On the heels of eight weeks of chaotic trading in markets, today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events, just warned that a massive global money printing program is about to shock the world.
Egon von Greyerz: “Eric, gold is now in a hurry and will surprise everyone with the speed of its move. The heavily massaged and false unemployment numbers on Friday pushed gold down $20 temporarily, but 70 minutes later gold surged to new highs and then closed unchanged on the day. In my view there is now nothing that can hold back gold from going to new highs in 2016.
Gold has spent over five years recharging its batteries after the 1999-2011 run from $250 to $1,930, with a correction ending at $1,050. The result of this long correction and consolidation is that gold is moving with a full charge out of the gate.
I am showing the bullish long term picture of gold in the graph below.
This move up is of course no surprise to some of us who have studied the damage that governments and central banks have inflicted on the world during many decades. With the immoral and scandalous mismanagement of the economies of most major nations in the world, these countries should already have collapsed under the weight of massive debts and credit creation…
Egon von Greyerz continues: “Skillful manipulation and deceit by governments and central banks from 2006 – 2009 subsequently gave the world another few years of respite. But after 10 years of money printing, credit bubbles and financial repression, the powers that be have now run out of both ammunition and ideas.
What they have done in the last few years has had no beneficial effect for the majority of the world. Ordinary people have been lumbered with a total global debt of $230 trillion — a debt that has gone up tenfold since the early 1990s. And don’t believe that anyone can ever repay this debt. If debt goes up ten times in so called good times, how can they ever be reduced or repaid in bad times?
The Currency Collapse Will Devastate The World Economy
Gold is of course telling us what will happen next. The currency debasement will now accelerate until most currencies become worthless measured in gold or real purchasing power. Remember that most currencies have declined 97-99% in real terms in the last 100 years. The last few percent is really nothing but will finish the job so that most currencies will reach their intrinsic value of ZERO. The dilemma is that from here to zero is a 100% fall which will clearly be devastating for the world economy.
So the world will soon experience the start of a downturn that will erase a major part of the gains in the last 100 years. This will involve most of the bubble assets (stocks, bonds and property) imploding by at least 75-95% in real terms. The debts that have financed these bubbles will of course also implode which means that the financial system will not survive intact.
Massive Global Money Printing Program Will Shock The World
Governments and central banks will naturally not give up this fight easily. But having already used up most of the weapons in their armory to little avail, all that remains now is the biggest money printing program in history. And this will be a global program with the Fed, the ECB, BoE, IMF, BoJ, PBOC, and many central banks participating.
This money printing extravaganza will be in at least the hundreds of trillions of dollars but probably into the quadrillions in an attempt to cover all the collapsing derivatives. The consequential currency collapse will inevitably lead to hyperinflation. Very few assets will maintain their purchasing power when this happens. The real winners will be gold and silver. Agricultural land is also likely to do very well.
We have talked many times, Eric, about how stocks will fare. My very firm view is that stocks will have a devastating collapse, in real terms, in coming years (except for mining shares). As gold will surge, the Dow/Gold ratio is likely to decline by over 90%. That would take this ratio, which currently stands at 13 (the Dow is 13x gold), down to lower than 1/1. One to one would mean that gold and the Dow are at the same level, just like they were in 1980. Other assets such as property and bonds will also fall at similar percentages against gold.
KWN Readers Must Take Action
The fortunate few who have savings are now standing at a crossroads. If they pick the wrong road they will lose virtually all of their assets. And if they pick the right one, they will have preserved all or a major part of their purchasing power. But sadly, very few people will choose the right road because most investors still believe that governments will save them and that therefore they can hold on to conventional investments. I know of course that most of the KWN audience understands the risks in the system, although they might not yet have taken action to protect themselves.
There are 1,700 billionaires in the world today. This is an incredible number, which has had the “fortune” to benefit from the profligacy of the central bankers and the fractional banking system. Of the 1,700, “only” 100 have a fortune above $10 billion. Most of those are Americans.
If I am correct in my view that most assets will collapse by up to 90%, 1,600 of the 1,700 will no longer be billionaires (in real terms). That is of course something that very few of them would agree with today.
One Of The Greatest Financial Opportunities In History
But if I then told them that I have an offer that they can’t refuse, they should be interested. Instead of riding the asset decline down by 90%, they could buy insurance. Nobody would of course believe that this would be possible. Let us say that they buy gold for only ten percent of their assets. So with a fortune of say $10 billion, they spend $1 billion to buy physical gold. If in the next five years, gold goes up 10 times and stocks or other assets lose 90%, all in real terms, the investor who bought the gold insurance will have kept his wealth of $10 billion intact. But if he didn’t buy the insurance, he would have lost a massive $9 billion.
I do realize that the assumptions can be argued, although I firmly believe that gold will go up ten times or more in real terms. If stocks or other assets “only” decline by 50% and gold only goes up five times, the capital would still be intact. But even if these assumptions play out slightly differently, ten percent is a very cheap insurance premium, especially since it buys an asset that throughout history has maintained its value in real terms and appreciated enormously in inflation terms.
I have taken the example of a billionaire but the same calculation obviously works at any level of wealth such as $1 million or $ 100,000. And it works even better if investors buy a higher percentage of insurance, say 25% of their assets.
Save Yourself From The Coming Wealth Destruction
So gold is both money as well as insurance that for 5,000 years has gone up in price greatly, measured in fiat money. And in times of political uncertainty and economic mismanagement, like the world is currently experiencing, gold is likely to vastly outperform all other assets.
Eric, what I am saying is that with unprecedented risks in the global financial system, investors have an absolutely unique chance to acquire insurance today in the form of physical gold, stored outside the banking system, and at a bargain price. Anyone who does not take that opportunity will have chosen the wrong road and will lose a major part of their assets in the coming wealth destruction.”
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