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What to do… » Chinese bubble

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Posts Tagged ‘Chinese bubble’

Even more reason to jump to gold?

March 24th, 2010

One of my favorite financial writers, Edward Harrison (of CreditWritedowns.com) made two very interesting posts today:

http://seekingalpha.com/article/195090-anticipating-eurozone-collapse

http://seekingalpha.com/article/195224-ten-ways-to-spot-a-bubble-in-china

Also J.S Kim made a post about the current focus on US vs China that was very interesting (Kim is very pro physical gold and silver and con fiat currencies):

http://seekingalpha.com/article/195097-in-the-real-world-series-of-poker-the-stakes-are-default-of-sovereign-debt

I must say that I am very terrified for the outcome for the Eurozone. I live in Sweden, we don’t have the € here (I personally voted against it as I didn’t trust the ECB), but of course we are going to be heavily affected anyhow. A lot of our exports are denominated in Euros as this intra-EU trade is very significant for Sweden. The same goes for all countries around the Eurozone (UK, Switzerland and so on). This in concert with the possible Chinese bubble and the possibility of a double dip in both US and EU sure doesn’t look good. If there is a bubble in China and it busts of course the resource producing countries like Australia, Brazil, Canada and Russia (and numerous others) will experience lowered export and price in many commodities like metals and oil will be effected.  The AUD is very strong today because the increase in Chinese import of resources from the continent.

If we have a failure in the Eurozone, a double dip in the stock markets globally, a bust in China and 1 trillion of petrodollars looking for alternative investments, what should one do? Buy gold I think. Clearly the central bankers think all problems are solved by printing more money (I got 1000 trillion of Zimbabwe dollars from a seller on Ebay for £15 last week. I  think it will look good framed on the wall above my desk.). China seems to understand that gold is the only currency that have survived the fall of great empires in the past for a reason. I think the Arabs are as smart and will shift their profits over to gold purchases (covertly of course).

Also, just a small remark. I have increasingly seen the word ‘endgame’ being used in articles the last few weeks. As a poker player I’m very familiar with this concept as the final phase in a multi table tournament, when you’re down to the final table. I don’t quite like the notion in financial discussions as I really don’t think the “tournament” ever will be over, but still I find it interesting that many writers now use the term. Somehow it says quite a lot on their view of current events…