Today the man who has become legendary for his predictions on QE, historic moves in currencies, told King World News to expect $10,000 gold and $667 silver.
The Fantasy Is About To An End
Egon von Greyerz: “The coming gold and silver moves in the next few months will really surprise most investors as market volatility increases substantially…
Egon von Greyerz continues: “It seems right now that “All (is) quiet on the Western Front,” as Erich-Maria Remarque wrote about WWI. Ten years after the Great Financial Crisis started and nine years after the Lehman collapse, it seems that the world is in better shape than ever. Stocks are at historical highs, interest rates at historical lows, house prices are booming again, and consumers are buying more than ever.
So why were we so worried in 2007? There is no problem big enough that our central banks can’t solve, and they have certainly been active in the last ten years:
Print and expand credit by $100 trillion, fabricate derivatives for another few $100 trillion, make further commitments to the people in forms of pensions, medical and social care for amounts that can never be paid, and lower interest rates to zero or negative.
And there we have it. This is the ‘New Normal.’ The central banks have successfully applied all the Keynesian tools. So the big question is, how can everything work out so well with just more mountains of debt and liabilities? Is it because things are different today? We have all the sophisticated tools, computers, complex models, money printing QE, interest rate manipulation management, and very devious central bankers. Or is it really different this time?
All these shenanigans by central banks have created fortunes for the top 1% and massive debts for the rest of the world. For some of us who spend considerable time studying risk, you can make two very distinct conclusions:
- On the one hand, central bankers have been extremely skillful in using all the tricks in the book, including some new ones, and saved the world by printing unlimited amounts of money, expanding credit exponentially, and abolishing the cost of borrowing by setting rates at zero or negative. This is the perfect scenario and the Keynesians of this world must be really pleased with themselves. In fact, the Krugmans of this world are really pleased since this justifies receiving the Nobel Prize and confirms that they have found the perfect method that can be applied indeterminately with great success.
- On the other hand, for those of us who believe that trees can’t grow to the sky and that sound money always prevails, we know that we are in the last stages of a bubble of epic proportions. Fortunately, our side has also received a Noble prize through von Hayek, although that was back in 1974.
The Harsh Reality
This has been a very long battle between the manipulators and the advocates of sound money. With free money and socialism, you can fool most of the people for a very long time. But sadly for the Keynesians, they will run out of ammunition when all the printed currencies return to their intrinsic value of zero. This means you can’t fool all of the people all of the time. As Margaret Thatcher said: “The problem with socialism is that you eventually run out of other people’s money (OPM).” And this is exactly where we are today. The world has run out of OPM. When our company went aggressively into gold and silver in 2002 for ourselves and our investors, we did not believe that the central banks would be able to manipulate markets for over 15 years. Silver was $4 at the time, and gold $300, so the manipulation has really only been partially successful.
But the signs are now very clear that the money printing experiment is coming to an end very soon. Despite all the trillions of fiat money created out of thin air worldwide, real GDP has stopped growing.
As the chart below shows, all the money printing and credit expansion is no longer having an effect. Even a child could understand that you can’t grow an economy by printing paper and calling it money but for some reason, the Keynesians will ignore the obvious.
The only areas which is still very strong are stock markets, property and bonds. This is where all the money printing goes,and the 1% believe that their riches are exploding due to their investment skills. Little do they realize that these skills will just vanish into a big black hole in the next 4-7 years as the exploding assets implode and the massive global debt with it. Sadly this must happen in order to create a sane world again. We cannot build a world on fake values and fake money. Mankind will not survive in such a world. It will totally destroy itself.
It will be hard enough to survive the coming collapse of the Ponzi scheme that has flourished in the last 100 years. But the transition from a false system, based on an illusion of phony valuations and fiat money to real valuations and real money will be painful for most of the world. The wealthy will lose at least 95% of their assets and many normal people will starve and live in misery. We will have wars, civil unrest, political upheaval and economic devastation. This is what the elite has caused by creating a dishonest system for the benefit of the 1% but to the detriment of 99% of mankind.
DIRE WARNING: More Than 2 Billion People Will Die
The problems we will see in coming years are likely to reduce world population by at least 1/3, which means the loss of life for more than 2 billion people. The combination of wars, civil wars, famine, disease, and economic collapse, will be the primary cause of this. World population has exploded from 1 billion to 7.5 billion people in the last 160 years. Statistically there have always been setbacks in history when population declines substantially, whether it is because of wars or disease. During the Black Death of the 14th century, for example, world population is estimated to have declined by a staggering 50%.
So the risks are major, even though we are only talking about probabilities. Things could take longer and they could be less severe, but with risks of this magnitude, the very privileged few who have the possibility to take precautionary measures must do so now before it is too late to act. At some point in the next few years, a financial and economic collapse is inevitable, and the window to take action will have already closed.
The autumn of 2017 has looked precarious as it relates to catalysts which will pop the massive bubbles in global stock markets and the economy. Stocks look very vulnerable and overvalued based on any historical criteria. Even though bubbles can always grow bigger, the risk is beyond unacceptable. At the same time, gold and silver have now finished the long consolidation period, which has taken many years, and have now resumed the uptrend to new all-time highs.
Moves in the metals could easily be explosive during the autumn. The strength the precious metals are now showing is a very strong indication that the manipulation by central banks — the Federal Reserve, Bank for International Settlements, and their bullion bank agents — is going to fail in the next few months. I have previously pointed out that at current (normal) levels of demand, the entire global mine production of gold and silver is absorbed. And importantly, less than 0.4% of global financial assets are invested in gold. The annual silver mine production of $15.5 billion is less than 0.01% of global financial assets.
$10,000 Gold & $667 Silver
Since all gold and silver production is being easily absorbed, with negligible invest demand, there will be no physical gold or silver available at current prices when the coming increase in demand begins to unfold. In addition, the paper market in the precious metals is likely to have major disruptions and likely fail as the demand for physical metal increases. As institutions and funds start to focus on the physical precious metals and the mining stocks, they will only be able to invest at prices which will be many multiples higher than current prices. This is what will drive gold to my long-standing target of $10,000 and beyond. With a gold/silver ratio back to the historical level of 15, that would make silver $667. I believe that these levels can be reached in today’s prices and when hyperinflation takes hold we could see multiples of those levels.
If silver today was at the same level vs the US monetary base as it was at the 1980 peak, the price of silver would be 80x greater, or $1,424 an ounce! Although this sounds like fantasy today, it is not unrealistic. Just look at what is happening to Bitcoin. And remember that silver is real money, while Bitcoin is just an electronic construction with no underlying asset. This may not stop Bitcoin from going much higher in its Tulip bulb type mania.
Technically silver is likely to outperform in the next few years. We have always argued that wealth preservation investors should hold gold mainly due to the volatility of silver. But at this point, silver looks extremely good value so an exposure of say up to 25% silver and 75% gold would be an excellent mix.
Gold & Silver Universe To Become Very Crowded
With annual mine production of $128 billion gold and $16 billion silver, this market is so small that it is totally dwarfed by the stock market. Just take some of the most well-known Nasdaq stocks — Apple, Google, Microsoft, Amazon and Facebook — their total market cap is $3 trillion. Compare that to the annual gold and silver mine production ($143B) and the top 20 gold stocks ($150B) and the top 25 silver stocks ($30B). The total annual precious metals mine production and biggest stocks add up to $437 billion. That is 15% of 5 of the biggest Nasdaq stocks and less than the smallest of those five which is Amazon, valued at $470B. Since these five stocks have probably topped, big investors will liquidate part of their holdings and look for new opportunities. The gold and silver universe is likely to get very crowded as funds and institutions enter.
Gold in many currencies bottomed in 2013. In dollar terms, the bottom was in 2015. After the rally in the first half of 2016 and the subsequent correction low of December, 2016, gold and silver are now on their way to new all-time highs. We obviously will not see a straight line move as there will be temporary stops on the way. But for those who are not fully protected against major global risk, now is the time to be fully invested in gold with an important allocation in silver. Precious metals will become an extremely crowded investment sector and the time to get in at reasonable prices is soon ending. This is a totally unique situation. Seldom has a protective wealth preservation investment also had massive capital appreciation potential. Don’t be left behind. There is too much at risk.”
***KWN has just released an amazing audio interview with the man who advises the biggest money on the planet, where he discusses exactly what he is advising institutions, hedge funds, and the largest sovereign wealth funds in the world to do with their money. He also explains why fortunes will be made by investors in the silver universe and elsewhere and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Man Who Was The First To Predict China Would Shock The World By Launching Gold-Backed Yuan Oil Benchmark Just Issued His Next Major Prediction CLICK HERE.
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