The price of gold is up over 9.5% since the beginning of the year. One strategist who appeared on CNBC yesterday says he sees it going even higher – as high as $2,000 by the end of the year.

David Roche heads London-based Independent Strategy. During an interview on CNBC’s Squawk Box, he said he sees bad things to come in the stock markets but gold will shine.

“I actually believe financial markets are now poised to crumble like a sand pile.”

Roche said the Federal Reserve already has a very low pain threshold.

“It seems to be operating on the basis of anticipating bad that might, might, might happen to the economy. But I think the markets are so drugged now on low-interest rates and easy money that any disappointment on cutting rates immediately results in equities going down.”

Roche noted the record level of negatively yielding debt that is out there.

“You can’t really afford to increase interest rates, because the whole pile, the whole sand pile will topple over and come tumbling down.”

Roche said he doesn’t see a 50 basis point cut in July. He said there is even the possibility that the Fed won’t cut at all in July and will wait until later in the year.

“But the markets won’t wait for later in the year. The markets will immediately come down. So, it’s very, very risky out there at the moment.

Roche said he thinks Powell might try to resist the pressure put on by Trump to lower rates to prove his independence, but at his core, Powell is a very dovish man.

“The Fed’s pain threshold, from Yellen to Powell, has come down by about a meter. Boom – like that. Now, they can’t bear any pain. Not before it happens in the data, but when they think that it might happen in the data because something in the financial markets is telling them possibly an inverted yield curve might possibly be telling them that down the road the US economy will weaken. Now, that’s a lot of ‘ifs.’ But the Fed reacts to it. So, they’ll cut interest rates. I’m pretty convinced of that.”

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