China’s Plan B Is About To Shock The World And The Gold Market

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China’s Plan B Is About To Shock The World And The Gold Market

On the heels of recent strength in global markets, today a legend in the business sent King World News a powerful piece warning that China’s Plan B is about to shock the world and the gold market.

By John Ing, Maison Placements
(King World News) – It is not only in the political world where we are witnessing traditional mores being broken. Ride-sharing Uber for example has challenged guidelines, city mandarins and monopolizing taxi cab companies around the world capitalizing on passengers fed up with poor service, and arcane regulations.To allow Uber to operate, city bureaucrats were compelled to introduce new regulations, opening up competition, that broke down long standing monopolies. Change is a good thing…

 

In the political world, voter frustration, disillusionment and anger has led to a flirtation or call for more radical political solutions. In recent years the public has lost faith in politicians and central bankers because of their failed promises and solutions. This lack of faith had its origins in the 2008 financial crisis which benefited so few at the expense of so many. Brexit was a recent example of the toxic combination of populists’ frustration, political missteps and a repudiation of intervention that “nanny state” governments like the EU have pushed for decades. No wonder the loss of relevance by mainstream politicians, politicized central bankers, regulators and the intelligentsia that has given way to a post-factual climate of lies, xenophobia and irrationality at the expense of facts and reason, empowering a new breed of politicians.

Their criticism is often self-serving as well as the rationalization, that the “silent majority” has finally found its voice, After all, after years of listening to “snake oil” politicians, flip-flopping economists and cheerleading media types, no wonder the loss of public esteem fed up with the

20 second sound bites, hopeful or sunny platitudes, academic central bankers and mainstream institutions. Despite accepting the harsh medicine of austerity only a few have prospered like the “too big to fail” banks which have become bigger or Wall Street enjoying the best times ever while $7 trillion dollars later, economic growth remains anemic, 47 million Americans are on food stamps and prosperity remains elusive. Consequently while priorities and politics seem to differ widely, the longer there is this disparity, the less credible markets are likely to greet subsequent remedies and the deeper the sense of disenfranchisement and the loss of faith in promises of “change”. Investors beware, better to come up with a Plan B.

Keep Calm and Carry On
The aftershock of the surprise Brexit mess continues amid political turmoil and contagion concerns. Longer term, there is no question that the fears are justified but amazingly, no one had a Plan B.

And that leaves Theresa May the herculean task to negotiate the so called exit clause, Article 50 of the Treaty of Lisbon, severing Britain’s 43 year membership. Ironically Mrs May, a “remain” supporter will negotiate the divorce agreement, acceptable to the House of Commons of which the majority are also “remain” supporters, but must ratify the divorce to repeal the 1972 European Commitment Act. Not an easy task. On the assumption of a successful agreement, the earliest notification date would be sometime in 2017 and then 2 years later, the exit sometime in 2020.

But wait. What if the new Prime Minister decided to call an early election, with a desire for a new mandate and, another referendum under a modified divorce agreement modeled after a Norwegian or Swiss type agreement with trade agreements, monthly contributions, passport rights etc. The UK is already compliant with many of EU’s dictates, including the single market law. The EU would also have to compromise finding middle ground in order to save the EU itself whose existence is threatened. This second referendum would vote on not only a new government but a new form of EU membership. The world order would change and yet again, the peoples’ will would be usurped by politicians. Noteworthy is that gold in sterling jumped 15 percent the night of the Brexit vote. Someone had a Plan B.

Change, Real Change
No wonder then, out of this morass, “outsider” politicians such as Donald Trump, Marie Le Pen in France, Beppe Grillo or Corbyn in the UK were able to capitalize on voter disillusionment. Polarization, it seems makes good politics leaving moderates on the sidelines. Politicians are complicit in this politics of polarization, hoping to divide and conquer. Even in the world of heightened social media, there is a great divide among those who are acknowledged or swept right, leaving the other “unlikes” in never never land, swipe left. At best, the consequences are not to continue with the status quo, and for a change, real change.

To be sure, more referendums are in the offing. Italy’s Matteo Renzi has called for a constitutional referendum in October, spooking a market that sees its third largest bank, Monte dei Pachi hit new lows as ECB warns of its bad loan exposure. Next year there’s the French election in May and German election in September. At worse, Brexit and the EU faces a couple years of economic uncertainty, protracted negotiations, refugee influx and a debate over its own existence. The dirty little secret is that change is coming and the markets are unprepared. Trump for President – swipe right? Gold is a good thing to have, a Plan B for everything.

The World Faces a Holy Trinity of Conditions
For some time our central banks’ alchemy has been knee deep in credit creation, inserting money into the world economies to keep them afloat. In the eight years since the crash, central banks led by the Fed have tried every tool in their repertoire to revive their economies and still, the world economies are not as robust as advertised. We believe their strategy is fundamentally flawed. Today in a race to the bottom, yields have yet to revive economic growth with the monetary experiment resulting in almost $13 trillion worth of sovereign debt carrying negative yields. Most of that debt is in Japan and the Eurozone which keeps growing, particularly after Brexit accelerated a global rush to safer assets…..More Here

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