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July 8, 2017, 11:49 a.m. EDT

Not a ‘total shock’ if stocks plummet 25% and gold soars 50% by October, says Ron Paul

‘I think it’s a very precarious market, and the Fed better be very careful,’ the Libertarian firebrand says in CNBC interview

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By Rachel Koning Beals

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The U.S. economy is nowhere near as strong as the prevailing view on Wall Street leads investors to believe. That means a painful stock-market correction could hit as soon as October, according to libertarian firebrand Ron Paul, the medical doctor, former Republican congressman and repeat presidential candidate.

‘If our markets are down 25% and gold is up 50% [by October], it wouldn’t be a total shock to me.’

Ron Paul

That scenario would land the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.29%  flirting with 1,800 and gold   above $1,860 an ounce.

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“I think it’s a very precarious market, and the Fed better be very careful. Since they are incapable of knowing what to do, I don’t expect much good to come out of anything they do,” Paul said in a CNBC “Futures Now” interview . “There are so many mistakes made out there that the correction is almost unlimited.”

Paul is an unabashed bear who has been critical of the Trump administration and more so, the Federal Reserve, who he says has pinned interest rates at historic lows for too long.

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Notably, Paul offered a similar prediction on the business network about a year ago. Since then, the S&P 500 is up more than 20%, while the Dow industrials /zigman2/quotes/210598065/realtime DJIA -0.07%   is up some 24% and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.37%  has surged more than 30%, each having knocked out record highs over that stretch.

Safe-haven gold, for its part, has logged a nearly 8% gain so far this year, according to FactSet data tracking futures markets.

It’s just such a run that leaves Paul nervous, he countered.

“People have been convinced that everything is wonderful right now and that stocks are going to go up forever,” Paul said. “I don’t happen to buy this. The old rules always exist, and there’s too much debt and too much mal-investment. The adjustment will have to come.”

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Rachel Koning Beals is a MarketWatch news editor in Chicago.

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