China is in big trouble… and it has a lot of investors quite scared.
It’s a timely topic.
We just looked at the pivotal role Know-How plays in our fear yesterday morning.
And, better yet, we told our Manward Letter subscribers on Tuesday how to make a quick buck off the situation. For those folks, learning that Apple is losing its shirt in China isn’t much of a surprise.
They’re profiting from it.
But here’s the thing. Most Americans have no idea what’s happening in China.
It’s quite crazy.
And yet the mainstream press barely covers it. And when it does, it focuses entirely on Trump’s trade battle.
They’ll fail to tell you the problem in China started long before Trump raised his right hand on the Capitol steps.
The truth is – as we’ve written about many times before – this world has a money problem.
Bring Back the Gold
Every day since Nixon pulled the nation from the gold standard in 1971, the problem has gotten worse. Money no longer has any real value. It’s worth something only when put up against another currency.
It’s as if we told a group of kids to trade baseball cards at school. Eventually, one of the more sinister ones would figure out he can print some of his own… Then another kid would do the same just to keep up.
Eventually, the school would be overflowing with worthless pictures of Babe Ruth.
That’s where we are today.
Some 50 years after the “gold shock,” the effects of the decoupling are rattling the market harder than ever.
For proof, we merely need to look at a single chart.
For decades, China’s export economy thrived, nay, flat-out depended on selling cheap goods overseas, importing freshly printed foreign currencies and then using that stockpile of cash to keep its own currency artificially cheap.
It’s what made the country a great export nation.
But there’s a problem with that idea.
It works for only so long.
Eventually, things get so bad that either a guy like Trump comes along or Mr. Market himself jumps into the fight.
Either way… somebody gets hurt and the entire global economy gets put at risk.
The Big Turnaround
The chart above tells the story. It tells us that, for the first time in more than a generation, China sent more of its currency overseas early last year than it brought in.
In other words, China imported more than it exported.
That’s not good… at least if you’re a fan of the status quo (and the money in your wallet).
From here… something has got to give. (It’s a topic we cover at length in the just-released issue of Manward Letter.)
We’re already seeing it in many places.
China’s yuan hiccupped on Wednesday night. It’s getting harder and harder for its communist keepers to keep it under control.
At virtually the same time that Beijing was flustered, the Japanese yen saw a bit of a “flash crash” of its own. With traders hopping out of volatile Chinese assets, the yen surged more than 4%.
Sadly, the big headline writers didn’t cover the story. It’s too confusing for the average reader, they figure. And, hey, there’s political news to twist into a “real” story.
That means many investors are forced to figure out what’s wrong on their own. Apple shareholders sure did learn about the problem the hard way.
The company fell from its trillion-dollar perch (peaking at a $1.1 trillion market cap in October) and is valued at a mere $700 billion this week.
Investors are right to be fearful… especially given the utter lack of any real, nonpoliticized news about what’s happening in China.
But where there’s fear, there’s room for our good pal Know-How.
With just a bit of insight – again, we argue the chart above tells us all we need to know – we see that China’s on the ropes.
We see that its currency is about to give.
And we see that it is now dangerous to hold any asset that’s tied to the country.
But that doesn’t leave a lot of choices, say the cautious readers.
Ah, we disagree.
In fact, the Manward Letter readers that took our advice earlier this week are already sitting on strong profits as the rest of the market loses value.
It’s yet one more win for the Triad and its most misunderstood component… Know-How.
China’s in trouble.
But it’s nothing to fear.
If you’re looking for the ultimate way to play what’s happening, click this link. It details an announcement that could come on March 20.
If you own gold, are concerned about the fate of the world’s money… or just want to score some quick profits, you need to know what’s happening.