Universa Investments has warned its investors of an oncoming financial collapse, likening current market conditions to those that preceded the Great Depression. Although the fund’s chief investment officer has predicted the stock market’s “dangerous path to collapse,” he is calling out rising debt levels for accelerating this “timebomb” crash. During times of high inflation and economic uncertainty, history shows that central banks turn to gold. “It’s hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace,” the World Gold Council reported. Analysts expect Fed Chairman Jerome Powell to double down on the crisis that is inflation by raising rates by a quarter-point to a range of 4.5% to 4.75%, its highest level in about 15 years.

Markets Insider/Jennifer Sor
The market is headed for a ‘tinderbox-timebomb’ that will be worse than the 1929 crash, Black Swan fund manager says

Get ready for a “tinderbox timebomb” that will be even worse than the 1929 stock market crash, the manager of the “The Black Swan” hedge fund warned this week.

Universa Investments is advised by “The Black Swan” author Nassim Taleb, who called the financial crash that spurred the 2008 recession. In a recent letter to its investors, the fund warned the economy was headed for another financial collapse that could mirror the market crash leading to the Great Depression.

“It is objectively the greatest tinderbox-timebomb in financial history – greater than the late 1920s, and likely with similar market consequences,” Universa’s chief investment officer Mark Spitznagel said in the letter seen by Bloomberg on Tuesday.

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Kitco News/Anna Golubova
Why is central bank gold buying at 55-year highs?

Central banks had their eyes on gold last year, purchasing 1,136 tonnes — the most since 1967, according to the World Gold Council (WGC). This also marked the second-highest level on record going back to 1950 and was a more than 150% increase from last year.

The WGC’s Gold Demand Trends report from Q4 revealed that central banks bought an additional 417 tonnes of gold, following Q3’s massive purchase of 445 tonnes.

“Geopolitical uncertainty and high inflation were highlighted as key reasons for holding gold,” the WGC said in a report published Tuesday.

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AP News/Christopher Rugaber
Powell likely to stress Fed’s inflation fight far from over

Inflation is cooling, and parts of the economy appear to be weakening. But Chair Jerome Powell is likely Wednesday to underscore that the Federal Reserve’s primary focus remains the need to fight surging prices with still-higher interest rates.

With financial markets anticipating that the Fed will stop raising rates soon and possibly even cut them later this year, analysts say Powell will need to push back against such optimism. If financial markets expect lower rates than what the Fed plans to deliver, the central bank’s already treacherous task can become even harder.

Powell’s tough message will likely emerge at a news conference after the Fed’s 19-member policy committee announces its latest action. The policymakers are set to raise their benchmark rate by a quarter-point to a range of 4.5% to 4.75%, its highest level in about 15 years. The move could further increase borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans.

You can read the full article, here.

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