Mark Thornton: The Most Overvalued Stock Market Since 1927? Why Gold Could Win Next

The U.S. stock market is currently more overvalued than at any point in the last 150 years, with the exception of 1927, signaling a high likelihood of a severe economic downturn. Mark Thornton, an Austrian economist, argues that the recent nomination of Kevin Warsh to the Federal Reserve acted as a "hit job" on precious metals, triggering a sharp correction in gold and silver by signaling a hawkish stance on interest rates. Despite this short-term volatility, the long-term thesis for precious metals remains robust due to ballooning government deficits, the downward trend of the dollar, and the Federal Reserve's primary mandates to finance federal debt and protect the banking industry. Smart money, including central banks like China's, is currently reloading on gold and silver as mining companies report high profitability and strong balance sheets. Ultimately, global recessionary pressures will likely force central banks to increase money supplies, eventually reversing current market sentiment in favor of hard assets.