Former Goldman Sachs Exec Raoul Pal Says Current Financial Turmoil Reminds Him Of March 2020

As the markets face the triple threat of an ongoing war, oil shortages and rising interest rates, former Goldman Sachs executive Raoul Pal says the current dynamics remind him of March 2020, and investors should be buying gold and crypto.

What Happened: In a litany of tweets on Friday, Pal outlined his view that the likelihood of interest rate hikes is growing smaller by the day, as the Fed and other central banks may be forced to take a more dovish economic stance to avoid a recession.

The odds of rate hikes are falling fast because hiking rates into a supply shock just exacerbates what is likely to become a global recession as the Russia situation will not get solved fast. Demand will erode fast at these prices too.

— Raoul Pal (@RaoulGMI) March 4, 2022

Pal told his over 900,000 Twitter followers that “Europe is now in a hot mess.” Adding that, he thinks there is a decent chance that Modern Monetary Theory (MMT) style handouts will be used to cover food and energy costs. “This could be a global thing. It was the new trick that the governments and CB’s learned in 2020,” Pal said.

Also Read: Over $4 A Gallon: Gas Prices Surge To Highest Levels In Over A Decade

Where To Put Your Money: The founder of the crypto investment platform Real Vision said that in light of current macroeconomic conditions, precious metals, digital assets, bonds and the US dollar are the best options for investors.

He added that the current global financial turmoil reminds him of March 2020, when most major financial markets collapsed before making strong V-shaped reversals.

The right trades here remain gold and crypto (no one's liability), bonds and dollars. One sniff of a change in CB's use of balance sheet and crypto explodes again but patience required.

The entire set up is very similar to March 2020 for crypto. Let's see if it makes a new low

— Raoul Pal (@RaoulGMI) March 4, 2022

When it comes to the current oil shortages resulting from the Russian invasion of Ukraine, Pal said the ongoing energy and financial crisis may ultimately have a silver lining.

I think it also accelerates green energy commitment, a global deal with Iran and a shift towards Morocco (manufacturing) and Algeria (gas) as regional further splinter into more regionalised supply chains they can control easier (I.e not Russia or China)

— Raoul Pal (@RaoulGMI) March 4, 2022

Pal has been a long-time crypto bull, and recently revealed that while he's bullish on Bitcoin BTC/USD, he has recently begun to favor Ethereum ETH/USD as his main crypto holding.

At the time of publication Bitcoin was trading at $38,863.67 down 1.72%, and Ethereum was priced at $2,618.43 dropping 1.91%, the declines occurring in a 24-hour period.

Photo: Courtesy of CoinDesk on Flickr