UPDATE: World Market Turmoil, Currency Wars and Precious Metals
Everyone knows that the United States has a serious debt problem. And as bad as it is – it almost can’t be overstated – could it be that China and Europe’s problems are even worse? We have found a few recent articles excerpted and linked below that we think Lear investor clientele should note.
Ours is not the only market on shaky ground right now.
China’s official economic numbers seem to be complete fiction. As bad as our debt is, their debt is worse. And one of their biggest reserve assets is mountains of OUR dollars. It’s a house of cards built on a house of cards! Gerald Celente gives his thoughts.
Also, Europe is caught in a cycle of monetary easing driven by populist nonsense that is sure to catch up to them. The adult investors in the room, who understand where this is headed, are storing their wealth in gold and precious metals as a backstop.
Wealth preservation IS king in this global climate of monetary nonsense. Read on below…
Gerald Celente – China Stock Market Crash To Create Full-Blown Global Panic, But Gold Will Shine
“Gerald Celente: “George Soros came out earlier in the week warning about the Chinese debt bubble, which is estimated now to be at about $30 trillion, up from $500 billion twenty years ago. Soros said stimulus can buy you additional time, but it makes the problem that much bigger. That’s where we are.
“So when they talk about China’s growth now at 6.7 percent, they leave out the fact that the Chinese banks pumped in some $212 billion in new local currency loans in March. There was also the social financing of another $360 billion in the month of March.”
Euro Could Suffer as Central Bank Policies Provoke Inflation Protection
“In a world where central banks are keeping rates low or negative, and are willing to let inflation overshoot after being stuck in lowflation/disinflation ruts for a several years, real returns become problematic. When an investor buys nominally-denominated sovereign debt, she is receiving fixed payments (as opposed to something like TIPs, which is fixed-real, or adjusted for inflation). Let's say the bond has a yield of 3% over a given period. If inflation is 0%, then her real return over that period is 3%. If inflation is 5%, even though the bond returned 3%, her real return is -2%. (This can be expressed mathematically as nominal return = real return + inflation, or real return = nominal return - inflation.)
“This is where the portfolio rebalancing channel effect comes into play as investors seek to maximize their risk-adjusted returns: the lowest yielding, highest quality debt should be sold off. Low yielding nominal bonds won't preserve returns in the event that inflation rises in the future; investors move along the risk spectrum and look for higher nominal returns at first - higher yielding nominal bonds (European peripheral debt). Those not comfortable with the state finances of Italy or Spain (who could blame them) might find European equities as the most palatable place to store capital and preserve wealth in the event of inflation unexpectedly running higher. Now with NIRP governing a greater proportion of global debt, it's no surprise that investors are using precious metals as hedges for inflation - Gold prices and Silver prices have been on a tear since mid-January…”
Continued Financial Market Deterioration Impacts Gold Eagle Sales In A Big Way
“Last week there were several emergency Fed meetings followed by China’s launching of its new gold yuan benchmark this Tuesday. Also, according to Global Research News:
“China has reportedly decided ”there can be no conversion of gold-backed Yuan to or from US dollars.” What China fears is that many countries around the world will want to trade their reserve US dollars for the new Yuan, leaving China with mountains of worthless US dollars. China already has several trillion in US dollar reserves and does not want or need more.”
“If the news reports that China will not allow a conversion of its new gold-backed Yuan to or from U.S. Dollars, this is indeed serious trouble for the United States Empire. Which is the very reason I believe there were emergency Fed meetings last week. Even though there hasn’t been any major impact via the mainstream media, the ramifications are likely to become public in due time.”
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