The United States is headed for a long recession and consumers will react by holding onto their cash, Stephanie Pomboy, founder of MacroMavens, told Barron’s.
Consumers will react by saving their money despite sales and low interest rates, she said.
Borrowing will no longer be an option.
“But the economic deleveraging has barely begun, and that's my longer-term thesis. It all revolves around the idea that U.S. consumers are actually going to do the unthinkable —they are going to save — and that we will be more like Japan than anyone believes is possible,” Pomboy said.
“But what will happen here is that credit is no longer the answer, because households decide they don't want to borrow.”
Investors will turn to buying gold or other assets as a safe haven for their money, she said.
“If I'm correct about the economic deleveraging still ahead and that it will continue for many years, that's a legitimate concern,” Pomboy said.
“That's why I'm long gold. I view it as the best way to protect my capital.”
Gold is now being seen as an “international currency,” Frank Lesh, a trader at FuturePath Trading in Chicago, told Bloomberg.
“Gold is reacting to the downturn in the dollar.”
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