The stock market still does not reflect reality, but Citigroup warns that pain and "collateral damage" are on the way




The first week of June starts with all the SPX, Nasdaq, and Dow Jones indices (14:30 hours), rising an average of 0.44%. Citigroup, one of the largest banks in the world (current market capitalization of US$ 98.5 trillion), says that the rise in the stock market does not reflect reality, and there will be collateral damage. The price of gold rises by 0.4% to $1,739/Oz at that time.

At AXL Capital, we see that this reflects a high level of competition between those who are betting on the market's recovery in line with the rampant economic reopening in the US and the global injection of dollars underway, versus large investors who in April and May were able to reap the benefits of years and raise their cash levels as Warren Buffet - one of the largest investors of all time - did, pointing to a new, healthy and significant market downturn reflected in a worldwide Recession, technically for the second quarter of the year due to the effects of the COVID-19 according to the federal reserve in Atlanta.

Analyzing the current context and the previous crisis of 2008 from an interesting ratio of Total Market Capitalization/ USA GDP, this ratio is currently significantly overvalued: 1.47 (31 trillion US$/21 trillion US$). We think that by the time the TMC/USG ratio gets close to 1, the stock market has a new setback, we will probably see gold prices after a few weeks, reaching and exceeding 1,800 $/oz and with it big monetary benefits and a potential new rally for gold mining companies' stock prices.
Ubicación: Estados Unidos

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