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 told King World News that up to 10,000 a day are dying in China as the Coronavirus may bring the world to its knees.

February 10 (King World News) – 
Egon von Greyerz:  There are no safe assets. In 2002 we recommended our investors to hold up to 50% of their financial assets in physical gold. Today in 2020, I consider that up to 100% is the right figure since there are no safe assets except for physical precious metals.

We are now at the end of the only truly global asset bubble in history, fueled by a debt explosion of epic proportions. Never before have all major economies peaked together, powered by hundreds of quadrillions of credit creation, money printing and derivatives. 

Although the magnitude of this bull market is greater than anything seen before, the psychology of the current market is similar to previous speculative bubbles whether we take 1929, 1973, 1987, 1999 or 2007. At the stock market peak of these periods, psychology reached uber-optimism. In 1929 for example, the Yale economist Irving Fisher stated in the New York Times: “Stock prices have reached what looks like a permanently high plateau.”  Three years later the Dow had lost 90%.

Whether markets peak now or climb slightly higher is irrelevant. Euphoric investors and  computers might push the Dow to the psychological level of 30,000 or it might peak here. What is clear is that the turn is imminent, whether it happens today or in a few weeks time. And once the turn is in, we are likely to see a 90% decline in real terms.

The catalyst for the coming market and debt collapse could be a number events. If the Coronavirus doesn’t miraculously stop spreading soon, it could very likely be the trigger for the world economy coming to a halt.

A Lancet study by the University of Hong Kong has estimated that the Chinese authorities have understated the Coronavirus epidemic tenfold. The study calculates a spread rate of 2.68 per case and a doubling in total numbers every 6.4 days.

Instead of the official figures of around 750 fatalities, there are other numbers stating 25,000 dead in total or even as high as 10,000 per day. During the 1918 Spanish Flu, 2.5% of the victims died or an estimated 50 million. The Wuhan figures indicate a death rate of 5%, which would be extremely serious if correct. But that is very low compared to the Black Death, which killed half of Europe’s population in the mid 14th century.

If the number of cases increases as fast as the Lancet estimates, the virus will quickly spread around the world. There are already cases on all continents and so far there are officially 17,000 cases in at least 25 countries. For example, five Britons in a French ski resort were infected by a Brit who had been to a conference in Singapore.

Currently 400 million Chinese are on lockdown. Based on the Lancet figures, all of China could be quarantined in a few weeks’ time.

But just as serious is that the Chinese economy is also on lockdown. Over 65% of the Chinese economy is shut down. More than 80% of the manufacturing industry is closed and 90% of the export industry.

We must remind ourselves that the Chinese economy is 17% of the world economy and any shutdown of the manufacturing engine of the world will have serious repercussions for the rest of the world. Also, Chinese debt has exploded. It was $2 trillion at the beginning of this century and is now $42 trillion. As the Coronavirus crisis spreads, a major part of this debt is likely to turn into junk.

With severe pressures in the US and European financial systems, both the Fed and the ECB have started aggressive QE programs. China will now have to start a substantial program of liquidity injections to prevent a collapse of its financial system.

As the world’s manufacturer is on lockdown and a serious pandemic is spreading around the globe, the rest of the world seems to live in a cloud cuckoo land. It is quite unreal that the Dow just reached a new high and the Dax in Germany was not far from the high…

Listen to the greatest Egon von Greyerz audio interview ever

With world trade potentially about to shut down, stock market investors live on a different planet. For these perma bulls the bad news is conveniently suppressed, and instead the focus is on all the worthless, fake money that central banks are creating out of thin air. For some inexplicable reason investors believe that printed money creates wealth. And for a while it has as it pushes markets ever higher. But the music is about to soon stop and when it does the world is likely to go into shock with crashing markets and failing banks on a much greater magnitude than 2006-9.

In bond markets the “flight to safety” has resumed. Investors are piling into US Treasury bonds with both 10 and 30 year yields having turned down again and approaching the all-time lows. Also, the yield curve has inverted again with short rates being higher than long.  A yield curve inversion is normally an excellent predictor of a coming recession.

To me it is incomprehensible how anyone can call a US bond “SAFETY.” This is a debt paper issued by a virtually bankrupt borrower in a currency which will collapse just like most other currencies. There is absolutely ZERO safety in a US bond or any other sovereign bond for that matter because these bonds cannot and will not ever be repaid in money that has a real value. The most likely destiny for these bonds is at best an indefinite moratorium or more probably a default. If there was any repayment it would be in totally debased, worthless money.

Our company entered the physical gold market in 2002 when the price was $300. At the time we recommended up to 50% of financial assets in gold to our investors. Since then gold is up 5-6x in most currencies. Gold has also outperformed all major asset classes, including stock markets, in this century.

Back in the early 2000s I was totally convinced that gold would be the best protection against a precarious financial system. My concerns were vindicated with the 2006-9 Great Financial Crisis. Miraculously, central bankers managed to save the system temporarily. But this has been at a massive cost which has put the system in a much riskier position today. Global debt has doubled from $125 trillion in 2006 to $260 trillion today. When debt doubles, risk increases exponentially.

There are at least 3 dozen risks that could trigger a collapse of the system. If the Coronavirus spreads substantially around the world, this is another factor that could act as a catalyst to crash an already fragile system.  

As I already stated, investors are living in cloud cuckoo land. They don’t understand that there are no safe assets today. The bubble markets in stocks, bonds and property are incredibly risky. But few people will realize that until it is too late.

Just look at the Dow. As the Coronavirus is spreading around the world, the Dow gained almost 1,000 points last week. At some point soon, we will see the most massive crash in all stock markets, totally shocking all the perma bulls.

As I said, I was already convinced in 2002 that gold was the best asset to hold as insurance and wealth protection. Holding up to 50% already then was quite aggressive but has proven to be the correct advice.

But today the world is in a totally different position. Although gold is up several hundred percent since the early 2000s, the bull market in gold has barely started. Manipulation in the paper gold market by the BIS (Bank of International Settlement) and bullion banks has held the price down significantly.

In June 2005, William R. White of the BIS (Bank for International Settlements) in Switzerland, said that one of the aims of central bank cooperation was to use joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.”

This intervention is likely to fail as holders of paper gold ask for delivery. And since paper claims are 100x greater than the available physical gold, this will lead to defaults in the paper gold market and the price of physical gold surging massively.

It is critical to understand that physical gold has no counterparty risk and is:

  • Real money
  • No one’s liability
  • An inflation hedge
  • A crisis hedge
  • The only currency that has survived in history

The world is now facing the greatest crisis in history. Much less than 0.5% of people are prepared for this. Physical gold (and other precious metals) is the ultimate protection as well as life insurance against the coming collapse of the financial system…For those who would like to read more of Egon von Greyerz’s fantastic articles CLICK HERE.

Also of importance…

Eric King:  “Ivan, as you know I have purchased well over one million shares of your company’s stock in the open market because I am very excited about the multiple world class discovery opportunities in Gold, Silver, and now Copper.  And now this news of your Environmental Permit (DIA) has come in which has to be extremely exciting for management as well as for shareholders.”

Ivan Bebek:  “We are very excited.  We have been talking about the dream of finding one of the world’s largest mining discoveries in the last two decades and now that dream is getting closer to being a potential reality.  We are on the cusp of putting drills on the property and making that discovery.  An opportunity like Sombrero comes to you once in a lifetime – if you are lucky.  We could be discovering half of a world class copper belt, and if this wasn’t enough what has shareholders so excited is this is one of three world class discovery opportunities we have now in Gold, Copper and importantly, Silver.

Eric, all of this is came together because we have one of the strongest exploration teams in the business.  These projects not only have investors excited, they have also drawn the attention of several major mining companies across the globe, not just for the world class opportunity at Sombrero but also for what’s happening now at our Silver/Gold project Curibaya. Having 3 world class opportunities in one company gives us the grand slam opportunity of possibly splitting our company into 3 companies (shares) for the price of 1, thereby substantially turbocharging the potential wealth creation for our shareholders.” Auryn Resources, symbol AUG in Canada and the US.

King World News will continue to release breaking news on
the Coronavirus and its impact on markets. Until then…

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KWN has just released an audio interview!

Gerald Celente discusses China shutting down entire cities and industries and quarantining and rounding up people. To listen CLICK HERE OR ON THE IMAGE BELOW.

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