According to Bloomberg, one of last year’s best-performing hedge funds says the “trade of the century” is to buy gold and sell US Stocks as risk assets are due for another meltdown.

As per Crescat Capital LLC, it’s only a matter of time until the bearish bet pays off big. The investment company says it has take exposure in Gold and is going short on stocks. It says that it is ready to capitalize on an end of the economic cycle as indicators warn that a recession is imminent in the coming quarters.

The consensus of analysts is pointing to a recession in 2020 or 2021, although for many, it looks closer. Going long gold in yuan terms and shorting global equities currently explains three-quarters of the hedge fund’s strategy. While the firm uses the MSCI World Index in models to visualize the trade, it goes a bit deeper with its short position, selecting individual stocks and exchange-traded funds to bet against.

Falling Unemployment, Negative Real Yields, and Fed easing…..All stars are aligned for a bull run in Gold.

Crescat warns that corporate insiders are currently selling stocks hand over fist — indicating a potential stock bubble burst. In early 2017, those investors heavily sold shares while the S&P 500 continued climbing. That happened again in 2018. With the smart money selling once again, “the third time should be the charm for the stubborn U.S. market,”

“Soon the buy-the-dip mentality and bull-market greed will turn to fear. Selling will beget more selling. That’s how bear markets work,” Crescat wrote. “There is so much more ahead to profit from the short side of the market. The bear-market rally is running out of steam!”


By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

Leave a Reply

Your email address will not be published.