Egon von Greyerz continues:  

“ArcelorMittal is the biggest steel producer in the world, and Hollande is telling them if they lay off employees that he will nationalize the business.  So if this steel producer moves to take normal action during a slowdown they are literally going to be nationalized.  This is a astounding.

A couple of days ago I spoke to an author and journalist in France who is very well known....

Continue reading the Egon von Greyerz interview below...


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“He told me he is in Athens now and is observing what is going on in Greece.  He said to me, ‘Athens is nothing compared to what we have in France now with the trouble we are seeing with the unions, poor people, people in the streets.’ 

Still, there is no austerity in France compared to Greece.  He expects France to be a lot worse than Greece will ever be.  That’s one European country and this will  be the case in many other European countries.  The UK will be terrible economically, but the social unrest will also be very, very severe and extremely difficult in the UK. 

So we are seeing it everywhere.  Mervyn King, head of the Bank of England, he now says UK banks will need another 35 to 50 billion pounds of capital.  He says the banks in England are undercapitalized and the risks are major.  Here you have a central bank chief who openly says the banks are at risk of failing.  Of course this is the risk worldwide with banks, but it is refreshing to see a central bank governor actually saying it officially.  Sadly this is the case with almost all countries in the world.

Turning to Japan once again, as I said in the last few interviews, Japan is one of the biggest risks in the world because of their economic position.  The Bank of Japan had a loss in the last quarter of 230 billion yen, which is about $3 billion.  Their balance sheet is also continuing to expand, it’s up to roughly 156 trillion yen or about $2 trillion.

Moving to the US, GDP was better at 2.7%, but again that was just inventory buildup and government spending.  GDP is still weak if you take those two elements out.  Consumption is very weak and inflation in the US is running at 1.6%.  Anyone who buys food and fuel knows inflation is a lot higher than 1.6%.  Also, if you used the real ‘deflator,’ GDP would be negative.

Consumption will continue to head lower because people are worse off now.  There are 127 million people in the US dependent on government welfare.  This is against a full-time working population of 115 million people.  So there are 115 million people working full-time and 127 million depending on the government. 

The bottom line is there are less and less people to pay for the welfare.  This is why the deficits will continue and grow much worse than they are today.  Also, if you look at median income in the US, it’s down 8% in the last three years, and disposable income is down a staggering 25% if you adjust for inflation in the last ten years. 

If you look at the real estate bust in the US, take states like Florida, California and Arizona, 50% of homeowners have negative equity.  Las Vegas is as high as 70% negative equity.  Again, it means that the banks are never going to get the money back.  This simply means that the government has to print more money.

This is the same problem in developed countries all over the world.  Therefore, governments will print increasing and virtually unlimited amounts of money.  So currencies will continue to reflect that activity.  The dollar, euro, yen, and the other currencies have already fallen 80% in real terms vs gold over the last ten years.  These currencies will continue to fall another 80% to 100% vs gold in coming years. 

So investors have to look at how to preserve their wealth and the way to do that is with physical gold.  Investors are always asking, ‘What percentage of my money should be in physical gold?’  I told people in 2002 to put 50% of their money into gold.  That would now total 85% since gold has gone up more than any other asset.

If you ask me today, ‘Is 85% a good level?’  I think it is because I don’t see any better way for people to protect their wealth against the wealth destruction and the risks we face going forward.  But every investor has to decide for themselves what is best for them.

What is important here is whatever percentage the investors buy must not be paper gold.  It must be physical gold and it must be outside of the banking system.  Remarkably, only 1% of the world’s assets are in gold today, so, sadly, not many people are thinking about wealth preservation.  This tells me we are still early in this bull market for both gold and silver.”

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with Eric Sprott, Gerald Celente, Stephen Leeb, James Turk, Egon von Greyerz, Michael Pento, Wilbur Ross, Don Coxe (BMO $538 billion) and Ben Davies are available now.  Also, be sure to listen to other recent KWN interviews which included Art Cashin (UBS $612 billion), and Nigel Farage by CLICKING HERE.

Eric King

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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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