World sinks deep into recession: Opposing view
Gold will be highly valued as a safe haven commodity.
(Photo: Spencer Platt, Getty Images)
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.
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