Ron Paul: Buy Gold To Protect Against 50% Equity Correction
(Kitco News)- Former Congressman and Presidential candidate Ron Paul is recommending investors look to gold to protect themselves from a correction in equity market.
Tuesday, in an interview with CNBC, Paul said that he could see lower equity markets as the U.S. struggles with burgeoning debt.
"The deficit is skyrocketing like never before," Paul said in the interview. "The market is destined to go down."
He explained that the Federal Reserve's quantitative easing program, which pumped massive liquidity into markets had created significant bubbles throughout the financial sector. He added that he could see equities fall 50% from current levels.
"Ultimately, when these corrections have to occur, they always go down a lot more than people expect. Just like they go up higher than people expect," Paul said. "A 50 percent correction with all the distortion that has existed for all these years - I think it's very possible."
Along with growing deficits, Paul also said that the U.S. economy isn't as strong as it might appear. He described the economy as a "real mess."
In this environment, Paul said that he likes gold as a safe-haven asset and see the potential to expand his exposure to the yellow metal.
"I personally would be better off if I did buy a little bit more gold," Paul said.
Paul's comments come as gold has struggled to find momentum has it has been hit with a wave of technical selling due to surging momentum in the U.S. dollar.
June gold futures, slipping back below the 200-day moving average, continue to hover near a four-month low at $1,306.5 an ounce, relatively unchanged on the day. At the same time, the U.S. Dollar Index has pushed above its 200-day moving average, trading at its highest level since late-December at 92.69 points, up 0.28% on the day.
Along with gold, equity markets continue to struggle to attract investment capital with the S&P 500 down on the year. The S&P last traded at 2649 points, down 0.20% on the day.
By Neils ChristensenFor Kitco News
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