On the heel of an absolutely wild trading week where we witnessed history being made, people around the globe are still stunned but this is really going to shock the world.
(King World News) Stephen Leeb: “A lot of things are uncertain after the Brexit vote. But there’s one thing that is certain: it sure hasn’t hurt the case for owning gold and silver…
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Stephen Leeb continues: “It goes beyond the mere fact that the added global uncertainty will in itself favor precious metals. If you look behind the shocking outcome of the referendum to see the frustrations that led so many in Britain to pull the lever to leave the EU, it suggests further reasons that gold and silver will benefit.
At their core, those frustrations reflect a long period in which lack of real growth meant shrinking horizons and contracting lives, a state of affairs as true in the U.S. as in Britain for those outside the rarefied elite of top earners.
Let’s look at America. This century – in contrast to the 1990’s, when prices of food and other necessities were either flat or declining – the prices of life’s necessities have risen much faster than inflation and much faster than incomes. Capital investments as a percentage of GDP have declined over the past 16 years, after rising in the previous 15 years. This has contributed to high-paying manufacturing jobs becoming a smaller part of the economy. Last, the percentage of U.S. population growth accounted for by immigration has risen from roughly 30 percent in the 1990s to about 40 percent over the past 16 years.
Most Americans Are Broke
The critical bottom line is that most Americans have little if anything left for discretionary spending. It makes for pretty grim lives. And when you realize that what is going on in America is happening to a greater degree in England, Brexit becomes, if not (in my view) the right medicine, at least a lot more understandable. Brexit is shot across the bow. And unless rich countries start to go for growth that will benefit their entire populations, it could be a shot that ends up sinking the entire ship, if it leads to a further unraveling of the EU.
While those who voted for “Leave” may think reducing immigration is the magic solution, it’s at best a stopgap. In the end, in both the U.S. and Britain as well as in other developed countries, the only way forward is through creating more high-paying jobs, and that means focusing on the enormous need to repair and create infrastructure, on replacing 130-year-old water pipes and on building giant electric grids and more.
We Need To Rebuild America
The U.S. needs to realize it has to spend, and spend big, on incentivizing private businesses to get to work and rebuild America. We have to stop saying that inflation cannot rise above 2 percent. Indeed, if we start spending, both productivity and wages will rise much faster than inflation, and in the end inflation might even come down. Put it this way: we are down to our last out and have to try.
Developing rare earths is just one example of a project that could more than rival the Manhattan project in scope but for peaceful not military ends. Rare earths are the most powerful permanent magnets nature has created. Developing them would give the U.S. a tremendous boost and create thousands of high-paying jobs. We have the rare earth ore bodies here but we don’t have the engineers or the ability to process, separate, and refine these very special commodities.
China Is The Only Country On Earth That Can Do This…
China is the only country on the face of the earth that can take rare earth ores through a multi-step supply chain that turns the ore into a product that can power everything from electric cars to sophisticated defense equipment. The ore bodies are in the U.S. and Canada for the taking – but the taking will entail a massive project(s) requiring unity in Washington and a willingness to throw out short-term inflation shackles in the interest of longer-term prosperity. It’s one of many potential projects both here and Europe that could turn the black cloud hovering over our future into something much brighter. In Europe infrastructure projects that spanned many countries would have welcome geopolitical ramifications, literally yoking the continent together.
This Is What Is Really Going To Shock The World
If it’s not clear how all this applies to gold and silver, let me spell it out. It’s the old expression, tails I win, heads I win. If Brexit shakes things up in the direction of governments finally taking the plunge into doing what it takes to generate growth via massive infrastructure projects, precious metals will win. Why? Because growth building on a grand scale will tax the earth’s resources – especially given the head start China already has – meaning rising commodity prices. High inflation is nearly certain. And with inflation riding high, gold and silver will soar.
But if the West fails to act boldly, it’s risking an economic unraveling that will also result in huge gains for gold. In today’s world, unlike the 1990s, there’s no safe middle ground. It you get growth, gold wins; if you get economic chaos, gold wins. But what will shock the world is the fact that the more than fivefold gain gold has made since the beginning of the millennium will at least matched or more than matched in the next decade.” ***KWN has now released the powerful audio interview with legend Art Cashin discussing the chaos in global markets in the aftermath of Brexit, gold, bonds, inflation, possible hyperinflation and much more and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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