Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. And it bears mention that most of these items are from the “tangibles heavy” contrarian perspective of JWR. (SurvivalBlog’s Founder and Senior Editor.) Today’s focus is on the Chinese Debt Bubble. (See the Global Economy & Finance section.
Gold/Silver Ratio Hits 25-Year High; Silver Underperforms. “Comex December silver on Tuesday bottomed at $13.92, the contract’s weakest level since 2016.” JWR’s Comment: This sounds like a genuine dip point though probably not a full bottom, and a signal to buy. Perhaps this is more of an opportunity to ratio trade out of gold and into silver.
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Global Economy & Finance (Chinese Debt Bubble):
The Chinese debt bubble has reached absurd proportions. Their bubble reeks of malinvestment. There are now some 50 million unoccupied apartments in China. That is one fifth of the nation’s apartments. Every major Chinese city has districts filled with apartments building that have never been occupied. The apartment building contractors are kept constantly busy, fueled by ballooning debt. The $28 Billion USD equivalent Three Gorges Dam Project is nearly complete — paid for with debt. And now the $1.2 Trillion “One Belt, One Road” infrastructure project is in full swing. Again, it is being paid for with debt. Some fools as far away as France are financing it. According to S&P, China local governments’ hidden debt could total $5.8 trillion.
This is what happens when a command-driven communist economy supposedly transitions to free market economics. The problem is that the Central Planning commissars are still calling the shots. They just call themselves capitalists now. Old School diktat is still the order of the day. There are already signs that the Chinese debt bubble is deflating. Just observe the Chinese stock market. There have already been $5 Trillion in losses, across Asia. Take a look at this Shanghai chart site, and click on the 5 Year view. Yikes! And that could be just the first stage of collapse. It is absurd to think that a further implosion won’t be felt world-wide. The now unfolding Asian Contagion may herald a global depression that will last a decade or longer.
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I can foresee that the practical limits of “fiscal stimulus” will quickly be reached in China. Since the nation was already saddled in debt, the current stimulus schemes are likely to collapse in less than a year. Chinese government officials will probably try to continue the charade, but at some point the Forex value of the Yuan will collapse. This, in my estimation, will be the trigger for full scale implosion of the Chinese stock markets, housing, car sales, and consumer spending. One almost certain consequence will be a subsequent global drop in commodities prices. Once China is taken out of the equation, commodities will soon have a lot more supply than demand. It will be at that point that platinum will finally bottom.
The global derivatives market now has a notional value of perhaps $1.2 Quadrillion.
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Forex & Cryptos:
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Preppers looking for a truly practical investment “vehicle” should consider buying an extra 4×4 pickup truck or perhaps even two, if you have the garage space. These are best bought during gas price spikes. Always look for bargains. Getting one in a divorce sale or from other distressed sellers will maximize your profit when you re-sell it. Add a little sweat equity — in things like repainting and minor repairs — and you’ll have a sure profit. One technique for making a pickup with faded or scratched paint look great is painting the entire vehicle in bed liner or bumper paint.
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.
Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who particularly watch individual markets. And due to their diligence and focus, we benefit from fresh “on target” investing news. We often get the scoop on economic and investing news that is probably ignored (or reported late) by mainstream American news outlets. Thanks!