Zoho's Sridhar Vembu says ‘gold is also flashing a big warning signal’ amid yellow metal prices soaring to new heights

Zoho founder Sridhar Vembu on Saturday joined a growing number of voices expressing concerns over the stability of global financial markets, saying gold is also flashing a big warning signal.

In an X post, the founder of Chennai-based software company said that he agrees with the former IMF chief economist Gita Gopinath's recent analysis of the US markets in The Economist.

What is Vembu's assessment of the situation?

"The US stock market is in a clear and massive bubble. The degree of leverage in the system means that we cannot rule out a systemic event like the global financial crisis of 2008-9,” Vembu said in a post.

The 2008 global financial crisis was a severe economic downturn caused by the collapse of the US housing market, which was triggered by the widespread issuance of risky “subprime mortgages.”

Noting that gold is also flashing a big warning signal, Vembu added, “I don't think of gold as an investment, I think of it as insurance against systemic financial risk. Ultimately finance is all about trust and when debt levels reach this high, trust breaks down.”

“I am sure AI will work hard to repay all the debt in the system,” the Zoho founder added.

What was Gita Gopinath's analysis of the situation?

Gopinath wrote in The Economist that the American stock market fueled by “enthusiasm around artificial intelligence”, has been hovering near an all-time high since quite some time.

This is happening despite volatility in the markets triggered by renewed trade tensions following President Donald Trump's series of tariffs on key trading partners, with the most recent one being China.

This trend has drawn comparisons to the late 1990s tech boom that ended with the dotcom crash in 2000, the former chief economist of the International Monetary Fund (IMF) wrote in the article.

In the meantime, traditional safe haven asset Gold price has hit a record high of ₹1,32,294 per 10 grams on Friday, 17 October. This development comes amid strong demand of the precious metal ahead of festive season.

Netizens react to the post

Several other X users commented on his post, with most sharing their own views on the the topic.

An user said, “The US debt spiral and inflated equity valuations after the Fed’s massive liquidity injections have distorted fundamentals. The bubble looks bigger than ever, just waiting for a trigger.”

Another user called out Vembu for issuing other such warnings regarding the financial markets, which read, “you cry wolf every year.”

Vembu responded to the post, saying “All that an engineer can do is to point out that the building is structurally unsound. No one can predict when it will collapse.”

Meanwhile an X user also highlighted an opportunity for companies during times of economic turmoil, stating “Great opportunity for you and other companies willing to grow market share. When bubble bursts, economic recession means most companies will actively seek cheaper alternatives to services provided by MS, AWS, Oracle, etc.”