Global markets cannot survive a Gold plunge


Last year it was oil prices that plunged to under $50 per barrel.   That sent Russia into one of the longest recessions they have ever endured.

Then Greece captured the headlines for several months and remains a major concern as they are forced to take a deal to sell their national assets in order to pay off the creditors for just a little longer. 

Last week China’s stock market plunged about 30 percent and would have probably continued if the government didn’t shut down most of the selling and force the companied they control to buy.  China’s market crash is yet to take its toll, but it is likely to push down commodity and asset prices around the world.

This week, on Monday – Gold prices dropped to a 5 year low.  This is not looking good.

Gold is the foundation of wealth.  It is used as collateral by the Central Banks around the world.  It is used to price most commodities traded around the world.  If Gold plunges, it will take the entire world into a global recession. 

On one hand, falling prices of commodities sounds good to everyday consumers that buy food and clothing and housing.  They enjoy lower prices. 

On the other hand, the world is awash in debts that they are already unable to pay.  Without higher prices to increase incomes (personal and tax), no one can pay their debts.  High prices are critical.  The Central Banks of the world cannot allow Gold prices to plunge. 

They will start buying Gold by the ton.  The US Fed will not be able to raise interest rates, rather they will probably start QE4 by year end.

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