Gold World editor Greg McCoach talks about the next two market bubbles that will burst, and how investors can profit from owning gold and silver.
In 2008, we witnessed three market bubbles popping:
1. The Real Estate Bubble
2. The Stock Market Bubble
3. The Commodity Bubble
Each of these markets remains stagnant, and we still seem to have a long way to go as the world continues down the road of deleveraging.
As a result of the global recession that has ensued, the stakes for individuals, businesses, and world governments are becoming greater and greater by the week.
Governments worldwide seem to be caught like deer in the headlights with their only available option being to inflate like there is no tomorrow.
And now, on top of everything that's already happened, it appears that we have two more bubbles that are going to pop this year.
The Commercial Real Estate Market Bubble
Within the next few months we are going to see a massive amount of commercial real estate go into default mode.
I recently had a conversation with one of the top leasing agents in America for big box retail stores. He told me that many retailers —including big brand-name stores that you well know— are having difficulty making their monthly lease payments. Most big box stores don't own their buildings. Rather, they lease the buildings from companies like his, which happens to be one of the largest in the country.
He told me just a few weeks ago that a day doesn't go by now where multiple calls come in from clients who can't make their monthly payments. He told me, by end of the first quarter, he expects to see a massive wave of defaults on the part of these big box retails stores who will have to shut down and move out.
As a result of all this, commercial real estate prices will plummet, causing further damage to companies' balance sheets and effectively putting the economy deeper into recession.
But the damage from the burst of the commercial real estate bubble will seem modest compared to the fallout from the pop of the U.S. Treasury bubble.
The U.S. Treasury Market Bubble
U.S. Treasuries are the main asset held by the rest of the world's central banks as reserves behind their own national currencies.
Yields are certain to move higher in 2009 as the U.S. Government tries to borrow more than $2 trillion or more.
We don't know yet how much, but reasonable estimates have the budget deficit for this year in the United States between $2 and $3 trillion, conservatively!
As yields skyrocket, all bonds, including U.S. Treasuries, will plummet.
And when the U.S. Treasury bubble bursts, the onslaught in world bond markets will be catastrophic.
This will be the last bubble to burst. The U.S. Treasury bubble is the 'Game Over' bubble.
When U.S. Treasuries start their downward spiral, the valuation of the reserves held by central banks around the world will be sucked down in the vortex, effectively forcing interest rates higher. As this happens, the value of the U.S. dollar against foreign currencies will be headed lower as well. And the role of the U.S dollar as the dominant reserve currency will lessen.
The U.S. dollar's and U.S. Treasuries' heading lower at the same time will wreak havoc with the foreign central banks desperate to replenish their reserves and maintain order within their pubic banking sector.
Amid the mayhem that will ensue, central banks, governments, financial insitiutions, and private investors around the world will harmonize in thought. They'll all rush to buy gold.
Bursting Market Bubbles Will Lead to a New Gold Rush
The rush to gold is going to be incredible over the next several months. While the world is still seeking safety in paper fiat currencies, there is only one alternative left to the U.S. dollar as it fails, and that is gold.
A recent quote that I saw in the Financial Times by the author David Hale said it best:
'The clear alternative to the dollar in 2009 is not other currencies but that ancient form of money: gold. Precious metals could emerge as a hedge for investors suspicious of central banks and fearful that inflation will be the simplest solution to the challenge of global deleveraging.'
Gold World still recommends holding physical precious metals and quality gold and silver stocks. The popping of the commercial real estate and U.S. Treasury bubbles is going to cause major problems here in America and worldwide. The time to prepare is now.As the professional manufacturer of complete sets of mining machinery, such as jaw crusher,Rotary kiln,Single toggle jaw crusher, Henan Hongxing is always doing the best in products and service.
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