Egon’s Publications

Final Catastrophe of the Currency System

Final Catastrophe of the Currency System

Final Catastrophe of the Currency System
By Egon von Greyerz

The fate of the global economy was decided decades ago as deficits, debts and derivatives started their exponential growth and reached the time bomb phase that we are now in. This final chapter of this 100-year era will end in “a final and total catastrophe of the currency system” as von Mises succinctly articulated.

It started on Jekyll Island

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It all started in 1910 when a few senators and bankers, led by JP Morgan, secretly met on Jekyll Island with the purpose to set up the Federal Reserve and so control the banking system. Thus, the Fed was a creation by private bankers and for the benefit of these bankers. Few of them could have imagined the enormous success of their venture as the control of the financial system led to vast fortunes for a very small elite. The back side of these fortunes is global debt of $230 trillion plus unfunded liabilities and derivatives. The total which is in the quadrillions is what the poor masses in the world are liable for. Not that they will ever be able to repay it but the implosion of these debts will lead to misery for the majority of people for generations to come.

Critical to protect yourself against these events

Sadly, things have now gone too far to stop the inevitable currency collapse and implosion of the financial system but that doesn’t mean that it is too late for individuals to protect themselves. As we enter this final phase, there will be panic in financial markets with governments and central banks taking draconian measures. Below are some of the potential risks that all investors must protect themselves against today:

  • Currency collapse –  leading to destruction of capital
  • Capital controls – making it impossible to take money out of bank or country
  • Bail-ins the bank will steal your money in order to try to save itself
  • Forced investments – compulsory purchase of treasuries with your bank or pension assets
  • Custodial risk –  stocks and bonds will be hypothecated by the bank, leaving you nothing
  • Bank failures – all your investments will disappear as the bank becomes insolvent

The above list in not exhaustive but it contains the most likely events that will take place in the next few years. Most private investors don’t see these risks and have zero protection against them. And professional money managers haven’t got a clue about real risk, nor do they see any need for protection or insurance. When you manage OPM (Other People’s Money), you take maximum risk in order to benefit from the upside. The downside is not your risk and thus it can be ignored. This strategy works extremely well until the music stops. But as long as money printing and credit creation inflates markets, these professionals will never spend a second worrying about the total destruction of clients’ money.

So how likely are the above risks and how do you protect against them? Anyone who has followed some of my work will know that I consider all the above risks as guaranteed to materialise.

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Currency collapse is already happening with all currencies down 97-99% in the last 100 years. The final 1-3% will happen in the next few years as governments print unlimited amounts of money. But remember that the last 1-3% fall is 100% from here and thus a total destruction of money. So whatever cash you have will be totally worthless in the coming hyperinflationary phase.

Capital controls are likely to start within 12-18 months in many countries including the US. As deficits increase and currencies fall, governments will stop anyone from taking money out of the bank as well as out of the country. This is just the next step in the total control money. We have lately seen FATCA (Foreign Account Tax Compliance), cash bans and the OECD AEOI (Automatic Exchange of bank Information). Capital controls will be the next logical step in an attempt to virtually confiscate money. Governments on the road to bankruptcy will take any desperate measure to control the people and their money.

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Bail-ins are guaranteed and in the legislation of most Western Countries. The average person has no idea what bail-in is nor its consequences. Simply, it means that for insolvent banks, which will be the case with most banks, governments will not bail them out but instead depositors’ money and assets will be used to cover the banks’ losses. Since banks are leveraged 10-50 times, all the money belonging to the bank customers will be gone. At that point, after the bail-in, governments will need to step in with bail-outs. But any government intervention will be futile since they will just create more debt to solve a debt problem.

Forced investment in treasuries will happen as governments issue an ever increasing amount of debt. At that point, the government will be the only buyer as we are seeing in Japan currently. Therefore, governments will force people to put their bank assets into treasuries to shore up the country’s finances. But then it will of course be too late and all the money going into government bonds will be totally worthless as these bonds go to zero.

Custodial risk means that it is not just clients’ cash which is at risk. Any asset deposited in a bank carries the same risk as cash. In theory stocks, bonds or physical gold should not be in the balance sheet of the bank and therefore not be part of a bankruptcy. Firstly, it could take years for the receiver to sort that out. But more importantly as banks come under pressure they will use client assets in order to shore up the assets of the bank. This was the case for MF Global for example. We often see banks not actually having the allocated physical gold that they have told the customer he possesses. When banks come under pressure, they will take any desperate measure to save themselves and this will definitely include client assets. And don’t believe that the government will help you since they are bankrupt too.

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Bank failures will be commonplace in coming years as banks’ irresponsible lending will be exposed.  Collapsing asset prices will exacerbate this problem dramatically. Most people believe that money or assets in the bank will be totally safe. Personally I wouldn’t deposit any major amounts of money or assets in a bank. And if I did I would ask for collateral. Banks today are totally untrustworthy borrowers of depositors’ money and anyone hoping to get their money back will soon learn that they won’t. 

So if you can’t trust the banks, what do you do with your money?  In uncertain times it is essential to avoid counterparty risk. Therefore, no assets must be held with a counterparty who is heavily exposed financially. Directly controlled assets is the best way to control investments. This can be property, land, direct ownership of companies including direct registration of stocks.

The best insurance money can buy

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The best and cheapest insurance against the risks outlined above is to hold physical gold and silver. But it is not enough just to own gold and silver but just as important how they are held. It is a sine qua non to hold metals in physical form, outside the financial system and outside your country of residence. It is also critical to have direct access to your wealth preservation asset which should not be held through a counterparty. 

Gold and silver will not protect investors against all the problems that the world will experience in coming years. But if they are held in the right way and place, precious metals will be the best insurance against the massive wealth destruction that will take place in the next few years.

Egon von Greyerz

Founder and Managing Partner
Matterhorn Asset Management AG
matterhorn.gold
goldswitzerland.com

HYPERINFLATION IS NIGH SO GOLD WILL GO HIGH

Moderated August 16th, 2016 by
Categories: All publications, Egon's Publications

Hyperinflation is nigh so gold will go high
By Egon von Greyerz

This coming autumn, we are likely to see the beginning of the hyperinflationary phase of the sovereign debt crisis. Hyperinflation normally hits an economy very quickly and unexpectedly and is the result of the currency collapsing. Hyperinflation does not arise as a result of increasing demand for goods and services.

The course of events in a hyperinflationary scenario can be summarised as follows:
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Will the Dow go up 100% and Gold 5,000%?

Will the Dow go up 100% and Gold 5,000%?

Will the Dow go up 100% and Gold 5,000%?

By Egon von Greyerz

 

Welcome to the wonderful world of illusions. This is a world where few people can see the difference between reality and fantasy. And maybe there is no difference. Just looking at the US election and the candidates, it seems like total fantasy from this side of the Atlantic. It is difficult to take the whole election process as well as the candidates seriously. But this is the world we live in today. Having in the last week seen people in many European countries run around the countryside and cities chasing Pokémon Monsters, you wonder if the presidential candidates might also be part of the same game.

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Pokémon GO–LD

Pokémon GO–LD

By Egon von Greyerz

 

Real GOLD versus Pokémon GO? That’s a simple choice for most people because shortly after launch there are already more than 30 million users of the game Pokémon GO (PG). Gold has not for a long time attracted the same interest but that is likely to change in the next few months and years. Not that gold and PG in any way are competing in the same market place.

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Central Banks Will Create A Historical Gold Rush

Central Banks Will Create A Historical Gold Rush

Central Banks Will Create A Historical Gold Rush
By Egon von Greyerz

 

The central banks are leading the world into a black hole and have no idea what a disaster they have created. What initially seemed like a nice money spinner for the private bankers in 1913 when the Fed was set up has resulted in a $2 quadrillion (at least) monster that is now totally out of control.

Banks and central banks are experts at forging money

During the last hundred years, the Ponzi scheme seemed to work beautifully under the guise of Keynesianism. So whenever there was a problem in any economy in the world, all that was needed was some stimulus in the form of credit or forged money creation. And there are so many ways to forge money.Through the unlimited flexibility of the fractional banking system, money printing became the most perfect perpetual motion system whereby the more credit that was created the more credit and paper money could be issued by the banks. There is absolutely no limit to how much money could be printed.

So banks and central banks have been in collusion to print or forge paper money which has no value and no asset banking. Any private individual doing the same would spend the rest of his days in jail. But when the bankers do it, it creates massive wealth and respectability for them since they have the full backing of governments. What a rotten world!

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Six Major Events That Will Change History

Six Major Events That Will Change History

Six Major Events That Will Change History
By Egon von Greyerz

 

Investors globally have never faced risk of the magnitude that the we are now exposed to. But sadly very few are aware of the unprecedented risks the world is facing. For the ones who understand risk and take the right decisions, it will “lead to fortune”. Only very few will choose that route. Instead most investors will continue to live in the hope that current trends will go on forever but sadly these people will end up “in shallows and in miseries”.

Risk is now staring us all right in our face but very few people can actually see it.

Let’s just be clear what some of the events that will change the face of the earth are:

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Physical Gold and Silver vs Failing European Banks

Physical Gold and Silver vs Failing European Banks

Physical Gold and Silver vs Failing European Banks
By Egon von Greyerz

 

It is no surprise that both commercial and central banks hate gold. Because gold reveals the total mismanagement of the economy and the deceitful actions that the bankers take. Once the paper gold market collapses, which is not far away, we will see the full extent of these malpractices which could easily be classified as fraudulent.

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Jim Rickards and Egon von Greyerz discuss $10,000 gold

Jim Rickards and Egon von Greyerz discuss $10,000  gold

Jim Rickards and Egon von Greyerz discuss $10,000 gold

 

I was very pleased to welcome Jim Rickards to Zurich very recently.

In this important 16 minutes video, recorded in a Swiss vault, Jim and I cover many vital factors that investors must be aware of to protect themselves against the major risks in the financial system.

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The EU Is Breaking Up Politically And Financially

Moderated July 1st, 2016 by
Categories: All publications, Egon's Publications
The EU Is Breaking Up Politically And Financially

The EU Is Breaking Up Politically And Financially
By Egon von Greyerz

 

When David Cameron decided to let the British people vote on Brexit, he did not realise that he would open a real can of worms. Before the referendum I declared that Brexit would not be the reason for a collapse of the world economy but that it could be the catalyst for such a collapse.

We have only seen a few days’ reaction with heavy intervention from central banks around the world but judging by the massive volatility we have seen so far, there is now a very high likelihood that a major secular decline in the world economy will now start to unravel. The next few weeks and months are likely to be a lot worse than the 2007-9 crisis.

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Get On The Goldwagon To $10,000

Get On The Goldwagon To $10,000

Get On The Goldwagon To $10,000
By Egon von Greyerz

 

Between 1999, when gold bottomed at $250, and the 2011 peak at $1,920 there was only one major correction lasting 8 months in 2008. The ensuing correction from the 2011 top at $1,920 of almost $900 seemed to take an eternity until it finally finished in December 2015. During those four years it was always clear to me that the uptrend in the precious metals was still intact although I must admit that I did not expect a correction of that duration. But after a long life in markets, patience becomes a virtue that is absolutely essential. If your investment decisions are based on sound principles at the outset, there is no reason to change your opinion because the market takes longer to accomplish what it must do.

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