Saturday, July 23, 2016

July 23 Update: Made in China

The Schiff-Maloney portfolio had another down week with a drop of nearly 1%, but as you can see in the chart below, this is actually an expected decline that takes the value down to the rising red trend line for at least the 8th time since February.  Assuming the current trend holds, this is probably a good time to add money to the portfolio.

Schiff-Maloney Portfolio performance (CLICK TO ENLARGE)

I end today's quick update with something tangentially relevant that I find darkly amusing.  The Wall Street Journal recently produced a video on the Panama Canal expansion project:

The video is informative enough, but at the 1:30 mark the video explains the primary justification for the expansion project, and in doing so it inadvertently lets us glimpse the house of cards that we're sitting on.  The nice young lady explains, "[it] would make it cheaper and faster to get (Asian) consumer goods to big cities along the Atlantic Seaboard," and as an afterthought she notes that it might make it easier for the U.S. to export food and energy.  Even assuming that the canal helps our exports, a country with a supposedly 21st-century, high-tech economy can't stay that way if it's importing most of its consumer goods in return for sending some corn, coal, and treasury bonds.

People assume that this one-way flow of manufactured products can somehow go on forever, but it won't last.  China is wise to what's coming, as evidenced by their recent massive purchases of gold bullion:

Most of us won't be able to afford Chinese goods after the dollar collapses, but Chinese consumers with good manufacturing jobs and gold-backed money will be happy to buy their own products in our stead.

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