By Egon von Greyerz Founder Matterhorn Asset Management

March 14 (King World News) - The Death Of The Dollar

A country that has been running triple deficits for decades is bankrupt and its currency is worthless.  So how come that this country can not only use its currency domestically but that the whole world uses it for trading?  It must be because no one dares to say that the Emperor has no clothes....

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When a nation for around half a century runs budget, current account and trade deficits, that country can’t possibly also be the world’s reserve currency.  Well, unbelievable as it may sound, this is sadly the case.


But we are now coming to the end of the dollar hegemony.  The combination of extremely adverse economic factors and strong worldwide political pressure will now lead to the dollar falling rapidly.  The world has realized that the Emperor is naked.


I am showing below the dollar against the Swiss Franc.  The dollar has fallen 80% against the Swiss since 1974.  And since 2000 it is down 50%.  This is the result of chronic economic mismanagement  leading to massive credit creation and money printing.  But the world has now voted that it will no longer accept a currency that is valued far above its intrinsic value.



What most dollar investors don’t realize is that a weak currency shows misleading investment returns.  To measure returns in dollars paints a totally false picture.  Let’s take the example of the Dow.  In dollars the Dow is up 37% since 2000. But this return is delusional.  If we look at the return in a more stable currency (still a paper currency), the Dow measured in Swiss Francs is actually down 23% since 2000.


So instead of a gain of 37% investors in the Dow have lost 23% measured in a stronger currency in the last 13 years.  That shows how dangerous it is to measure results in a currency that is chronically ill and constantly losing value.


Finally let us have a look at the Dow in real money which is of course GOLD.


The chart below shows that the dollar has fallen 72% measured in gold since 2000.  Gold will always reveal governments’ deceitful actions in destroying the value of their currency.  So instead of an illusory gain in the Dow of 37% since 2000, in real terms investors have lost 72%.



What investors who measure their returns in dollars must realize is that the REAL dollar fall is just starting.


Dollar Swiss is currently around 0.87 cents.  We expect this rate to reach below 0.50 cents in the next few years which is a further fall of 40-50% at least.


And if we look at the Dow against gold, we would expect a further fall of 90-95% in the next few years.


Thus, anyone invested in dollar assets will see their wealth decimated in the next few years.


There are many ways to protect against this total wealth destruction that will hit the world in the next few years but nothing will preserve wealth as well as physical gold stored outside the banking system.

© 2014 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.

IMPORTANT - KWN has many more interviews being released today.

The audio interviews with Egon von Greyerz, Eric Sprott, David Stockman, Michael Pento, Gerald Celente, Bill Fleckenstein, Dr. Paul Craig Roberts, Grant Williams, Andrew Huszar, Art Cashin, John Mauldin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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© 2014 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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