JAKARTA

QUESTION: Marty,

Many thanks for your fantastic website and daily insights to how the world really works. You are very good at making the muddy waters of economics crystal clear.

In the downturn after 2015 will Asia slow as much as the west?

I live in Indonesia. Property prices in Jakarta have almost tripled in the last 4 years – now at all time highs. Is it now a good time to get out of real estate and into minerals (gold/silver) for the run up from next year?

Cheers

RB

ANSWER: In the USA, this is a reaction rally overall in real estate. However, during the wave, peripheral  economies will see their real estate markets peak in 2015. The US is the core so it peaked first. People made money in the States so then they look around and try the same thing in the next market. We should see highs in Switzerland, Britain etc.

This trend also emerged in debt. We saw Greece start to get in trouble in 2010. Then they began to look around and saw Portugal, Spain, Italy, and now France. Whatever trend we see emerge will spread slowly like a contagion.

When we are talking about sector booms, it begins in the core economy. If we are talking about economic collapse, it begins in the secondary or peripheral economies and moves into the core. This is why I have stated you will see the Sovereign Debt Crisis hit Europe and Japan and then move into the USA. This is simply how things work and this was discovered both in modern times as well as ancient times.

As to jumping into the metals, not just yet. You may want to look at US equity since you will benefit from both the market and the currency as foreign investors did going into the Japanese Bubble of 1989 – rising Nikkei and yen.