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This Region Of The World Is Being Hit By The Worst Economic Collapse It Has Ever Experienced

The ninth largest economy in the entire world is currently experiencing “its longest and deepest recession in recorded history”, and in a country right next door people are being encouraged to label their trash so that the thousands upon thousands of desperately hungry people that are digging through trash bins on the streets can find discarded food more easily.  Of course the two nations that I am talking about are Brazil and Venezuela.  The Brazilian economy was once the seventh largest on the globe, but after shrinking for eight consecutive quarters it has now fallen to ninth place.  And in Venezuela the economic collapse has gotten so bad that more than 70 percent of the population lost weight last year due to a severe lack of food.  

Most of us living in the northern hemisphere don’t think that anything like this could happen to us any time soon, but the truth is that trouble signs are already starting to erupt all around us. 

It is just a matter of time before the things currently happening in Brazil and Venezuela start happening here, but unfortunately most people are not heeding the warnings.

The global economy is more interconnected than ever before, and pain that starts in one region can rapidly spread to others. 

The biggest debt bubble that the world has ever seen is starting to burst, and over the coming years we are going to see financial pain on a scale that would be unimaginable to most of us at this moment. 

But even now there are those that would suggest that this colossal debt bubble can continue growing much faster than global GDP indefinitely, and this sort of exceedingly reckless optimism is leading many astray.

Virtually Everyone Agrees That Current Stock Market Valuations Are Not Sustainable And That A Great Crash Is Coming

Current stock market valuations are not sustainable.  If there is one thing that I want you to remember from this article, it is that cold, hard fact.  In 1929, 2000 and 2008, stock prices soared to absolutely absurd levels just before horrible stock market crashes.  What goes up must eventually come down, and the stock market bubble of today will be no exception.  In fact, virtually everyone in the financial community acknowledges that stock prices are irrationally high right now.  Some are suggesting that there is still time to jump in and make money before the crash comes, while others are recommending a much more cautious approach.  But what almost everyone agrees on is the fact that stocks cannot go up like this forever.

 
Above Shiller PE10 as of 3-09-17 is 29.14

 This current stock market bubble has lasted much longer than many of the experts originally anticipated, but that just means that the eventual crash will likely be that much more devastating. 

But what you do need to know is that current stock market valuations are not sustainable and that a great crash is coming. 

It may not happen next week or next month, but it is going to happen.  And when it does happen, it is likely to make what happened in 2008 look like a Sunday picnic.

The Path to $10,000 Gold

So let’s go through the math, because there is a solid mathematical basis for $10,000 gold. It’s actually the implied non deflationary price of gold under a gold standard. 

The combined M1 money supply in the world is about 24 trillion dollars. That includes the United States, China, the Eurozone and Japan. Those four entities combine for over 70% of global GDP. 

Now, the official gold in the world is about 33,000 tons. That’s not counting private gold, because private gold is not part of the money supply. 

So if you wanted to restore a gold standard, how much gold do you need to back up the money supply? My estimate is about 40%.

Now, if you back 40% of the $24 trillion of money supply with the amount of official gold, it implies a gold price around $9,000 an ounce. But I predict $10,000. 

So how do I arrive at $10,000 an ounce? 

That’s because I expect central banks to print a lot more money by the time this issue comes to a head. So, by the time the printing presses stop running around the world, that $9,000 number will likely be in the range of $10,000.

 DYI