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Six Major Events That Will Change History

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Published : July 20th, 2016
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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:

  1. No Sovereign state will ever repay their debt – That is an irrefutable statement and anyone who doesn’t understand that lives in denial.Sovereign debt has increased exponentially in the last couple of decades and governments neither can nor have the intention of ever paying their creditors. They can’t even afford to pay the interest and this is why an ever increasing number of countries have negative interest rates. So not only will they not repay the capital but investors now pay bankrupt nations for the privilege of holding their worthless paper. It is incomprehensible that investors are prepared to hold nearer $100 trillion of debt with no yield or negative yield and no chance of getting their money back. No one worries about the return OF their money and now it seems that investors don’t even worry about getting a return ON their money. This is a shocking state of affairs that eventually will lead to a total collapse of all sovereign debt.
  2. Screen-Shot-2016-07-19-at-11.23.58No bank will ever give depositors their money back – I know that very few believe this statement. Because, if bank depositors did, they would not hold around $200 trillion of assets in the financial system plus another $1.5 quadrillion derivatives in the banking system. Bank stocks in Europe, whether it is Deutsche Bank in Germany or bank Monte Paschi in Italy are continuing to crash to new lows. As I stated in a recent article, the share price of most European banks as well as many US banks like Citigroup or Bank of America have collapsed 70-95% since 2006 and they are on their way to ZERO. Consumer borrowing is still growing exponentially. Student loans in the US is now $1.4 trillion up a MERE 3x since 2006. And the delinquency rate is increasing exponentially as most students can’t find a job.
  3. Stock markets will fall 90% or more – I know that most investors will think that this is a sensational statement from someone totally deranged. But let me just remind investors that when the Dow crashed 90% between 1929 and 1932, the economic conditions in the USA and the rest of the world were far superior to the ones we are experiencing currently. Economic conditions are deteriorating fast worldwide but stock markets are continuing to go up to dizzy levels. Investors are putting their faith in funny or printed money. S&P earnings have declined for 5 straight quarters. The Dow is now valued at a dizzy 24x GAAP earnings. And sales revenue, adjusted for share buybacks is down 1/3rd since 2006. Yes, governments worldwide will this year launch the most massive money printing programme in history. But that will be like pushing on a string and will have zero effect on the world economy. The time when the misconceived Keynesian methods of creating prosperity by printing worthless pieces of paper (or electronic money) is now passed. The printed money will only exacerbate the debt problem. And the world will soon learn that you cannot solve a problem by applying the same methods that caused the problem in the first place.
  4. Screen-Shot-2016-07-18-at-23.37.02.pngProperty markets will collapse – Low interest rates and speculative frenzy have created bubble property markets worldwide. We had the first warning signal in 2006 but through massive money printing and guarantees to the extent of US$25 trillion, governments and central banks managed to postpone the inevitable. Since then global debt has increased by 2/3rd and interest rates have declined from around 6% to zero or negative. In Switzerland a 15-year mortgage now costs 1.25% and in Sweden you don’t need to ever amortise your mortgage. And in the UK, 6 major commercial property funds have now frozen redemptions. That represents 50% of the commercial property funds and is a grave sign that should be taken as seriously as the 2006 subprime crisis. China with its $34 trillion debt and many ghost towns and empty properties will also have massive problems.
  5. Currencies will go to ZERO – The deficit spending of most countries and ensuing debt explosion will put continues pressure on all currencies. Most currencies have lost 97-99% in real terms in the last 100 years. The last 2-3% fall will probably take place in the next 4-7 years. But the problem is that this last fall is 100% from now. This means that all currencies will go to their intrinsic value of ZERO in the next few years. So any cash savings will be worthless.
  6. Screen-Shot-2016-07-18-at-23.47.24.Geopolitical risk, terrorism and social unrest – These risks are higher than ever in history whether it is in the Middle East, between the US and Russia, China etc or civil unrest in Europe, the US, China or the rest of the world. Social unrest, terrorism and civil war will also become part of normal life in many countries. What has happened in Paris, Brussels, Nice, Orlando, Baton Rouge and Turkey is just the beginning of a trend that will spread across the globe. It will lead to a much less safe world for many years. It will also reduce tourism and commercial flights dramatically. In a less secure environment, people will choose to stay at home.

The above sounds to many like a prophecy of doom and gloom. For investors who want the good news, they can just listen to any TV channel or read the newspapers. There are very few places where risk is spelt out properly. I obviously hope that my forecasts above are totally wrong. But I fear that I will be right. And therefore I believe that it is essential for investors as well as people who don’t have much to protect to take whatever measures they can.

Gold and silver will not solve all the potential problems or catastrophes that the world will encounter in the next few years. But it is probably the best insurance that investors can hold to protect capital against the potentially biggest destruction of wealth that the world has ever encountered. Naturally it must be physical gold and silver and it must be held outside of the financial system.

Egon von Greyerz

Founder and Managing Partner
Matterhorn Asset Management AG

Some of Egon’s future speaking engagements:

Annual Global Access Asset Protection & Investment Conference. September 18 – 24, 2016. Vienna, Austria.

This conference is primarily for US tax residents

IPI Fall Forum for Private Investors. October 5- 6, 2016. New York, USA.

For Family Office Members of IPI

The 14th Asia Pacific Family Office Conference. November 14 – 16, 2016. Hong Kong.

For Family Offices

Mining & Investment Latin America. October 24 – 25, 2016. Lima, Peru.

Mines & Money. November 28 – December 1, 2016. London, UK.


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Egon von Greyerz is the managing director of Matterhorn Asset Management AG based in Zurich Switzerland. He specialises in wealth preservation with the special emphasis on physical gold stored in Zurich outside the banking system.
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Thanks for the article and I concede all 6 outcomes are feasible. What I would like feedback on is the following.
If one holds physical gold outside the the financial system how does one practically use that asset for everyday living expenses. If cash is going to zero then one can't exchange gold for cash and then use it to buy a loaf of bread. One cannot get out a knife and carve their gold bar or coin into smaller pieces. So practically how does it unfold
Good question.
Not sure if I can answer it.
Let's assume there is a complete breakdown and markets are closed and banks aren't open. Gold will be "no offer" so you won't be able to buy it and of course you would be silly to sell to get increasingly worthless dollars. So basically there will be no commercial trade, at least for a while until the PTB figure out how to fix the mess that they created in the first place. While those morons are doing that, people will get on with their lives and I suggest that "cash will be king in a crisis" so therefore I think get cash out of the banks NOW and every other institution its held because it will still be better than nothing. At least for a while.
Lets face it. The banks are saying it is worthless NOW and they do not want it because rates are zero.

Re Gold and Silver.
Recognised all over the world as money. And you are correct that walking into a bakery for e.g. with an ounce of gold isn't going to be much use unless of you actually want to buy the bakery lock stock and barrel.
For these sort of transactions I think that JUNK SILVER coins will be very handy and will come into their own because they are or will be easily recognised.
1 gram gold bars will also be good to have if you need a new suit ?? and a kilo of gold could likely buy a beachside mansion from a former banker and now desperate destitute.
All that aside i think it most likely there will be an overnight revaluation of gold and silver, something akin to the thoughts of Hugo Salinas Price. ( see the coming revaluation of gold)
Interesting times.
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Good question. Not sure if I can answer it. Let's assume there is a complete breakdown and markets are closed and banks aren't open. Gold will be "no offer" so you won't be able to buy it and of course you would be silly to sell to get increasingly worth  Read more
S W. - 7/22/2016 at 9:42 PM GMT
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