later in 2009.”

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Tudor Jones says this will be the ‘Second Depression’ if we remain in lockdown a year from now

Tudor Jones“Billionaire hedge fund investor Paul Tudor Jones said Monday the economy would be in a “Second Depression” if the coronavirus pandemic doesn’t get contained for another year.

“If a year from now, we are still in the same situation, we would be called a Second Depression,” Jones said on CNBC’s Squawk Box on Monday. “Just depends on whether unfortunately this goes to a year with this kind of a lockdown.” The Great Depression from 1929 to 1939 was the worst economic downturn in the U.S. history.

“I think this part of the bounce was easy to forecast, I think what happens from here again depends a lot on Covid stuff. There’ll be a shift in focus from liquidity issues somewhere down the line to solvency issues. If we don’t find a vaccine or a cure, if we don’t find a much better way of testing at scale … then I think the market’s going to have a much more difficult time,” Jones said.

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FX EMPIRE/James Hyerczyk

Price of Gold Fundamental Weekly Forecast – Fed Powell’s Comments Should Set the Tone This Week

gold bars and paper money“Gold could spike higher again if Powell says that negative rates are still on the table. However, that hasn’t been his style so he is likely to downplay the idea, which could drive gold prices lower if he is convincing enough.

Short-term gold traders have a lot on their tables at this time. Some of the factors make sense to the gold bulls. Others are counter-intuitive and make more sense to the bears. However, the price action suggests the market may have to move lower before it makes another major move to the upside.

Last week, June Comex gold settled at $1713.90, up $13.00 or +0.76%.

Gold has been drifting sideways to lower for close to a month. The series of lower tops and lower bottoms serves as technical proof that the short-term trend is down. The long-term trend remains up, however.

Gold hit its last multi-year high on April 14 at $1788.80. This occurred after the bulk of the central bank monetary and government fiscal stimulus hit the global economy. So essentially, the stimulus has been priced into the market. This is why gold is struggling to make new highs at current price levels. This also suggests that it may have to break into a value zone in order to attract new buyers.

Without fresh stimulus concerns or an acceleration in the number of new coronavirus cases globally, gold bulls may be having a hard time justifying putting on new positions at current price levels. They may be having trouble assessing the risk/reward of new long positions.”

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CNBC/Stephanie Landsman

US risking a second wave and a depression, Mark Zandi warns

unemployment rate chart“Mark Zandi of Moody’s Analytics is getting increasingly worried states are taking a large gamble by reopening businesses too quickly.

He warns a spark in new coronavirus infections would send the economy further into tailspin — especially since there’s no vaccine.

“If we get a second wave, it will be a depression,” the firm’s chief economist told CNBC’s “Trading Nation” on Friday. “We may not shut down again, but certainly it will scare people and spook people and weigh on the economy.”

Zandi defines a depression as 12 months or more of double digit unemployment.

On Friday, the Labor Department reported the April jobless rate soared to 14.7%, and non-farm payrolls tumbled by 20.5 million. Both sets of employment data are post-World War II records.”

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