Do you also get the feeling that the world is going crazy? Many people have, particularly those that follow the headlines. And the last few weeks alone have added fuel to the fire.
It’s A Mad World
Let’s go back to March 26, when a huge cargo ship rammed Baltimore’s Francis Scott Key Bridge, causing its collapse and killing six construction workers who were repairing potholes. The freak accident is the deadliest bridge collapse in more than a decade and is also having major financial repercussions. Morningstar estimates the collapse cost could the Baltimore region more than $25 million per month, and that’s aside from the national impact. In addition, there will a huge cost to rebuild it.
But the odd occurrences do not end with that event. At least 179 people died in Kenya from heavy rains that destroyed homes and roads. Exceptionally heavy rains forced many people to be evacuated in Dubai after it was deluged with more rain in a 24-hour period than it had in the last year and a half. And Oman, Bahrain, and Saudi Arabia are also trying to cope with exceptionally heavy rains; these places almost never get torrential rains, particularly so late in the season. Storms of a very different kind are still wreaking havoc on colleges and universities across the U.S.
How about this story: the plant that produces approximately one-third of all the U.S.’ 155mm artillery shells was damaged in a fire, bringing production to a halt. What makes this incident even more curious is that the U.S. has been sending large numbers of those shells to Ukraine (and more recently to Israel), and its own inventory is so low that it had to borrow shells from South Korea. The cause of the fire is still unclear. But what is clear is that at the current rate of production it will take America 9-10 years to replenish its inventory of shells – this at a time when some highly regarded experts including the former head of Navy intelligence and writer/analyst Gordon Chang are warning that China is preparing for a war with the U.S. And, both add, that the U.S. is clearly unprepared for one.
A Sinking Feeling
But among all the crazy stories out there, probably the strangest one is that China is sinking – literally. What makes this even more incredible is that at the same time it also has to deal with the torrential rains that are causing terrible flooding and have swept away cars, homes, and even people in many of China’s major cities. A related problem is that huge potholes are opening on its streets and roads, swallowing people, cars, and anything else unfortunate enough to be over one.
According to the website Iaowhy86.com, large parts of China are very slowly but steadily sinking; the website warns that if this persists over the long term, some of their major cities could actually disappear and, long before that, become uninhabitable. Nearly half of China’s urban areas, which are home to 29% of the country’s population, are sinking. This means that approximately 270 million people are living on land that is unstable and poses risks to its residents.
People cannot control the weather, but they can anticipate that at times it will be extreme and prepare to deal with those dangerous conditions. China, however, has not done that. They’ve constructed huge buildings and built too many of them. According to First Post, there are an incredible 600 million buildings in China, and their weight is of a magnitude that the ground simply cannot support them.
Radar observations from satellites in China made over many years found that “40% of the land in China with 82 major cities is undergoing moderate to severe sinking,” First Post reports. Another reason China is sinking is because it has been pumping water out of the ground faster than it can be replenished. The problem with excessive pumping is that it lowers the water table and causes the land on top to sink.
If the weather reverts to normal soon, China probably will be able to deal with their flooding problems. However, if not, in the coming years many cities probably will be sending this SOS: “Beijing, we have a problem.”
And Now For The Good News
It’s no secret that gold is one of the bright spots in the market. The yellow metal has made numerous new highs recently, and although the price has backed off recently, it still has decent gains for the year. This is a vindication to the many investors, speculators, central banks, and others who buy, hoard, and believe in precious metals. It also sits well with Lawrence Lepard, Managing Partner at Equity Management Associates, who recently shared his latest views about the markets. Following are some of his thoughts.
The market is very overvalued and vulnerable to a significant correction. Lepard believes that one reason for this is the recent developments at the so-called FAANG and Magnificent 7 stocks – the handful of major companies that play a disproportionate role in the performance of the major indexes, and that have been driving them higher for the most part. These select companies have enjoyed very rapid and steady growth for years. Now, however, they appear to be experiencing a noticeable slowdown in revenue growth, and this could spell bad news for a bull market that may be growing tired and that could give way to a significant bear market.
Leopard believes that when the market finally declines sharply a great deal of money will be looking for a new home with brighter prospects. And he cites data compiled by Ronni Stoeferle showing that “gold does extremely well on a relative basis during equity bear markets.” Lepard thinks “gold miners will trade at multiples of their current prices.”
For years, gold bears have snickered that gold does nothing – it just sits there. Well, they’re not snickering any more. And if Lepard is correct, the yellow metal has a lot of glitter in its future, and gold bugs who have stuck to their convictions have lots of reasons to smile.
Sources: conference-board.org cnbc.com; firstpost.com; jpmorgan.com; laowhy86.com; morningstar.com; poplarreport.com; thequint.com; zerohedge.com
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
