By Egon von Greyerz Founder Matterhorn Asset Management

March 8 (King World News) - Ukraine Crisis, Black Swans & A Global Meltdown

Greyerz:  “Eric, we have discussed many times the unprecedented risks in the world today.  These risks are the result of the century-long mismanagement of the world economy, based on credit and printed money.  So we now have a world resting on the edge of a black hole....

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“We have also discussed the potential catalysts around the world that could trigger the world falling into the black hole.  These can be economic events such as Japan defaulting, or it could a collapse of the dollar.  It could also be geopolitical like the Middle East.

Each one of those risks can create a major disaster. But we also have the possibility of black swan events.  These are events that very few people can forecast, and Ukraine is such an event.  Very few people thought the problems in Ukraine could be the trigger for the collapse of the world economy but we have to remember that any of these events are just catalysts.

The world is bankrupt economically, financially, and morally.  And if Ukraine now will be the trigger for the inevitable economic collapse, it’s also possible that it will be the beginning of World War III as Paul Craig Roberts has indicated.

Ukraine is an important pawn for both Russia and the West, which is led by the United States.  Russian President Vladimir Putin has a strong hand with almost 40 percent of Europe’s gas requirement going through Ukrainian pipelines from Russia.  But Ukraine is bankrupt and needs money either from Russia or the West.

The $1 billion the U.S. has offered would pay only half of Ukraine’s debt to Russian giant Gazprom.  And I’m sure the U.S. does not want to pay $1 billion to Putin.  This crisis will have a major impact on both the Ukrainian and Russian economies.  Ukrainian bonds are collapsing and interest rates are up to 47 percent now, from 10 percent in January, and the currency is falling fast.

The same thing is happening in Russia, with the ruble down 10 percent this year and the stock market falling.  The Russian central bank had to raise interest rates from 5.5 percent to 7 percent in order to stabilize markets.  But in spite of economic problems, I doubt that Putin is going to give in on Ukraine.  And for Obama, a war would be a good solution to the U.S. economic pressure.

So with this potential black swan event in Ukraine, the risks are extremely high and the consequences could be devastating.  But whether Ukraine is the catalyst or some other event is, the outcome is inevitable.  The world is already set up to go into a hyperinflationary depression.  That in itself is bad enough, but a major war would also be horrific.

Today we are looking at commodities that are still going up strongly, and pointing out that inflation is coming.  Most currencies are weak, not just emerging-country currencies but also the dollar.  The falling dollar will be the trigger to the hyperinflation I expect, and to higher precious metals prices.

Investors should ignore event-driven price movements.  Gold went up this week on Ukraine, and then down today on non-farm payrolls.  Precious metals investors must understand that long-term price movements in gold and silver have nothing to do with events.

Gold is going up because currencies are being destroyed by virtually every nation due to deficit spending, debts, and money printing.  So precious metals investors must ignore these short-term moves.  The trend is clear and will not change.  So it won’t matter what happens in the world politically or economically.

With regards to the non-farm payroll figures today, it had to be a good figure.  The U.S. had to counteract the bad Ukraine news with some good unemployment figure.  But what is interesting and important is that the dollar did not move higher on the bogus jobs release.  Currently the euro is just under 1.39, and the U.S. Dollar Index is around 79.7.  This is what precious metals investors must focus on.

The weak dollar indicates that the 1-percent move down in gold today will be short-lived.  What investors must realize is that the time for protecting their wealth is running out.  Ukraine could be the black swan event or there could be another.  Therefore, it is critical to own physical gold and protect against the inevitable consequences of the mess that the world is in.  You must ask yourself if you are prepared for such a collapse.  If not, as I said, time is running out.”

© 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.

UPDATE - Gerald Celente’s incredible audio interview has now been released, to listen CLICK HERE.

IMPORTANT - KWN will be releasing interviews and pieces all day today. 

The audio interviews with Michael Pento, Gerald Celente, Bill Fleckenstein, Egon von Greyerz, Dr. Paul Craig Roberts, Grant Williams, Andrew Huszar, Art Cashin, Rick Rule, David Stockman, 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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