In May 2008 the stock market staged a "rally" that was very similar to the one that took place recently. Back then, some investors believed that the turmoil during the latter part of 2007 and the early part of 2008 was over and that the economy was headed toward a strong growth!

In actuality, that rally merely masked the economic collapse. The same situation is happening, all over again. There are numerous flashing red lights as the stock market is falling once again, just as it did during the beginning of the spring of 2008!

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There have now been four consecutive quarters in which corporate earnings have declined. The profits among S&P 500 companies were down 7.1% during the first quarter of this year.

The U.S. markets have now entered the next phase: a stock market downturn. The global financial system is now starting to unravel, which will have far-reaching implications!

According to the Federal Reserve, 47% of all Americans say they are unable to come up with $400.00 for a surprise bill. This Atlantic article concludes "that either a sizable minority or a slim majority of Americans are on thin ice financially."

In December 2015, when the Fed raised interest rates for the first time in almost a decade, policymakers had projected a total of 1% of interest rate increases in 2016. We were skeptical of this prediction and forecast that the Fed would not "materially" hike rates!

The Fed later backtracked its estimates to half a percentage point or increases in 2016 during the March meeting.

The chances of a June 2016 hike are low to nil now as the "Brexit" referendum is being held only one week after the June Fed meeting. If the U.K. votes to exit the European Union, then the financial implications may wreak havoc on the already fragile global economies. Hence, the Fed will not risk raising rates before such a significant and important event.

Similarly, after July 2016, the U.S. presidential race will heat up, and the Fed will not want to raise interest rates without knowing what the next president's economic policy will be. If the world economy falters, however, the Fed will have to follow the other central banks and restart quantitative easing.

The timing of a stock market crash is presently within our reach. All signs are pointing toward a higher price for gold, both in the near term and the long term. If the Fed embarks on more quantitative easing and devalues the dollar, this will be very bullish for the yellow metal.

The rise of the stock market in recent years is widely viewed today as the result of QE. A bandage was placed on that financial crisis which was never structurally repaired. Investors have long since given up on the Fed's bond-buying as a means of repairing the economy. 

S&P 500 Weekly Chart

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Courtesy of TradingView

The greenback has lost value since the start of the year. The PowerShares DB US Dollar Index Bullish(UUP) - Get Report , an exchange-traded fund designed to track the value of the dollar against other major currencies, is down 3.7% year to date. Treasury securities maturing in 10 years or less have yields of less than 2%. Something has truly gone horribly wrong with the economy! The Fed, however, is trying to put up a brave front. Policymakers have asserted that they are considering a hike in their June 2016 meeting, but this is very misleading as there will be no material short-term interest rate hike.

Monthly U.S. Dollar Index:

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Weekly S&P 500 Stock Index

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Courtesy of TradingView

Daily Gold Chart

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Courtesy of TradingView

The problems that exist within all of these markets stem from the global central banks, which are sending mixed messages. They are actually driving the dollar higher for the time being.

Two weeks ago, the Bank of Japan did not provide more monetary accommodation, as was expected, at that time; whereas last week, the BOJ announced they would do so. Therefore, the dollar rose up whereas other currencies, including the euro and the yen, fell rather hard. This reaction resulted in both metals and stocks going down.

The three central banks have now reversed their prior announcements regarding monetary policy, within the last month. First, the ECB and then the Fed and now the BOJ.

Also, Fed officials have been considering how sustained negative interest rates would affect the health of banks. In its 2016 stress tests of banks, the Fed is looking at how a negative interest rate on the 3-month Treasury bill would affect big banks over an extended period, Bloomberg reported

Gold prices are surging this year and that has the smart money flocking toward the yellow metal.

During this global contraction, it is only a matter of a very short period before the stock market reflects this reality. Truly, this is the beginning of "The Great Reset"! In short, big things have slowly been unfolding that will be not only life changing but will change the entire financial situation of the world.

The good news is that there are many ways to profit and prosper from these events. A few simple and well-timed positions can yield huge results for the savvy trader and investor. 

Follow my lead as we place special ETF trades to prosper during the pending market collapse: www.TheGoldAndOilGuy.com

This article is commentary by an independent contributor. At the time of publication, the author held gold bullion.