'The Everything Bubble': Why The Coming Collapse Will Be Even Worse Than The Last
Bonds have been in a "perfect bull market" for 36 years, Maloney says. But historical patters suggest that the coming shock will likely trigger its demise: Over a span of decades, interest rates have tended to spend about equal time on either side of a peak. If this pattern holds, it would mean that the decadeslong bond-market rally only has two or three years left to run, which brings us to another important question: when the crash comes, what's it going to look like?
Maloney believes it will unfold in two stages:
In the first, investors will flood into the perceived safety of bond markets, causing a temporary spike, as stocks and real estate markets collapse.
Then all three markets will plummet as the collapse of a catastrophic pile of debt brings about the end of the global dollar-based monetary system.
In the 20th Century, shifts in the global monetary paradigm have occurred about every 30-50 years.
And shifts in secular bond-market trends have tended to mirror them. Maloney, who has long advocated owning gold and silver, also revealed that he has purchased a small share of bitcoin and other cryptocurrencies, though he cautions against owning an outside position. Rising demand in the East has been offsetting falling demand in the U.S. So far, excess capacity in the U.S. market has helped compensate for this as the East has attracted Western gold.
But soon this imbalance will be ameliorated, and the price of gold - which has already risen modestly year-to-date - will see a large, sustained rise.