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Myrmikan Research on gold, China and the overall system

May 17, 2016

From our friend Dan Oliver is the latest Myrmikan Research report. I always take time to read over Dan’s work. Below is a synopsis of what Dan is thinking about the overall global system and a link to the full report. We hope you enjoy.

China is the linchpin of the current credit bubble, its banking system having grown from $4 trillion in 2004 to $30 trillion today, fueling epic overcapacity and plunging prices in higher orders of capital.  As commodities fall, due both to overcapacity and slackening demand, mines and plants lose value rapidly, along with the debt used to finance them, and the banks that made the loans.
This transmission mechanism from China to the Western banks has earned a temporary reprieve as China unleashed another massive debt stimulus in the first quarter, but we are reaching the end-game, nearing the 1930s moment when falling prices spurred trade wars that prompted populist politicians to raise trade barriers, ushering the Great Depression.
On June 6, the CMRE is hosting a discussion on the economic and geopolitical threats from China’s credit situation along with a discussion of presumptive Republican nominee Donald Trump’s monetary philosophy.
To see the full program and register for the event, please visit:
     www.cmre.org
Space is limited.

Meanwhile, gold stocks are on a tear, but, unlike other sectors, the indexes are not the way to play it.  Market participants continue to wait for a correction, which never seems to come.  Every sharp move lower attracts bids that levitate the miners higher, regardless of what gold is doing, a reflection of the deepening concern investors have with Federal Reserve mismanagement.  Please see the attached report for additional commentary.

Click to the right for the full Myrmikan Report – Myrmikan_Research_2016_05_17
Also click here to visit the Myrmikan website.