KWN interview 13 December 2013 – Egon von Greyerz
“We are ending 2013 on what for most investors is a high note. Stock markets worldwide have had an excellent year. Investors feel generally bullish and conventional wisdom says that 2014 will be a good year. But sadly conventional wisdom is this time just conventional without any wisdom, because 2014 is likely to be a year of change when stock markets and the world economy continues the downturn that started in 2008. And this time it will be a lot worse. None of the real problems have been solved – like toxic debt in the banking system, government debt and deficits, or destruction of currencies through money printing.”
Governments and central banks have just postponed the moment of truth. They have pumped trillions of worthless dollars, euros and yen into the market. We have reached the point when all this credit and money printing has no effect. The marginal effect of all these actions are no negative and the world is pushing on a string.
For the majority of investors 2014 will be a very dangerous year because the bullish sentiment is extremely high. This means that very few investors are prepared for the coming downturn. We are now at the end of a secular bull market that has lasted for centuries. The ensuing bear market is likely to be worse than the 1930s depression and be devastating not just for investment markets but also from a quality of life perspective.
How can we be certain that this will all change in 2014. Well of course we can’t because turns of this magnitude are very hard to predict when they will start. But the combination of fundamental, technical and sentiment factors all point to 2014 as being a year of change.
Even if we were wrong, the risks are now higher than ever and therefore the importance of wealth preservation must not be ignored.
In my King World News Interview on December 13th I outlined a number of “Dont’s” that if heeded will protect investors from ruin.
As regards the precious metals, they are still the ultimate way to protect wealth (in physical form). We are likely to see new highs in gold and silver during 2014.
Egon von Greyerz