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Egon von Greyerz continues:
“The problem is that Switzerland is expanding its balance sheet like every other central bank. Switzerland is no better off, and to buy Swiss francs is not the solution. These investors are now attacking the euro/Swiss franc spread.
By doing that they are increasing the deficit of the Swiss National Bank because the Swiss are having to spend more and more money to protect their currency. So investors buying the Swiss franc is actually very bad for Switzerland. These investors are totally mad if they think that is protection for them....
Continue reading the Egon von Greyerz interview below...
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“Very soon, these investors will realize that the only protection is to buy gold. So it’s quite possible gold has bottomed now. If you look at the move since the top of September, 2011, after the first reaction we have basically just had a sideways move.
We have basically seen $1,700 gold, plus or minus a little over $100, for the last seven months. This has not been a big correction. So, the correction has been relatively tame since the run-up to the high last year.
If you look at 2008, the correction lasted seven months at that time as well. From that perspective, it could be we have bottomed out. Regardless of the price action, the fundamental situation is improving by the day.
Both the ECB and the Fed, they are in total denial. Here you have a week when the ECB said, ‘No more support to the eurozone governments.’ Well, these governments are all hemorrhaging. Without additional financing, they will go under.
The ECB, so far, in the last few months, has given them 1 trillion euros, but as I said in my last discussion with you, my estimation is they will have to give them tens of trillions of euros.
People are now worried about Spain. Portugal is the same and every country in Southern Europe will go through the same thing. Unemployment is rising fast. These countries are going through austerity programs, which means their budget deficits will increase, not decrease because every single economic figure is declining.
So, these countries cannot survive without more money. Therefore, as I said, the ECB is in denial because it will only be a very short time before they will need to print again. It’s the same with the Fed and the FOMC minutes. The are saying no new asset purchases.
Well, it’s ridiculous because here you have a country that is not doing anything to cut down on its deficits. Consequently the US deficits will continue to increase at an accelerating rate. So, the Fed will absolutely be forced to print money.
This money printing, whether it happens today or tomorrow, it’s actually ongoing all of the time. We see it in all of the central banks balance sheets worldwide. They are all expanding. They might pause for a few weeks, but it is absolutely clear that they will continue to print. Participants in the gold market shouldn’t believe a word of what the central banks say.
The bottom line is investors must protect themselves with gold because QE will continue and it will accelerate. The average debt to GDP around the world is something like 350% and that excludes the unfunded liabilities. That’s total debt, private and government debt.
Even if we cut that 350% figure in half, to 175% debt to GDP, it would mean a reduction in debt, worldwide, of roughly $25 trillion. This just reinforces the point that governments will need to print in the tens of trillions of euros. Keep in mind this is the current situation, without any further disasters in the derivatives area.”
© 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.
Eric King
Greyerz - Gold Bottom, $25 Trillion in Debt, ECB & Swiss Franc
Today Egon von Greyerz told King World News that around the world, the average debt to GDP is at a staggering 350%. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Von Greyerz also stated that even if the number was cut in half, to 175% debt to GDP, it would require the elimination of $25 trillion of debt. But first, here is what Greyerz had to say about what is happening in Europe: “Yesterday the Swiss franc came very close to the 1.20 level versus the euro. This is happening because bad economic news is coming out of Europe. Industrial production is falling and Spanish rates versus German rates, there is now a 4% gap, now people are getting worried about that again. So they are buying the Swiss franc.”
© 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.
April 6, 2012
