Putin, Gold & A Stock Market Panic That Will Frighten Investors

Manager out of Hong Kong spoke with King World News about a coming stock market panic that will frighten investors.  William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, also discussed what to expect in the gold and silver markets, and why Putin and Russia will be victorious in the conflict in Ukraine.

Kaye:  “We are seeing a continuation of the tensions that we’ve talked about in the past.  The Western script for this tragedy continues to play out.  There is obviously a serious intention on the part of the West, in conjunction with their puppet regimes in Europe, including tiny places like Estonia, to isolate Russia and encircle them, and to try to bait Russia into a serious military conflict....

“The push by the West for a conflict with Russia is because they believe they will win that conflict.  This logic is seriously flawed.  They are up against a master chess player in Putin.  I think at the end of the day the West will be the loser in this battle over sanctions.  And actually the world at large will be a loser in all this.

This escalation of geopolitical tensions can’t do anything but be harmful to global trade, harmful to equity markets around the world, but probably beneficial to the pricing of precious metals.  The metals need to finally break the grip that the cartel has had on them and find their free market levels. 

But I think we have gotten to a major turning point.  We’re seeing it now.  This is a turning point in which equity markets have entered a bear market of some sort.  The question is what is the duration of that bear market?  That will be a function of several things including what goes on in Russia and Ukraine -- whether there is some type of de-escalation of those tensions.  However, I’m not optimistic that will happen.

But we are in the process of seeing a reseting of risk parameters that are consistent with risk around the world.  The excess liquidity, which the Western central banks are responsible for, has really accounted for a smothering of what would be normal risk tolerances.  This has been the primary cause of the extended valuations and complacency, and this needs to be corrected.

This turn into a much more serious correction that just those phenomena, but that still remains to be seen.  I say that because when people really get scared, and we haven’t reached that point yet, but when we do get to a point of real panic, then we could see levels to the downside in the major stock markets around the world that most investors see as unimaginable.  But this is not a time to buy the dips.  This is a time to just watch things unfold very carefully and eventually look for some type of a panic bottom. 

And I would say the converse of that should be in trading precious metals.  Gold and silver have finally gotten a bid under them again.  And I would expect both metals, in this particular cycle, to act inversely to the general equity markets.  So the bottom line is physical gold and silver would be a much safer place for investors to put money to work at this juncture.”