Everything is collapsing at once – here’s what to do about it

MoneyWeek/Merryn Somerset Webb/5-23-2022

“I’m not often glad I am no longer the young person in the room, but this month I am. If you have only been knocking around in markets for, say, 15 years, you are seeing the collapse of everything that you have been told is true and have observed to be true about markets.”

USAGOLD note: As the new verities fall one after the other and Somerset Webb returns to an old verity saying that what is new to most market participants is actually old and a return to the 1970s. “With that in mind, ” she says, “hold gold.” But that is the bottom line in a very interesting longer analysis of the economic times at the link. The Misery Index – the combination of inflation and unemployment – became the poster child of the stagflationary 1970s.  As it rose, so did the price of gold, as shown in the chart below.

The Misery Index and the price of gold
(% change from year ago,1970s)
overlay chart showing gold and the misery index 1970-1980
Sources: St. Louis Federal Reserve [FRED], ICE Benchmark Administration, Bureau of Labor Statistics

 

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