China/Asia Economic Implosion On The Horizon?

Recent news of the US enacting $60 billion in economic tariffs on China as well as reactionary tactics from China have everyone spooked. The US stock markets and global markets tanked last week as this news hit the wires. We have been warning of a massive upside move in precious metals as well as global market concerns for the past 12+ months. Our recent research shows just how fragile the global markets are to external factors as well as strengths in the US and other established economies.

This multi-part special report will delve into the immediate and future risks that are associated with the fundamental and economic likelihoods of credit market contractions and economic rotations within the China, India, South East Asia markets in relation to recent news events. We hope to clearly illustrate the opportunities and risks that will likely play out over the next 12 to 48+ months for investors and traders. Let’s start by trying to keep it simple with some very clear examples of what has transpired over the past 4 to 5 years and how we believe things will change in the near future.

This chart of property price cycles (advancing price cycles vs. declining price cycles; highlighted for your convenience) in Beijing, China, clearly illustrates the expansion and contraction cycles experienced in the capital city/region of China. One can clearly see the expansion of the peaks vs. troughs as these price cycles have played out over the past 10 years.

What we find interesting about this chart is that the upper boundary appears to reside within the +8.5% or slightly greater expansion range, while the price contraction cycles continue to explore deeper and broader downside boundaries over this same range.

This leads one to consider the possibility that Real Estate prices and cycles in China may be much more speculative in nature than we may have considered in the past. It also points to the concept that the Global Credit Crisis (2008 through 2010) may have created a consumer mentality that wealth can be created by speculating on real property throughout these cycles.