As the world edges closer to the next crisis, today the man who has become legendary for his predictions on QE and historic moves in currencies and metals just warned King World News that hell will soon be unleashed in global markets.
The Gold Casino
November 11 (King World News) – Egon von Greyerz: “The gold price is determined in a Casino with massive leverage and it has nothing to do with the real price of physical gold. More about that later in the article…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
At what point will gold turn from a minority interest attracting less than 0.5% of world financial assets to a mass-market investment?
2 Decades Ago We Made This Important Decision…
Three decades ago I identified physical gold as the best asset to hold for wealth preservation purposes. Then, almost two decades ago we decided to invest properly in physical gold for ourselves and the investors we advised. Part of our wealth protection plan was obviously to store the gold outside the area we saw as the biggest risk, namely the financial system. Anyone who stores gold in a bank, ETF or some gold fund has not understood the purpose of physical gold.
Being holders of a minority asset means that 99.5% of the investment population sneers at you and believes you live on a different planet. As a company who passionately wants to help others to protect their wealth, we are fortunate to meet like-minded people. But most of our clients feel very isolated because they have no one to discuss their concerns about the world with.
I would advise anyone with a gold interest to attend a good precious metals conference. In the last two weeks I have been speaking at two excellent gold conferences. One was the Gold Symposium in Sydney and the other one the Edelmetallmesse (International Precious Metals & Commodities Show) in Munich. It is important to pick a conference which includes many participants talking about the risks in the world and who see gold as a remedy against these risks. Many gold conferences are more geared towards gold mining and therefore less interesting for the wealth preservationists.
For anyone who wants confirmation that they are not alone in their analysis of the risks in the world, it is good for the soul to attend one of these gold conferences. Both the show in Sydney and Munich had a very enthusiastic crowd. For someone who has written newsletters for many years and appeared in interviews, like myself, most people in the audience will know you and want to talk to you. The Australians are more expressive and want to shake your hand and have a photo taken. The Germans are a bit more shy but also have a lot of questions. Both conferences were very well attended — more than in previous years.
Alasdair Macleod’s KWN interview
Alasdair Macleod gave an excellent interview on KWN a few days ago in which he expressed similar views to mine that there is clearly something very rotten in the financial system. Central banks are panicking and QE is back with a vengeance. The whole financial system is just a massive paper tiger but the world hasn’t realized it yet. In effect there are no true markets, no true prices and no solid counterparty standing behind any transaction. Financial markets are a casino full of drunken gamblers. A small minority has rigged the system in their favor and this is why players like investment banks make massive profits every day.
These investment banks gamble by making bets that are exponentially greater than the risk they can cover when all goes wrong. They are totally aware that they are too-big-to-fail. And this the world experienced during the LTCM collapse (Long Term Capital Management) in 1998 as well as during the 2008 collapse. Both times the financial system was minutes from a total breakdown but the investment banks had to be saved at an enormous cost. No senior banker was fired or prosecuted and their bonuses continued to even more ridiculous levels. The winner takes it all!
With central bank printing and guaranteeing at least $25 trillion, the system was saved temporarily. But it wasn’t actually saved. All that happened was that a smaller problem became an exponentially bigger problem. And this is where we are today. The 2006-9 Great Financial Crisis was never resolved, just deferred. So the proverbial can was kicked down the road again but the next time it will be too big to kick.
Just to understand the size of markets, let’s consider the Forex market. Daily turnover in the Forex Casino is in excess of $5 trillion. That means $1.5 quadrillion a year is traded in foreign exchange. That’s 19x annual global GDP of $80 trillion. But since global trade is only $20 trillion, global forex trading is 75x the amount of goods that involves foreign exchange. So the majority of the $1.5 quadrillion forex trading is pure speculation leading to the currency price being set in a casino with no relevance to the underlying goods traded. Thus the price has very little correlation to the products or services traded.
The Great Deception
If we look at the gold market, exactly the same thing is happening. The annual mine production of gold is around 3,400 tonnes with a value of $159 billion. But if we look at the daily trading volume of gold it is a staggering $187 billion, and thus greater than the entire combined annual production of all gold mining companies across the planet. That makes annual gold trading $48 trillion or 1,030,000 tonnes. All the gold ever produced in history is 170,000 tonnes. So annual gold trading is an incredible 6X all of the gold ever produced in history and 300X annual mine production. It is important to understand that this gold trading is virtually all paper trading with a very small percentage of physical.
So for all of you who own PHYSICAL gold and believe that last week’s closing price of $1,460 per ounce is the real price of gold, please think again. $1,460 is the paper gold price in the casino. It has nothing to do with the real price of physical gold.
The corrupt and manipulated paper gold market is guaranteed to fail. A market that is leveraged 300X the underlying physical or real market has no chance of survival. When the holders of paper gold realize that they are holding a worthless piece of paper, the whole paper market will implode and the price of gold will skyrocket. This is not a question of IF but WHEN?
Hell Will Be Unleashed In Global Markets
And WHEN is getting closer quickly. Stocks are very near the end of their secular bull market and the coming moves to the downside will frighten investors around the world. Bond markets might hold out a bit longer but will surprise everyone with how quickly they will come down. The coming fall in stocks and bonds will shake confidence in all markets with many investors looking for protection in safest hard asset in the world — physical gold.
But the physical gold market cannot satisfy the coming increase in demand at current prices. The only way that new buyers can find gold will be at much, much higher prices. So I advise holders of physical gold and silver not to worry. This correction will soon be over and in the next few years we will see the prices of gold and silver reaching multiples of the current levels.
Be Sure To Remember…
Just be sure to remember that you are holding physical precious metals as essential life insurance for long term protection of your wealth and not for short term price gains…For those who would like to read more of Egon von Greyerz’s fantastic articles CLICK HERE.
***KWN has just released the powerful audio interview with Alasdair Macleod and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
Albert Edwards – Huge Bubble Bursting, Plus Fred Hickey On Gold
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