World sinks deep into recession: Opposing view
Gold will be highly valued as a safe haven commodity.
When commodity prices began collapsing in mid-July, Wall Street blamed rising expectations that the Federal Reserve would boost interest rates by year’s end. And, because commodities are traded in U.S. dollars, it would become more expensive for other countries, whose currencies are declining, to buy raw materials.
When global equity markets began falling a few weeks ago, financial fingers pointed to China’s “surprise” currency devaluation. Now, as markets plunge deeper, China’s economic woes are largely blamed for the sell-off. Indeed, as featured in USA TODAY’s On Politics, Republican presidential candidate Donald Trump warned that “China’s taking our jobs; they’re taking our money … they’ll bring us down.”
Trump is wrong. China is merely the canary in the collapsing global equity mine. Markets are tanking, currencies are collapsing and commodity prices, now at 16-year lows, are plummeting because the world is sinking deep into recession.
Not only do we have a “clue” why markets are tanking, two weeks before China devalued its currency, we forecast exactly that in our Trends in the News broadcast. Then, on Aug. 6, before the market meltdown began, we forecast that global equity markets would plummet by year’s end.
The formula is simple: When the United States and Europe buy fewer consumer goods, China manufactures less of them. And the less China manufactures, the fewer raw materials and agricultural goods it imports from resource-rich nations. As exports decline from resource-rich nations, their economies will dramatically weaken.
Conventional wizards now advise to take a deep breath, it’s merely a correction and there are buying opportunities. We disagree. Global central banks’ low interest rate policies and massive quantitative easing liquidity injections merely relieved symptoms of the Panic of ’08 , but were not the cure.
Therefore, in this environment of currency devaluations, failing economies and a series of other trend lines leading to increased global conflict and social unrest, we forecast gold will be highly valued as a safe haven commodity.
Gerald Celente is a market trend forecaster and publisher of Trends Journal.