On the heels of another wild trading week, today a 42-year market veteran spoke with King World News about the coming frightening chaos that investors around the world need to be brace for, as well as $10,000 gold, $50,000 gold and much more. Below is the powerful interview with Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland.
Greyerz: “Eric, on the surface it looks like there is deflation on the way. Japan is failing to inflate and China is tightening because of the problems in their banking system and shadow banking system. The EU banking system has also restricted lending..
“This has led to the
ECB having reduced its balance sheet substantially. In the US there is
now tapering of $20 billion per month. If this continues we will have a
deflationary implosion of the world economy. We will have a total
collapse of the financial system because the massive debt cannot be
repaid in that environment.
Printing
money at current levels no longer has any effect, and interest rates
are already at virtually zero. Governments also know that a
deflationary implosion will also lead to a total loss of power and
control. This would just usher in anarchy.
So let
me again state that money printing is not the solution. Worthless
pieces of paper cannot create wealth. Whether central banks print or
don’t print wealth, they are doomed because either alternative is
catastrophic for the world. They are just a different way of reaching
the end game. As Ludwig von Mises said, ‘There is no way of avoiding
the final collapse.’
This
collapse will be a final catastrophe for the already fragile global fiat
currency system. I agree with what Ludwig von Mises said because
either way the collapse will take place. But even though there are
signs of deflation in the economy, the markets are telling us something
different.
Many
commodities have bottomed and the CRB is already up 8% since the start
of 2014. Many food categories have already bottomed and are already
starting a major rise. If you look at soybeans, coffee, cocoa, rice,
oats, wheat, sugar, and so on, they have all turned higher and are now
set for a spectacular rise. Oil is also set to surge. Gold and silver
have also finally broken out of their cyclical bearish correction, and
they are now on the way to new all-time highs. The US dollar is also
starting to break down, which will only accelerate the inflation.
Eric,
the markets are setting up for hyperinflation in many countries because
of excessive money printing, leading to collapsing currencies. The gold
price will simply continue to reflect the falling currencies.
Initially we will have an orderly rise of gold and silver, but in the
next few years financial markets will not be orderly.
As a
result of the major structural problems in the world and in the world
economy and in the financial system, there will be collapses of
currencies and money printing will become disorderly. This will lead to
an exponential rise in gold and silver, and we won’t just reach my
longstanding target of $10,000+ for gold, but also Jim Sinclair’s
$50,000 figure. And if the $1.4 quadrillion derivatives bubble blows
up, we could easily see gold at a Weimar price level, which was $100
trillion.
But
remember that gold is held for the purposes of preserving purchasing
power. So the reason why it’s so critical for investors to hold
physical gold is to preserve their wealth, and there is no better way of
protecting wealth than gold. The wealthy who are not prepared for the
coming carnage will see their wealth reduced by 75% or more.
But
remember also that gold going up is a reflection of a very unstable
world, not only financially and economically, but also socially,
politically, and geopolitically. Sadly, our children and grandchildren
are likely to live in a much more unstable world then we have.
Many
people have no jobs as it is. Look at Greece, with 61% youth
unemployment, and 28% overall. But unemployment will continue to
increase all over the world, and so will famine, especially with higher
food prices. Meaning, people’s priorities will move from wanting the
latest iPhone to getting enough food to survive. But the good part of
all of this is the network of family and friends will again become the
core of society, just as this is happening in Greece today.
Eric King
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