When The Production Seizes Up...

Following this major bacteriological attack, the Chinese economy had been almost at a standstill for 3 weeks. The closure of factories, offices, public places, and the traffic ban have resulted in a vertical drop in energy consumption by China, the world's largest importer of oil and natural gas.

Natural gas has been on its floor for two months.

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As for oil, it has been clinging desperately for two weeks to the support of $ 50, but this figure in a megaphone shows that it could drop very suddenly below $ 40.

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The fall of the price of crude oil, in addition to that of the natural gas, would accelerate the bankruptcy of American companies in oil and shale gas. They have been operating at a loss for a long time.

For the past 6 months, the hundreds of billions of dollars injected by the Federal Reserve into the REPO market, have inflated the stock markets, which are rising without taking into account that the production chain of the World plant is seized up. The Chinese aluminum production line will not be operational until February 20, according to the Shanghai Metals Market. The same is true for most Chinese industries.

Many industries in the West will find themselves blocked by the disruption of the supply chain. The distribution will find itself out of stock of many products and the transport sector will be a disaster, due to the air gap in Chinese exports.

THIS STOCK MARKET RALLY COULD END ABRUPTLY LIKE THAT OF 1929

If so, the US indices would have a 50% fall potential, up to their 200-month moving average.

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The worsening pandemic in China this week, possibly because authorities have allowed factories to reopen too soon, suggests that the freezing of the Chinese economy could be much longer and more severe than expected. The contagion of this economic flu will spread to the West in the weeks to come.

WHAT IMPACT ON PRECIOUS METALS?

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