Kitco News: Watch For “Real Collapse” Warning Signs; Markets Are Still In “Complacency” Mode
Markets have had a fast shift in sentiment in the past few months. That’s sent many leading assets during the rally higher into losing positions. A number of companies are even facing liquidity and solvency issues as a result.
Amazingly, despite the sharp selling in recent months, markets may be in for a further drop. That’s because a number of sectors could still head lower, even those that should be serving as a market hedge now.
Investors are still increasing their cash positions. That’s occurring even as inflation is at a high rate.
Investors are willing to face a loss in real terms over time just holding cash. But if they can buy assets at a lower price in the coming months, they could fare well over time.
Even bonds aren’t faring well as a safe-haven assets. The move higher in yields this year has led to a drop in prices. Potential buyers are likely looking for even lower bond prices before buying in.
Traditional hedges for today’s environment like precious metals have likewise proven underwhelming for investors. Mining companies are making lower lows right now as well, a sign that there may be more weakness ahead.
In the short-term, markets could see a complacency rally in the coming months. However, as long as economic growth slides and inflation remains high, a longer-term downtrend could continue.