Greyerz:  “Eric, the U.S. dollar hegemony and role as a reserve currency is soon going to come to an end.  This will lead to a precipitous fall of the dollar.  The further consequences will be severe U.S. exchange controls.  It will be virtually impossible for private individuals to transfer any funds out of the United States....

Continue reading the Egon von Greyerz interview below...


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“It won’t matter if the transfer is for investment purposes or for holiday use.  The fall of the dollar will also lead to major pressures in the U.S. economy and the U.S. financial system.  So the U.S. will experience bail-ins and the U.S. will see forced transfer of savings into Treasuries as the budget deficit escalates to a much higher level.

Also, interest rates will rise dramatically since no one will lend money at zero rates to an economy with a weak currency and debt that can’t be repaid.  Eventually rates will go to at least 15 percent to 20 percent, like we saw in the 1970s.  All of that will be the start of the hyperinflationary depression that will hit the U.S. and major parts of the world.

In a world with total debt of $280 trillion, and total unfunded liabilities totaling many hundreds of trillions of dollars, plus derivatives of over one quadrillion dollars, this unprecedented global debt can never be repaid out of proper revenue growth.  The die was cast in 1913 when the Fed was created, and recast in 1971 when gold no longer backed up any currency.

After the removal of gold from the system there was a free-for-all for governments and central banks to borrow and print unlimited amounts of money.  If more people believed that the excellent KWN contributors were right, there would be far more than 1 percent of world assets invested in gold.  A lot more people would realize that wealth preservation and insurance in the form of physical gold is critical.

But as gold goes to $5,000, $10,000, and eventually much higher, the whole world will want to own gold.  As always, it’s important not to wait for the herd, but to take action now.  When we recommended up to 50 percent of assets be put into physical gold in 2002, gold was trading at $300 and it was unloved and undervalued.  That is the time to invest.

Today, 12 years later, at $1,300 per ounce gold is still unloved and undervalued.  It’s unloved because virtually nobody owns gold.  And gold is greatly undervalued because at $1,300, which is the marginal production cost, it does not reflect the massive credit creation and money printing that has taken place since 2008 crisis.

During that crisis the financial system almost collapsed.  But the day of reckoning was deferred by governments and central banks throwing $25 trillion at the problem, and reducing short term interest rates in the U.S. from 5 percent to zero percent.  But the same problems are still there in the financial system and in the economy.  The difference now is that borrowings, both governments and private, are exponentially higher as interest rates have been artificially set at zero.

The problem is that credit and printed money no longer have any effect.  Thus when the 2008 problems reemerge with a vengeance, there are absolutely no effective measures that governments can take.  So if governments can’t do anything, what can investors and savers do?  Well, I and many of the lone voices on KWN have for a long time advised people to get out of the banks and also get out of the weak currencies like the dollar, the euro, the yen, and most others. 

Physical gold and silver should be held outside of the banking system.  That will be the best form of wealth preservation and insurance.  Some gold should be held in small denominations like 100 gram bars and 1 ounce coins.  I don’t think it’s worthwhile holding smaller coins and bars than that.  This is because I don’t see gold being used for daily purchases of goods and services.

After having seen firsthand how Chinese factories can produce perfect gold-plated tungsten bars and coins, I fear that this trend will happen around the world as the gold price rises.  The consequence of this is that people will not trust gold as a method of payment.  Instead I see a system whereby recognized and trusted companies in the gold market like GoldSwitzerland will provide liquidity for holders of gold and silver who need to cash in a portion of their holdings.

GoldSwitzerland only buys from the top Swiss refiners, and if the client wants to sell, we sell it back to the refiner.  Even if that refiner has made that bar they will still melt down their own bar to be 100 percent certain that they only sell pure gold out of that factory.  So by holding surplus funds in the form of physical gold, investors can keep their savings safe, outside of the banking system and cash in part of their funds as required.  This method is far superior to keeping cash in the fragile financial 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 Eric Sprott, Bill Fleckenstein, David Stockman, William Kaye, Dr. Stephen Leeb, Paul Craig Roberts, John Hathaway, Gerald Celente, Grant Williams, Andrew Maguire, Egon von Greyerz 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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