The embattled Chinese property company Evergrande remains at risk of collapse after struggling to make huge loan repayments (as we reported in our previous Bulletin). Now, Chinese officials have warned that a storm is brewing should this happen, with experts suggesting that the demise of Evergrande could have global economic impacts – something which offers further justification to add safe haven gold to your portfolio right now.
Evergrande is China’s largest real estate developer and the most in-debt developer in the world. According to sources reported by the Wall Street Journal yesterday, the Chinese government is not prepared to offer a bail out, and has told officials to “get ready for the possible storm”.
Jerome Powell, who is the Chairman of the Federal Reserve said on Wednesday that an Evergrande failure could have wider implications outside of China and push markets back into risk averse mode. He said, “The Evergrande situation seems very particular to China, which has very high debt for an emerging economy. Corporate defaults in the U.S. are very low right now … You would worry that it would affect global financial conditions through confidence channels.”
This is good news for gold which typically thrives in any moment of market unrest, economic turmoil or low investor confidence.
Buy now to get ahead of the curve.