Greyerz - Greatest Financial Collapse The World Has Ever Seen

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/28_Greyerz_-_Greatest_Financial_Collapse_The_World_Has_Ever_Seen.html

With global stock markets trading in the red, today Egon von Greyerz told King World News that investors are going to witness the greatest financial collapse the world has ever seen.  Egon von Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said, “...investors are under the illusion that the system will continue, but it won’t.”  Here is what Greyerz had to say about the the financial collapse:  “As always, Eric, I’m focusing on the big picture.  We are in a crisis, and the outcome is absolutely certain.  What is not certain is how we get there.  The problem is it’s not only one crisis, it’s a number of crises.  We have the first one which is the sovereign crisis.”

Egon von Greyerz continues:  

“Almost every single major country in the world is bankrupt, and no one has the tools or a plan to get these countries out of this crisis.  So countries will go bankrupt by default or by printing excessive money.  This situation will continue to get worse and ultimately lead to a hyperinflationary depression.

Then you have the banking crisis.  The banks are insolvent and they are also in a liquidity crisis.  And this is, again, worldwide.  There is no way the banks will be able to survive this without massive assistance.  This is a banking crisis of the magnitude which will amount to trillions of dollars, and if we take the whole of the derivative positions, it could be hundreds of trillions of dollars because of the counterparty risks.

The third crisis is the economic crisis.  Every single country is suffering tremendously and economic figures are continuing to deteriorate, whether it’s in the US, in Europe, China or Japan.  This crisis will also lead to a depression.

Any of these three crises is sufficient to bring the world down because they are not just in one country, they are worldwide....

The three crises together are guaranteed to bring down the world economy.

The fourth crisis that will come out of this will be the social crisis because people are suffering today.  Most people can hardly afford to live today because the costs of their food, fuel and housing are so expensive.  This will lead to more social unrest.

All of these factors are why this will be the most serious depression the world has ever experienced.  The problem is not having a gold standard, which has meant that the world economy has lost its integrity and honesty.  That’s what’s happening now, we have a dishonest financial system.  So we have a world without values.”

Greyerz also added:  “Europe is in a crisis, but they can never decide anything in these meetings.  They might come out with a little package, but in the end it will be irrelevant.  The real package will come out when there is panic.  We shouldn’t even listen to what these politicians are saying today because they are incapable of facing the truth.

Many countries in Europe are already bankrupt, such as Greece, Spain, Italy, and many others are on the way to bankruptcy such as France, the UK, etc..  In the short-term Europe will hold together.  Longer-term the EU will break up and the euro will disappear, but shorter-term it’s not going to happen. 

Right now investors have the illusion that things are actually okay because the stock market is near the recent highs.  The reality is the stock market is not near the highs because it’s down 80% vs gold in the last 10 years.  The other problem is the bond market which is the biggest bubble right now.  Who wants to buy government bonds and earn zero to 2% from bankrupt governments?  There will be a guaranteed collapse of the bond market.

So, in reality, investors are under the illusion that the system will continue, but it won’t.  This is why investors have to focus on protecting their wealth.  I’m still of the firm opinion that the only investment that will protect investors purchasing power is physical gold, stored outside of the banking system. 

Gold cannot be printed, it cannot be destroyed, and it will continue to act as money as this crisis deteriorates even further.  We now have the BIS proposing that gold should be part of Tier-1 capital.  This means that gold, as Tier-1 capital, will involve zero percent risk.  Up to now it’s been counted as having a 50% risk.

Therefore, it is likely that a lot of the central banks and international banks are going to increase their investment in gold.  This could have a major effect on the demand for gold in the next couple of years.

So in the short-term gold is like a bouncing ball.  The swings are getting smaller and smaller.  The price of gold has simply gone sideways for ten months, but now the range is narrowing.  While gold may experience short-term pressure, the next big move is going to be on the upside, and investors need to be positioned for that.”