Greyerz:  “Eric, there is so much noise coming from the mainstream media that it’s confusing investors.  But let me make one thing clear:  All of these economic figures that are being published every day are adjusted and manipulated to make them look better than they really are....

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“But these figures have no impact on the economy going forward because the die is already cast, and there is absolutely nothing that can change the direction of the US and world economies.  The Fed and other central banks have no possibility of changing anything. 

Therefore, it serves no purpose to wait for their next decision or policy statement.  They know what they have to do, and we know what they will do, which is to continue to pump unlimited amounts of money into the economy.  The money supply is expanding exponentially, and so is the Fed’s balance sheet.  For that matter, so is the federal debt.  The next phase will not be exponential, it will be parabolic. 

Many people are wondering why we are not seeing inflation with all of this money printing.  This is because the money is going into the financial system.  So the banks are the major beneficiaries.  A lot of this newly created money is going into the stock market as well.  So, the rich are getting richer, but the masses are just getting more and more into debt.  This is a very dangerous situation.

But what is very interesting is that while the US stock market is making new highs, many European stock markets are well below their 1999/2000 highs.  The principle reason for this is that the US has printed so much more money than Europe, and a lot of this liquidity has gone into the US stock market.

According to the Nobel Prize winner, Schiller, the inflation-adjusted S&P 500 Index is now at a P/E of 25, which is the highest at any time since 1929.  So, the reality is that, technically, the European markets look set up for a major and long-lasting decline, and the US is very near the end of a bull market, with horrific consequences for the US and for the world.

But inflation will not remain subdued for much longer.  As soon as the velocity of money accelerates, inflation will super-surge, and that is likely to start in 2014.  The trigger for the turnaround in the US economy will be the fall of the US dollar.  A reserve currency cannot be based on debt that is increasing exponentially, and this is why the world will soon dump the dollar at an accelerated pace.

It is this fall of the dollar which will be the trigger for the major economic decline.  The stock market will fall, bonds will fall, and the money printing and the velocity of money will go up dramatically.  This will be the beginning of a hyperinflationary depression.  As the dollar falls, so will the euro, yen, and the pound, but at a slower rate.  This is all part of the race to the bottom for these currencies. 

But the fall of the dollar should not be measured in other currencies, instead it should be measured in gold.  And gold will soon start an exponential rise measured in paper money.” 

Greyerz added: “Looking at gold demand from India and China, it continues unabated.  Premiums in the Indian market reached $100 per ounce last week.  This is an indication of a massive shortage of supply.  Meanwhile, the UK has exported well over 1,000 tons of gold to Switzerland in just the first eight months of this year.  This was against only 85 tons last year. 

This is yet more proof of the demand for gold being so much greater than the production, as Eric Sprott recently explained in his letter to the World Gold Council.  But the reason for this massive increase in gold going from the UK, which produces virtually no gold, to Switzerland, is the fact that the Swiss refiners could not get enough supply from the mining companies -- so they had to buy from the bullion banks. 

And London has the biggest concentration of 400-ounce gold bars in the world, with a large stash of central bank gold being stored there.  And this central bank gold is leased into the market.  But now a lot of it is gone to the East, via Switzerland and Swiss refiners. 

This clearly emphasizes that there is a massive shortage of physical gold.  And when the holders of paper gold demand delivery, there will be the most spectacular surge in the gold price.  The good news for gold bulls is the start of that historic rise is not far away in my view.”

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